BG Group plc reports its 2015 Second Quarter and Half Year Results
Second Quarter Key Points
- E&P production up 19% at 703 kboed; full year guidance moved to the upper half of 650 – 690 kboed range
- Australia and Brazil average E&P production more than doubled to 80 kboed and 143 kboed, respectively
- QCLNG pipeline disposal completed with gross proceeds of $4.6 billion; Train 2 start-up in July
- Upstream EBITDA down 39% to $1 138 million; lower commodity prices partially offset by higher volumes
- LNG Shipping & Marketing EBITDA down 66% to $263 million; lower margins partially offset by higher volumes
- Business Performance EPS down 65% to 12.6 cents;Total EPS up 63% to 65.2 cents,reflecting profit on disposal of QCLNG pipeline
- Interim dividend declared of 14.38 cents per share (9.22 pence per share)
- Unconditional anti-trust approval of the Shell offer from Brazil in July; one of five pre-conditions to the offer
BG Group’s Chief Executive, Helge Lund said:
“We achieved a number of key milestones during the quarter while continuing to deliver on our cost and efficiency programmes. Production reached record levels, more than doubling in both Australia and Brazil, and we now expect output for the year to be in the upper half of our forecast range. In Australia, we assumed operational control of the first train at QCLNG, which is now operating at plateau, and produced first LNG from the second train earlier this month. In Brazil, our share of production is now exceeding 150 kboed and the sixth FPSO was recently moored on
location. Our LNG business has again produced a robust operating performance to deliver 58 cargoes in the quarter. “This performance reflects our actions to stabilise and de-risk the business and our teams remain focused on delivering our 2015 commitments.”
BG Group now expects 2015 E&P production volumes to be in the upper half of the 650 – 690 kboed range, excluding any changes to the portfolio. The Group expects third quarter production to be broadly similar to the average for the first half of 2015, with continued growth in Brazil and Australia being offset by a lower net entitlement in Kazakhstan and planned shutdowns, before increasing again in the fourth quarter.
In Australia, Train 1 at the Group’s QCLNG project has now reached plateau output of around 4 million tonnes per annum (mtpa) and Train 2 started up in July. Upstream production continues to ramp-up as planned, and the Group continues to expect up to 20% of gas for the two trains to be supplied by third-party contracts during this ramp-up phase. The integrated project remains on track to reach plateau production in mid-2016.
In Brazil, the fourth and fifth FPSOs, Cidade de Ilhabela and Cidade de Mangaratiba respectively, will continue to ramp-up during 2015 with additional well connections. With the sixth FPSO, Cidade de Itaguaí, on location in July, the operator expects this to be onstream in the third quarter of 2015.
LNG Shipping & Marketing EBITDA guidance remains in the range of $1.3 – 1.5 billion for 2015 based on mid-July forward commodity price curves (see page 37 for further details). Supply volumes are still expected to be slightly lower than 2014, excluding the purchase of spot cargoes and the impact of new volumes from QCLNG. As previously disclosed, the majority of the contribution from QCLNG will be reported in the Upstream segment of the business.
With cash capital expenditure of $3.1 billion in the first half of the year, 2015 will be significantly lower than 2014, as projects complete and the Group reacts to a lower oil price environment. Capital expenditure on a cash basis is still
expected to be around 30% lower than 2014 at between $6 – 7 billion in 2015.
The Group’s 2015 full year effective tax rate (ETR), excluding BG Group’s share of joint ventures and associates’ results and tax, is currently expected to be 35%. In the current low commodity price environment, the 2015 full year ETR remains sensitive to movements in the Group’s profits by jurisdiction and could therefore be subject to further movements during the remainder of the year.
The Group continues to expect a significant increase in Business Performance net finance costs in the second half of 2015 as a result of a material reduction in assets under construction following the start-up of QCLNG. This is expected to reduce the amount of interest on borrowings that can be capitalised by approximately 50%.
BG Group’s sensitivity to a $1 per barrel movement in the oil price is still expected to be between $60 – 70 million at an earnings level and between $70 – 80 million on post-tax operating cash flow, both on an annualised basis for 2015 only.
Source: BG Group plc
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