(Photo courtesy of BG Group)
Reuters – Oil and gas producer BG Group , which reported a major profit warning last week due to turmoil in Egypt, reported underlying fourth-quarter earnings of $1.14bn on Tuesday, in line with analyst forecasts.
The earnings figure for the three months to the end of December was up 11% on the previous year, due to a greater proportion of oil in the portfolio, lower hedging losses and a favourable LNG cargo delivery mix with increased sales to high value Asian markets.
BG said that excluding an impairment charge, 2013 earnings came in flat at around $4.4bn.
BG Group’s Chief Executive Chris Finlayson said the firm had made some good progress on its key growth projects in Australia and Brazil, but that it now needed to address the problems in Egypt.
BG last week shocked the market with an unscheduled announcement, warning that its 2013 earnings would be hit by a $2.4bn post-tax impairment charge while its production this year would be as much as 11% lower than analysts were expecting.
It also cut a 2015 production forecast by as much as 14%.
BG, which counts on Egypt for about a fifth of its production, said in January that the government there had not honoured agreements covering its share of gas from fields and as a result it had served so-called “force majeure” notices to affected buyers and lenders, effectively freeing all sides from contract terms due to circumstances beyond their control.
The difficulties in Egypt would impact it across the board, BG said, warning on the profitability of its LNG unit and hiking costs per unit of production by around a third for this year.
When including the impairment charge, disposals and re-measurements, total earnings for the full year were down 33%.
Over the past 18 months, BG has cut its output forecasts three times, including abandoning a goal to produce 1 million boed (barrels of oil equivalent per day) by 2015, and will have posted two straight years of falling production before output growth is restored in 2015.
