Shares in BG Group rose slightly yesterday despite the international oil and gas explorer and producer reporting a 41% slump in first quarter profits.
The City responded positively to an improved outlook for the group’s liquefied natural gas (LNG) business, boosting the stock by more than 1%.
Analysts also welcomed the company’s better LNG earnings forecast to £856-988million for 2015, compared with previous guidance of no more than about £659million.
BG, which is in the throes of a £46billion takeover by Royal Dutch Shell, said it enjoyed a “solid” operational start to the year.
Chief executive Helge Lund added: “Our growth assets in Brazil and Australia continued to ramp up, with production in each more than doubling year-on-year.
“We also started up the Knarr FPSO (floating, production, storage and offloading vessel) in Norway, however, we produced fewer barrels in the UK than expected due to shut-ins. Our LNG business performed strongly.”
The takeover, which is still subject to regulatory and shareholder approvals, is expected to complete in early 2016.
Mr Lund, whose potential £25million pay deal was branded “outrageous” by one investor at the firm’s annual meeting earlier this week, when one in five shareholders voted against his remuneration package, said: “Until then, BG Group will operate independently and our teams remain focused on delivering our plans safely and efficiently.”
BG has a 21.7% stake in the giant Buzzard field and interests in a further 14 assets in the UK North Sea, where current investment by the company is worth around £300million.
Half of this is being spent on a project to extend the life and reliability of the Lomond platform about 145 miles off Aberdeen.
Steve Cox, vice-president UK operations, said: “Our focus has been on delivering our offshore investment programme.
“On Lomond, for example, we have invested in new metering equipment, power trains to improve reliability, replacement pipework and better accommodation for the workforce.”
The recent oil price rise has improved BG’s outlook for LNG prices but the firm’s first-quarter results showed how much the drop in oil prices earlier this year hit its business overall.
BG said core earnings fell to £1.05billion, from £1.78billion a year ago.
Pre-tax profits slumped to £466.4million, from £1.25billion previously, on revenue down 23% at £2.5billion.
Production volumes increased 1% as a result of the ramp-up in Brazil and Australia, largely offset by lower production in the UK, Trinidad and Tobago and Egypt.
An analysts’ not from banking giant Barclays said BG’s results significantly exceeded expectations. It added: “Upstream was weaker than expected, with LNG a key area of strength. Overall, we see the results as positive.”
Recommended for you
