The shares of Centrica (LSE: CNA) slipped 4p to 398p during early trade this morning after the owner of British Gas said it would abort two gas storage projects and write off all the associated costs.
The FTSE 100 member said it had decided not to proceed with a new gas storage facility located 53 miles off the coast of Norfolk, and put on hold “indefinitely” a gas storage project near Bridlington.
Both facilities are depleted gas fields and had offered a combined capacity of 2 billion cubic metres.
Centrica confirmed the decision was taken “in light of weak economics for storage projects and the announcement by the UK government… ruling out intervention in the market to encourage additional gas storage capacity to be built.“
Today’s statement revealed the decision to abort both projects would trigger a £240m write off — equivalent to 4.6p per share — within Centrica’s 2013 accounts.
Prior to today, City brokers expected Centrica’s current-year earnings to climb 3% to 27.9p per share and the annual dividend to advance 5% to 17.2p per share.
Following this morning’s market reaction, the shares of Centrica trade at 14.3 times possible profits and yield a potential 4.3%.
