BG Group profits slump as Shell merger nears

BG Group rounded out a week of disappointing results for Europe's oil majors, reporting a sharp decline in profits for the third quarter as the collapsed oil price took its toll.

FPSO Cidade de Itaguaí on location in the Santos Basin, Brazil

BG Group

Underlying profits for the period fell 37 per cent to $1.2 billion for the three months to September 30th, compared to $2 billion a year ago. BG Group said the fall reflected "a significant fall in realised sales prices" that hit both its upstream business and its liquid natural gas (LNG) shipping and marketing arm.Revenue and other operating income fell nine per cent to $4.15bn, while EBITDA declined 37 per cent to $1.24 billion.The price of oil has plummeted since last June, falling from a high of $115 per barrel to around $50 now. BG Group offset the effects somewhat with increased production, however. Output climbed 26 per cent for exploration and production and 76 per cent for LNG delivered volumes.The firm is scheduled for a £39 billion takeover by Royal Dutch Shell, which reported a third quarter loss this week."Our teams delivered another strong operational performance in the third quarter," said BG Group's chief executive, Helge Lund. "In our Upstream business, we maintained positive momentum in our growth projects in Australia and Brazil, and we continued to improve reliability and efficiency in our base assets."We are now increasing our full year guidance for production to 680-700 kboed. Our LNG operations had a robust operating performance, despite challenging market conditions, and we have maintained our EBITDA guidance for 2015."We are on track to deliver our promised operating and capital cost savings for 2015 and are adding new low cash cost volumes through Australia and Brazil. These actions will help mitigate the impact of lower commodity prices on our financial results."We continue to work with Shell on integration planning and to secure the necessary regulatory approvals ahead of the shareholder vote. The transaction remains on track to complete in early 2016."BG Group's decline in profits follow Shell's losses and BP's announcement that it will cut capital spending after its third quarter profits saw a 40 per cent drop.For more news and stories like this, see Re:locate's Enterprise section.

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