3rd Feb 2015 08:14
LONDON (Alliance News) - BG Group PLC Tuesday reported significant impairment charges driven by low commodity prices and said it will slash its capital expenditure budget by up to USD7 billion in 2015, as it also reported a drop in fourth-quarter earnings that beat analysts' expectations.
The company reported profit excluding impairment charges of USD915 million in the fourth quarter ended December 31, down 19% from the USD1.13 billion reported a year earlier. Revenue fell to USD4.40 billion, from USD5.42 billion, as upstream revenue almost halved and liquefied natural gas shipping and marketing revenue fell sharply. This was partially offset by hedging gains, which totalled USD229 million.
After impairments, BG reported a USD8.33 billion pretax loss, significantly wider than the USD1.57 billion pretax loss reported in the fourth quarter of 2013.
The company booked a USD2.33 billion pretax loss for the full year, which includes significant impairment charges, compared with a USD3.88 billion profit in 2013. Revenue for the full-year remained fairly flat at USD19.28 billion.
It booked a pretax non-cash impairment charge of USD8.9 billion, or USD5.9 billion post-tax, in the fourth quarter, driven by the significant fall in global commodity prices. It reported a USD5.03 billion net loss including the impairment charges.
"The sharp deterioration in commodity prices in the second half of the year has led us to recognise significant asset impairment charges in the fourth quarter," said Executive Chairman Andrew Gould.
BG Group has recommended a final dividend of 9.52 pence per share, resulting in a full year dividend of 17.99 pence per share, which is in line with 2013.
The company has also committed significantly less to its capital expenditure budget for 2015, which will be reduced by USD6 to USD7 billion compared with 2014.
Full year production averaged 606,000 barrels of oil equivalent per day, a 4% drop from 2013 but within the company's guidance. In 2015, BG Group is expecting production to increase to around 650,000 to 690,000 barrels of oil equivalent per day.
"In the new environment we are well placed to manage the downturn as we are reaching the end of a high capital expenditure cycle and will continue to add further production in 2015 from Brazil and Australia," said Gould.
BG reported a cash balance of USD5.3 billion, and is expecting to receive a further USD5.5 billion in the first half of 2015 from the sale of QCLNG Pipeline Pty Ltd and two LNG carriers, it said.
Still, BG Group shares were down 1.5% at 919.50 pence early Tuesday, the second-worst declining stock in the FTSE 100.
By Joshua Warner; [email protected]; @JoshAlliance
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