BG Group, a UK-based oil and gas giant – soon to be acquired by its larger peer Shell – posted a 54 percent drop in its quarterly earnings.
Excluding special items, the company’s earnings for the fourth quarter of 2015 were 423 million, down from 915 million a year ago. However, including disposals, re-measurements and impairments, total earnings for the fourth quarter of 2015 were a loss of $29 million.
The impairment charges reflected the impact of further falls in commodity prices and reserve revisions on certain of the Group’s E&P assets, mainly in the North Sea and Tunisia. For comparison BG’s 4Q 2014 result, including special items, was a loss of more than $5 billion.
BG Group’s revenue and other operating income for the 4Q 2015 dropped by 2% to $4.28 billion from $4.4 billion in 4Q 2014. According to BG, this reflects the significant fall in realised sales prices impacting both the Upstream and LNG Shipping & Marketing segments, offset by higher volumes in both segments and the start-up of liquefaction operations at Queensland Curtis LNG (QCLNG).
Capex was 28% lower at $1 732 million and was almost entirely in the Upstream segment ($1 722 million), where it comprised $1 594 million on development and other activities, and $128 million on exploration. The development spend was concentrated primarily in Brazil ($705 million) and Australia ($597 million).
For the full year 2015, BG’s earnings, excluding special items, were $1 697 million, down 58% from 2014.
E&P Production for the quarter was 757 thousand barrels of oil equivalent per day (kboed), up 20% from the fourth quarter of 2014. Growth was driven by Australia, Brazil, the UK and Norway. Volumes in Australia more than doubled to 117 kboed and in Brazil, increased 56% to 161 kboed.
Full year production was E&P production 704 kboed, up 16% on ramp ups in both Australia and Brazil.
BG Group’s Chief Executive, Helge Lund, said: “We are pleased to have delivered an excellent operational performance in 2015 with results in line with, or ahead of, our guidance for the year. The ramp up of both LNG trains at our QCLNG project in Australia and the ramp up in Brazil, including the start-up of our sixth FPSO, drove a strong E&P operational performance. Our LNG Shipping & Marketing business delivered 282 cargoes, an increase of 58% on 2014, in difficult market conditions.
“The addition of new low cash cost volumes in Brazil and Australia and delivery of our operating and capital cost savings has helped to partly mitigate the impact of lower commodity prices.”
BG Group’s proposed merger with Shell, announced in April 2015, is nearing completion after shareholders of both companies approved the deal late in January this year. The deal is expected to become effective on February 15.
In its results announcement, BG Group said it would not pay the final dividend to shareholders, as completion of the merger is expected prior to Shell’s Q4 2015 dividend record date on February 19, 2016, so the shareholders will receive the dividend from Shell.
Offshore Energy Today Staff