BG Production Hits Record Before Merger with Shell

Capping a week which saw arch-rivals BP and Shell reporting dramatic slumps in their financial fortunes, BG revealed a $429 million (£275 million) second-quarter profit, down from $1.2 billion a year earlier.

Capital spending in the second quarter was down 41 percent to $1.47 billion, and the company’s FY estimate is now at $6-7 billion, about 30 percent lower than 2014.

Despite the significant headwinds, however, the company maintained interim dividend at 14.38 cents per share.

BG Group raised the 2015 full-year production guidance to the upper half of the 650 – 690 kboed range, with continued growth expected in Brazil and Australia. 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.

Shell is buying BG and its surging production levels just as its own oil-and-gas output is on the decline. 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. Oil prices have crashed down from last year’s peak of $106 per barrel in June – and are now hovering around the $50 per barrel mark. Analysts had expected net income of $315 million. The attraction of the company’s gas portfolio outweighed BG’s missed production targets that pushed down in its shares in two of the past three years. Revenue was down 28% at $3.95 billion compared with $5.51 billion in the same period a year ago due to the fall in oil prices. “This is more or less only driven by the lower oil price in the market”, said chief executive Helge Lund, adding he was “not disappointed” with the result given the tough operating environment.

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