BG Group plc Dips On Disappointing Third Quarter

BG Group (LSE: BG) this morning published results for the third quarter. The company’s share price is currently down 2.4% in trading so far today.

BG leads the highlights of its third quarter with the appointment of Helge Lund as chief executive, although it obviously remains to be seen whether Lund — lured from Norwegian state producer Statoil by the prospect of earning up to £13.5m a year in a combination of salary and bonuses — can deliver the goods after he takes up the reins on 2 March 2015.

The rest of the “highlights” aren’t exactly soaring achievements. E&P production is down 2%, at 569k barrels of oil equivalent per day (boed), with a decline in Egypt only being partially offset by increased production in Brazil.

Upstream total operating profit is down 36%, to $746m, with lower realised prices and higher costs more than wiping out any benefit from an increased proportion of higher margin oil. LNG total operating profit is down 4%, to $576m.

Group earnings and business performance earnings per share (EPS) are both down 29%, at $759m and 22.3 cents respectively, although BG reports that total EPS is up 22%, to 44.3 cents. 

On a brighter note, BG reports “excellent flow rates” in Brazil, with group net production in October exceeding 100k boed. The company also says that it received the equivalent of $350m from the Egyptian government in October, although that still leaves receivables at a colossal $1.2bn.  

Commenting on the results, interim executive chairman Andrew Gould said:

“Our developments in Brazil and Australia are progressing well and, in the case of Brazil, beginning to have a material impact on our business. Reaching net production of over 100 kboed from our Brazil assets is a major achievement, and to do it so swiftly after first commercial production in 2010 reflects the quality and the scale of our interests there. In Australia, the Queensland Curtis LNG project is on target to export its first LNG cargo by the end of the year, which will add volumes and flexibility to the company’s global LNG portfolio.“

At 1,018.5p, BG’s share price is down almost 18% on this time last year, compared with drop of only 5% in the FTSE 100. And BG’s share price badly trails the index over the longer-term, too, with a fall of 10.6% in the past five years, during which time the FTSE 100 has gained 22%.