Royal Dutch Shell and BG Group are expected to grow by 14 percent next year and by about 8 percent per year through 2020, Jason Gammel, head of European oil and gas research at Macquarie Group, told CNBC.
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"I expect Royal Dutch Shell to have good growth in the near term because they benefit from the oil price environment, and I consider BG Group the premier growth company in Europe,” Gammel said.
Royal Dutch Shell recently bowed out of a $1.9 billion takeover of Cove Energyto gain access to massive gas finds off the coast of east Africa. Thailand's PTT E&P is now in the box seat to complete the deal.
Royal Dutch Shell missed the deal, but Gammel said this was actually an exercise on “good capital stewardship on the management’s part. They were getting into a bidding war that was tracking to a level that we thought was too high for Cove .... Backing away is actually good for the investor.”
Earnings of the Anglo-Dutch oil giant fell 13 percent compared to the same quarter last year due to lower global energy prices resulting from weakening economies. Gammel thinks this drop is a one-off.
Gammel’s expectation on the outlook for Brent crude oil prices is about $105 a barrel through the end of the year. He thinks that the oil market has moved to “the level of equilibrium” and expects prices in the oil market to remain balanced in the coming months.
He also noted that the overarching concern for oil producers is that the Chinese demand growth has not been there for the last half year. “We need to see those Chinese demand numbers come back into the market,” he said.