BG Group profits plunge 63% on low oil prices

In related news, Shell’s Polar Pioneer drilling rig arrives in Port Angeles. Shell’s worrying Q3 results were largely caused by low global oil prices, its failed Alaskan exploration and the financial penalties from pulling out of a Canadian oil sands project – but the company’s LNG business has not emerged unscathed.

The company delivered 75 liquefied natural gas cargoes, or 4.8 million metric tons, in the third quarter, 31 cargoes more than the same period a year earlier.

BG Group rounded out a week of disappointing results for Europe’s oil majors, reporting a sharp decline in profits for the third quarter as the collapsed oil price took its toll. Adjusted for one-time items and inventory changes, profit dropped 70 percent to $1.77 billion, The Hague-based Shell said Thursday in a statement. That missed the $2.92 billion average estimate of 17 analysts surveyed by Bloomberg.

The company’s Chief Executive, Ben van Beurden, sees the decisions, though costing the company massive amounts of profit, as poignant and pertinent.

“Of course if you look at gas prices in North America, you can imagine a downward adjustment is actually going to improve the economics of a project that fundamentally takes a margin between US gas prices and North Asian gas prices, but at the same time that’s not the only driver”.

Shell abandoned the construction of the 80,000 barrels a day Carmon Creek oil sands project in Alberta, Canada, after having already started building it, a sign of the painful decisions the company is taking.

“It’s a good, solid performance”, said Oswald Clint, senior analyst at Bernstein. The company was able to cover its capital investment and dividends with the money it earned from its operations plus asset sales, a target “the other majors are all pushing towards by 2017”, he said.

Van Beurden said the BG takeover would help Shell focus on “fewer and more profitable themes”, specifically deep water and integrated gas.

Lund added that the transaction with Royal Dutch Shell remains on track to complete in early 2016.

BG shares fell 0.1 percent to 1,029 pence at 11:18 a.m.in London, trimming this year’s gain to 19 percent. The shares have dropped 24 percent this year.

Shell’s CEO, 57, is staking his reputation on the BG deal, worth $70 billion when it was announced in April. The oil slump has been brutal to companies around the world, forcing them to slash spending, lay off employees and delay projects.