8th May 2015 11:24
LONDON (Alliance News) - BG Group PLC Friday said earnings and revenue in the first quarter of 2015 were substantially hit by the fall in the oil price which caused a poor performance from its production and exploration division, although it reiterated its full-year production guidance.
The FTSE 100-listed oil producer, which is being acquired by Royal Dutch Shell PLC, said its pretax profit for the three months to end-March was USD708 million, down from USD1.89 billion a year earlier.
BG Group reported earnings before interest tax, depreciation and amortisation in the quarter of USD1.59 billion, down over 40% from the USD2.71 billion reported a year earlier, whilst earnings before interest and tax more than halving to USD945 million from USD1.97 billion.
That was after its upstream division experienced a 56% fall in Ebitda in the quarter to USD870 million from USD1.99 billion as the oil price hit results, lowering revenue in the division to USD2.01 billion from USD3.25 billion. The average oil price in the period dropped to USD52.16 per barrel compared with USD108.95 a barrel a year earlier as gas prices fell 21% to 41.31 cents per therm.
The upstream division also saw earnings before interest and tax fall 80% to USD253 million from USD1.28 billion.
The liquefied natural gas and marketing division saw revenue rise to USD2.23 billion from GBP1.97 billion, leading to Ebitda of USD708 million compared with USD730 million and Ebit of USD680 million from USD690 million.
Revenue was bolstered by delivered volumes increasing 56% due to increased cargoes and weather-related gains in the North American gas marketing business due to particularly cold weather, largely offset by the impact of lower LNG sales prices, particularly in Asia and South America.
"Our LNG business performed strongly. We delivered more cargoes and in our North American gas marketing business we demonstrated our ability to move swiftly to capture the benefits of the rise in US gas prices due to cold weather," said Chief Executive Helge Lund.
Overall earnings per share halved to 16.6 cents per share from 33.8 cents per share.
Production in the quarter rose 1% to 638,000 barrels of oil equivalent per day as production from its Australian and Brazilian assets more than doubled from a year earlier, but this was partially offset by production declines in the UK, Egypt and Trinidad and Tobago.
Chief Financial Officer Simon Lowth told journalists that production in Brazil is expected to continue to grow throughout the rest of 2015, and reiterated the company's full year guidance of between 630,000 to 690,000 barrels of oil equivalent per day.
"We have had a solid operational start to the year. Our growth assets in Brazil and Australia continued to ramp up, with production in each more than doubling year-on-year. We also started up the Knarr FPSO in Norway, however we produced fewer barrels in the UK than expected due to shut-ins," said Lund.
At the end of the quarter, net debt had increased to USD12.07 billion from USD10.41 billion, pushing its gearing up to 29.6% from 23.6%.
Shell's cash and shares takeover bid for BG Group was announced in April, valuing BG at around GBP47 billion and marking the biggest UK to UK acquisition ever. The deal is expected to be completed in early 2016.
On Friday, Lund said BG Group remains committed to implementing its business plan in 2015, and said although it will work with Shell on planning integration, no actual integration will take place until after the deal has been closed.
BG Group shares were up 1.0% at 1,186.00 pence Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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