The combination is though set to see exploration spending slashed, while Shell is also left needing to source $20 billion in funding to push the deal through.

Shell made a £47 billion ($69.7 billion) cash-plus-shares offer for BG as it looks in particular to deepen its exposure to deep-water and liquefied natural gas plays, with Brazil and Australia two key focus areas.

“We have been working on this for some months,” Shell chief executive Ben van Beurden told investors and analysts on a call on Wednesday morning.

Van Beurden also admitted that the supermajor had eyed “BG and other companies for a long period of time”, without identifying any of the other potential targets.

“I have been an admirer of BG since my LNG days,” he added. “This is putting strength together with strength and making something better out of it.”

Van Beurden said the combination will create a newer portfolio, with growing positions and long-life assets. But much of the appeal of BG was in its LNG assets and its upstream position in Brazil.

“Brazil is an absolutely outstanding upstream province,” the Shell boss said, pointing out that his company is already a partner in the giant Libra pre-salt field.

“You have to look at Brazil for the potential that it holds. This at the moment is the most exciting part in the industry. The potential is absolutely gigantic - there is much more to come. And if you then look at how we have been exposed to it, I can only conclude that at Shell we are insufficiently exposed to the Brazil opportunity.”

Shell is set to add significantly to its LNG portfolio in Australia in particular, where it already has the giant Gorgon and Prelude projects to add to BG’s Queensland Curtis LNG.

BG has also participated in major gas discoveries off Tanzania in East Africa where it is developing an LNG project together with Statoil.

Exploration spending will be cut, however, with chief financial officer Simon Henry seeing it dropping to below $35 billion from a combined $42 billion to $43 billion this year.

Henry also said Shell will require $20 billion in financing this year to get the deal through, and this is on top of any other financing requirements, which will most likely be needed in a weak oil price environment.

Analyst Neill Morton of Investec said in a note that “Shell is pouncing on BG’s imminent free cash flow to protect its burdensome dividend payout”.

BG is set to start generating sales revenue shortly from QCLNG after it was brought on stream in December, while also ramping up output from two floating production projects off Brazil that were also kicked off last year.

The analyst said BG investors had received “what we see as a compelling offer”, though added the merits of the deal were less convincing for Shell’s shareholders.

He added the proposed transaction was predicated on Shell’s projection of an oil price recovery to $90 a barrel by 2018, with the company aiming to generate $55 billion to $70 billion of cash flow by 2020 when it expects prices of $95 a barrel.

Another analyst, Teodor Sveen Nilsen of Swedbank, opined that the pending takeover could set the stage for similar deals and “will most likely intensify merger & acquisition speculation”.

“Shell’s acquisition may mark the first deal in a row of well capitalised E&Ps that use the weak oil market to strengthen their asset portfolios,” he said.

Nilsen added it shows players are willing to pay a significant premium to stockmarket valuations for oil and gas assets and “represents by far the largest E&P deal in Europe over the past few years”.