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BG reassures on projects as earnings beat consensus

British oil and gas company quarterly earnings reassure investors after issues at fields in North Sea and Egypt had forced it to downgrade 2013 production forecast

Reuters, Thursday 2 May 2013
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British oil and gas company BG Group, under pressure after a series of setbacks, delivered better-than-expected quarterly earnings on Thursday and gave reassurance that its huge growth projects were on track.

The company last year unnerved investors when it downgraded its 2013 production forecast, blaming issues at fields in the North Sea and Egypt, and then conceded earlier this year that it would miss a 2015 target.

BG's new chief executive Chris Finlayson, who took over from long-serving Frank Chapman at the end of 2012, said that a $20.4 billion project in Australia, QCLNG, was on track to start-up next year and added that oil developments in Brazil were also going to plan.

"We have made a good start to the year. I am encouraged by the progress we are making against our remaining 2013 targets," he said in a statement.

The reassurance on projects comes two weeks before a BG strategy update, which will be the new chief executive's opportunity to sketch out his plans for the company.

BG's earnings of $1.183 billion in the first three months of the year were ahead of a company-supplied consensus forecast of $1.098 billion but 3 percent lower than the same period last year.

The drop in earnings was a result of a 3 percent fall in production due to a North Sea field being closed for some of the quarter and ongoing difficulties with output in Egypt, and on higher costs linked to rising royalty payments.

BG said on Wednesday that it was moving ahead with plans to build an LNG project in Tanzania after more successful gas flow results, and would present the government with proposed locations for it in the coming months.

Shares in BG, which are down 25 percent compared to where they were a year ago, closed at 1,089.5 pence on Wednesday.

 

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