BG Group: 3Q income plunges 63 pct. Production up. Capex down
BG Group, a UK-based energy giant, has reported a net income of $280 million for the third quarter of 2015. This is a 63% drop from $759 million earned in the same quarter a year ago.
Revenue and other operating income decreased 9% to $4.1 billion, reflecting a sharp fall in realised sales prices impacting both the Upstream and LNG Shipping & Marketing segments.
BG said that the impact of lower prices was partly offset by higher volumes in both segments, with E&P production volumes up 26% and LNG delivered volumes up 76%.
Capital expenditure was 32% lower at $1.5 billion and was entirely in the Upstream segment, consisting of $1.36 billion on development and other activities, and $174 million on exploration. The development spend was concentrated primarily in Brazil ($687 million) and Australia ($292 million).
With cash capital expenditure of $4.7 billion in the first nine months of the year, BG said that 2015 would be significantly lower than 2014, as projects complete and the company reacts to a lower oil price environment. Capital expenditure on a cash basis is now expected to be around 30% lower than 2014 at around $6.5 billion, BG said on Friday.
The company’s production was 716 thousand barrels of oil equivalent per day (kboed), up 26% from the third quarter of 2014. Growth in the third quarter was driven by Australia, Brazil and Norway.
BG Group has increased its outlook for 2015 E&P production volumes to 680 – 700 kboed, excluding any changes to the portfolio. This reflects the strong operational performance to date and the reduced duration of planned shutdowns in the second half of the year, BG said.
In the fourth quarter, the group expects continued growth in Brazil and Australia to be partly offset by a number of planned shutdowns and the continued expected decline in Egypt.
BG Group’s Chief Executive, Helge Lund said: “Our teams delivered another strong operational performance in the third quarter. In our Upstream business, we maintained positive momentum in our growth projects in Australia and Brazil, and we continued to improve reliability and efficiency in our base assets. We are now increasing our full-year guidance for production to 680-700 kboed.”
Lund said BG group was on track to deliver the planned operating and capital cost savings for 2015. According to the company’s 3Q statement, BG will deliver at least $300 million target savings for 2015.
Lund also briefly commented on the pending Shell-BG acquisition: “We continue to work with Shell on integration planning and to secure the necessary regulatory approvals ahead of the shareholder vote. The transaction remains on track to complete in early 2016.”
To remind, Shell on Thursday reported a loss of $6.1 billion on a current cost of supplies (CCS) for the third quarter of 2015, caused mainly by the charges from write-downs of projects in Alaska and Canada.
Offshore Energy Today Staff