British energy company BG Group, soon to be taken over by Shell in a $70 billion deal, has reported a steep drop in profit after tax for the first quarter of 2015.
The company’s earnings fell 78% to $240 million in the first quarter of the year, versus $1.1 billion earned in the same period of 2014. Revenue also fell to $3.8 billion from $4.97 billion a year ago. Upstream revenue and other operating income decreased 38% to $2 012 million, reflecting significantly lower commodity prices, particularly oil and liquids.
As for production, the company said the output Australia and Brazil more than doubled year-on-year to an average of 56 kboed for Australia and 123 kboed for Brazil. However, total production grew only 1% to 638 thousand barrels of oil equivalent per day (kboed), as the Australia and Brazil performance was offset by the UK where production fell.
According to BG Group, in the UK, production for the quarter was down to 77 kboed, as the Armada, Everest, Lomond and Erskine fields were shut in as a result of the asset integrity programme on Lomond and repairs to a valve on the CATS Riser Tower which shut in the main gas export route.
Production was also lower in Trinidad and Tobago, down to 59 kboed, and in Egypt, down to 52 kboed. Production in Kazakhstan was flat year-on-year, although benefited from a higher than planned PSC entitlement.
BG Group’s Chief Executive, Helge Lund said: “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. 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.
“Following the end of the quarter, the company announced an offer from Shell, which the Board has recommended to shareholders. The attractive offer is now subject to regulatory and shareholder approvals and completion is expected in early 2016. Until then, BG Group will operate independently and our teams remain focused on delivering our plans safely and efficiently.”
It has been reported that Helge Lund will leave BG Group after the completion of the $70 billion Shell takeover. According to Reuters, Lund could leave the company $47.8 million richer.
According to Lund’s remuneration package at BG, he is entitled to get a base salary of £1.5 million, fixed for the first five years of employment. Also, Lund could get a 130% of salary on termination of the contract, expected to happen in early 2016, once the Shell-BG transaction is completed.
However, according to Reuters, the Norwegian could receive as much as 32 million pounds ($47.8 million) by the time he is out of BG. In its calculation, apart from the base salary and the termination fee, Reuters included long-term incentive share awards, bonuses, shares Lund already owns, and stock options he has in BG.
Offshore Energy Today Staff