BG share price: Gas major posts results in line with profit warning

on Feb 4, 2014
Updated: Apr 9, 2020
Listen, Tuesday, February 4: Shares in BG share price slumps as explorer issues ‘disappointing’ 2014 guidance).

As at 8:39 UTC, BG share price was down 0.2 percent at 1,023p, compared to a 0.7 percent decline in the blue chip FTSE 100 index.

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**BG results**
BG’s ‘business performance’ results, which exclude disposals, certain re-measurements and impairments to give a clearer picture of the underlying operating performance of its ongoing business, showed a fourth quarter profit of $1.14 billion, up 11 percent year-on-year. The full-year profit was flat at $4.37 billion.

On a so-called ‘total results’ basis, which includes disposals, re-measurements and impairments, BG reported a loss of $1.07 billion for the fourth quarter, bringing the full-year earnings to $2.21 billion. For 2012, the company reported a profit of $935 million for the fourth quarter and a profit of $3.29 billion for the whole year. The quarterly loss and the 33 percent drop in full-year profit was attributed to a post-tax charge of $2.2 billion taken in the fourth quarter and related to impairments of assets in Egypt and US shale gas assets.

Last week, BG declared force majeure on Egyptian LNG exports, meaning it won’t deliver on contracts, blaming the African country’s government for not honouring agreements and diverting gas volumes to the domestic market. Uncertainty in Egypt, which accounts for about a fifth of BG’s output, continues to be a problem for the company.
BG’s fourth quarter revenue and other operating income grew 14 percent y/y to $5.43 billion, as a greater proportion of oil in the portfolio, a favourable LNG cargo delivery mix with increased sales to high value Asian markets and lower hedging losses, were only partly offset by a decrease in overall production volumes and fewer LNG cargo deliveries. Total operating profit rose 4.0 percent to $1.91 billion as the higher revenues outweighed an increase in operating costs and depreciation, depletion and amortisation (DD&A) in the upstream segment.

For the full year, revenue rose 1.0 percent to $19.1 billion despite a 4.0 percent decline in overall production volumes and fewer LNG cargo deliveries. Total operating profit fell 5.0 percent to $7.62 billion due to a rise in operating costs and upstream DD&A.

Looking ahead, BG Group reiterated last week’s forecast of output in the range of 590,000 – 630,000 barrels of oil equivalent per day (boed) for this year and 710,000 – 750,000 for next year. It expects its assets in Brazil and Australia to deliver strong growth this year although it will be offset by reductions in Egypt and volume declines in the US.
The company forecast unit operating expenditure to grow around a third to $15.50-$16.25 per boe this year from $12.17 per boe for 2013, due to increasing production from royalty-paying fields in Brazil and Bolivia, the cost of new facilities in Australia and Brazil, the cost of the enhanced asset integrity programme in the UK, and declining production in Egypt. The unit DD&A charge is seen rising to some $12.25-$13.00 per boe from $11.29 per boe as new developments come onstream.
LNG Shipping & Marketing total operating profit for 2014 is seen at between $2.1 and $2.4 billion in 2014, reflecting reduced supply volumes from Egypt and lower prices.
BG Group continues to expect to be free cash flow positive in 2015.
**As of 8:26 UTC buy BG shares at 1,018.00p.**
**As of 8:26 UTC sell BG shares at 1,017.50p.**
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