BG Group Q2 profits halve as oil price drop bites
The gas producer announced reductions in capital investments for a second time this year, shaving another $3bn (£642m) off its 2015 budget to bring it to $30bn. In Australia, we assumed operational control of the first train at QCLNG, which is now operating at plateau, and produced first LNG from the second train earlier this month.
Despite the significant headwinds, however, the company maintained interim dividend at 14.38 cents per share. That underlines the appeal to Shell of BG’s natural-gas assets in Australia and deepwater fields in Brazil. The Anglo-Dutch giant also emphasized that the deal would make sense even during the current sustained slump in oil prices. Average production levels during the quarter in Australia and Brazil more than doubled to 80,000 barrels of oil equivalent per day and 143,000 barrels of oil equivalent per day, respectively, according to the group’s results statement. BG group today said that the mega-merger had gained regulatory approval in the US and Brazil.
BG’s gusher represents a big turnaround after years of under delivery on its own output targets.
The company grew rapidly in the early 2000s but its output stalled in the middle of the decade.
Brent crude in London trading averaged $63.50/bbl in the second-quarter, 42% lower than a year earlier.
The company said in its second quarter report that underlying earnings declined to $429 million, compared with $1.2 billion one year ago. That beat the $343.7 million estimate of 11 analysts surveyed by Bloomberg.
Chief Executive Helge Lund, who took over early this year, said the LNG business for BG Group has been robust. Exploration and production increased 19 percent to 703,000 barrels of oil equivalent per day, though with most of that existing as oil, the weak price environment for crude oil took its toll.
Earnings per share decreased 65% to 12.6 cents a share.