Royal Dutch Shell (LON:RDSB) has launched more cost cuts to persuade investors to approve its controversial £35.6bn merger with BG Group (LON:BG.).
The company plans to reduce costs and capital investment by US$12bn in 2015, with further reductions expected in 2016.
Some investors have voiced concern about whether the deal is still viable given the plunge in oil prices in the last year from more than US$100 a barrel to just over US$36 now.
But Shell said the break-even price per barrel for the deal was in the low US$60s, rather than the US$65 it had previously mentioned.
In a statement accompanying its circular and prospectus for the deal, Shell said: " The end-2015 fall in oil prices underscores that today’s oil price downturn could last for several years.
"Shell’s plan reflects market realities, making sure the company is resilient."
Shell plans to slash operating costs by US$4bn in 2015, down about 10% from 2014 levels of US$45bn. It says they should drop another US$3bn next year.
Capital investment in 2015 is expected to dip by US$8bn to about US$29bn, or more than a fifth from 2014 levels, and lower than previous guidance of US$30bn.
The group said 2016 capital investment for the combined group would be about US$33bn, US$2bn lower than previous guidance, and 30% lower than in 2014.
It has outlined plans to reduce staff and contractor numbers by 7,500 globally in 2015 and forecast a further cut of 2,800 staff as a result of the merger.
But Standard Life Investments (LON:SL.) last week said the deal no longer made financial sense at current oil price levels.
Shell originally approached BG in April when the oil price stood at about US$55 a barrel.
A major BG shareholder, Capital Group, reportedly sold about £100mln of shares in BG in the last week.
But Shell said on Monday that it expected meetings of investors in both companies to approve the tie-up to take place on January 27 and 28, 2016, respectively.
It said the tie-up should enhance the company's free cash-flow, accelerate its deep-water and liquefied natural gas strategy and create a springboard to reshape itself.
Shell chairman Chad Holliday said: "This is an important moment for Shell. Our industry has entered what could be a prolonged oil price downturn.
"The board is confident that the financials of the group will be further strengthened by this transaction.
"This should improve Shell’s ability to cover both dividends and investments. The result will be a more competitive and stronger company, for both sets of shareholders, in today’s volatile oil-price world.”