1st May 2014 07:23
LONDON (Alliance News) - BG Group PLC Thursday reported lower first-quarter profit as the situation in Egypt continued to weigh, and it reaffirmed that production in 2014 as a whole is likely to be at the lower end of its guidance due to the issues in the country and the hit is likely to continue into 2015.
The company's earnings come just days after BG Group Chief Executive Chris Finlayson resigned with immediate effect for personal reasons. Non-executive Chairman Andrew Gould has take over as interim executive chairman while the company looks for a new CEO.
At that time, the company had warned that Egypt remained challenging, with volumes in the first quarter declining 35% from from the fourth quarter of 2013 to 66,000 barrels of oil equivalent per day.
In its earnings statement Thursday, the oil major said the amount of oil being diverted to the domestic market in Egypt remains well above its contractual commitments, and the reservoir performance in the country is continuing to deteriorate. The company is entitled to a lower share of production when oil is diverted into the domestic market.
BG Group reported higher revenue for the first quarter, buoyed by higher oil volumes, particularly from Brazil. However, profit fell as costs rose in its exploration and production unit and its Liquid Natural Gas shipping and marketing unit made fewer deliveries, with no BG Group cargoes leaving Egypt at all.
It posted a net profit of USD1.11 billion for the three months to end-March, down from USD1.21 billion a year earlier, even though revenue rose to USD4.98 billion, from USD4.91 billion.
It said its 2014 production guidance remains unchanged at 590,000 to 630,000 barrels of oil equivalent a day at reference conditions, although production is now expected to be at the lower end of the range, given the issues in Egypt.
"The deterioration in Egypt will similarly impact 2015 production," it warned, adding "the group is reviewing its operational, investment and portfolio management plans and will not provide 2015 guidance until its full year results in February 2015".
BG Group shares were up 0.5% at 1,203.50 pence early Thursday.
By Steve McGrath; [email protected]; @stevemcgrath1
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