BG Group is down 15% or 185p to 1068p due to a surprise announcement before its usual early February results as problems in Egypt have forced it to cut earnings and output forecasts for this year and 2015.
Chief Executive Chris Finlayson announced this morning that for 2013 earnings would fall 33 percent to around $2.2 billion due to a $2.4 billion non-cash, post-tax impairment charge to reflect the difficult operating environment in Egypt, as well as lower future gas prices in the United States. The latest profit warnings follows a series of warnings in 2013.
With 20% of the company’s gas output coming from Egypt, the company has announced that the government had not honoured agreements covering British Gas’s share of gas from fields, with high levels of gas being diverted to the domestic market. This diversion had prevented it from meeting its export obligations an LNG (liquefied natural gas) project in the area. BG said negotiations with the Egyptian authorities were ongoing but were hampered by the constitutional and government changes in the country and that there was continued uncertainty over the quantity of LNG production in 2014. The company said it had been forced to serve “force majeure” notices to parties in the LNG agreement.
BG said it expected to produce between 590,000 and 630,000 of barrels of oil equivalent per day (boed) this year, 7 percent below 2013 levels and 12 percent lower than forecasts. 2015 production is cut to between 710,000 and 750,000 boed, from a previous target of 775,000-825,000 boed.
Another stumble for BG and another set back for oil and gas production in the Mediterranean.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
BG drops 15% on profit warning for 2014 and 2015 on Egypt LNG issues
Jan 27, 2014 at 10:21 am in Market Commentary by contrarianuk
BG Group is down 15% or 185p to 1068p due to a surprise announcement before its usual early February results as problems in Egypt have forced it to cut earnings and output forecasts for this year and 2015.
Chief Executive Chris Finlayson announced this morning that for 2013 earnings would fall 33 percent to around $2.2 billion due to a $2.4 billion non-cash, post-tax impairment charge to reflect the difficult operating environment in Egypt, as well as lower future gas prices in the United States. The latest profit warnings follows a series of warnings in 2013.
With 20% of the company’s gas output coming from Egypt, the company has announced that the government had not honoured agreements covering British Gas’s share of gas from fields, with high levels of gas being diverted to the domestic market. This diversion had prevented it from meeting its export obligations an LNG (liquefied natural gas) project in the area. BG said negotiations with the Egyptian authorities were ongoing but were hampered by the constitutional and government changes in the country and that there was continued uncertainty over the quantity of LNG production in 2014. The company said it had been forced to serve “force majeure” notices to parties in the LNG agreement.
BG said it expected to produce between 590,000 and 630,000 of barrels of oil equivalent per day (boed) this year, 7 percent below 2013 levels and 12 percent lower than forecasts. 2015 production is cut to between 710,000 and 750,000 boed, from a previous target of 775,000-825,000 boed.
Another stumble for BG and another set back for oil and gas production in the Mediterranean.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.