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BG weighs asset sales after CEO exit in dispute over disposals

EDUARD GISMATULLIN

READING, United Kingdom (Bloomberg) -- BG Group Plc Executive Chairman Andrew Gould said there would be “no sacred cows” as the oil producer considers selling assets to boost shareholder returns.

CEO Chris Finlayson resigned this week amid disagreements with the board over the speed at which he was implementing the company’s strategy, Gould said on a call with reporters. His exit after a little more than a year in the job prompted analysts including RBC Capital Markets to speculate that BG may become an acquisition target or sell assets.

“There are absolutely no sacred cows in the portfolio as we will look at everything,” said Gould, who’s running BG until a new CEO is found. “The issue that the board is facing isn’t a dispute over strategy, but a dispute over the speed at which it was being presented with optionality on the different parts of the portfolio. It’s more a question of pace.”

BG’s shares have risen for four straight days in London since Finlayson resigned for personal reasons. The stock reached a three-month high of 1,293 pence today and traded 1,227 at 10:16 a.m. local time.

Industry analysts, including Deutsche Bank AG, forecast the company will sell holdings in Brazil, where its gross production was more than 220,000 boed at the end of the first quarter.

Finlayson’s predecessor Frank Chapman, who ran the company for more than a decade, had been reluctant to trim exposure in the Latin American nation.

“The knowledge of the quality of the Brazil assets was much lower than it is today, we’ve done a lot of work since then,” Gould said today. He declined to comment on the timing of any possible asset sales.

BG’s first-quarter profit excluding disposals and one-time items beat analysts earnings estimates, dropping 3% to $1.15 bn from a year earlier, the UK’s third-largest oil and gas producer said in a statement.

“Our strategy remains unchanged and we must accelerate the creation and delivery of longer term value,” Gould said. “One of my highest priorities is the recruitment of the new chief executive.”

He declined to comment on the timing of the new CEO appointment.

First-quarter output fell 4% to 633,000 boed. The company forecast average output will be about 590,000 bpd this year.

Egyptian extraction dropped 35% in the first quarter to 66,000 bpd from the prior three months because of deteriorating field performance and fuel diversion to the domestic market, BG said. The nation accounted for about 10% of the company’s production and 5% of earnings.

05/01/2014

 

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