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BG reports quarterly loss for first time since 2000

BY EDUARD GISMATULLIN

READING, United Kingdom (Bloomberg) -- BG Group Plc, the UK’s third-largest natural-gas producer, reported a quarterly loss for the first time since 2000 as Egyptian exports were disrupted and costs rose.

The net loss was $1.08 billion in the fourth quarter, compared with net income of $1.74 billion a year earlier, the Reading, England-based company said today in a statement. BG will write off $2.4 billion in assets in Egypt and the U.S.

CEO Chris Finlayson has faced hurdles to restoring value at BG, whose shares are trading 33 percent below their 2011 high. In Egypt, which accounts for about 18 percent of production, gas has been diverted away from export terminals to the domestic market amid political unrest. In Brazil and Australia, costs are rising as the company expands.

The loss was the first since BG reported a 60 million-pound ($98 million) loss in the second quarter of 2000, according to its website. Profit excluding disposals and one-time items rose to $1.14 billion from $1.03 billion a year earlier, BG said.

On Jan. 27 BG issued a profit warning saying that “total results” for 2013 probably fell by a third to $2.2 billion. It also said output may drop to as little as 590,000 barrels of oil equivalent a day in 2014 from 633,000 barrels a day last year.

Finlayson, 57, took the helm a year ago from Frank Chapman and was charged with balancing record capital spending with lower-than-expected oil and gas production. The shares rose 28 percent last year, before plummeting in the past two weeks.

“After high expectations in 2013 following the new CEO start, more of the same from BG” this year with output forecast at the lowest level since 2006, Anish Kapadia, an analyst at Tudor Pickering Holt & Co., said before the earnings release. The “big issue now is lack of credibility on BG’s guidance.”

The company has suffered project delays from Brazil to the North Sea and last week declared force majeure on Egyptian LNG exports, meaning it won’t deliver on contracts.

BG has also revised its 2015 output forecast for the second time in a year, cutting its projection to 710,000 barrels to 750,000 barrels of oil equivalent a day. Exploration and production costs will rise by as much as 34 percent to $16.25 a barrel this year from last year, it said.

BG, which was formed in 1997 when former state gas monopoly British Gas Plc split its exploration and production arm from its retail business, is the biggest UK-listed gas producer after Royal Dutch Shell Plc and BP Plc.

02/04/2014

 

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