Reuters – British oil and gas company BG Group reported a lower-than-expected drop in first-quarter profit on Thursday, just days after its chief executive resigned.
The FTSE 100 company saw a 6% fall in operating profit to $2bn but beat consensus forecasts and reassured investors its big projects were on track to help meet its 2014 production target of 590,000-630,000 barrels of oil equivalent per day.
The company has cut its output forecast several times in the last two years, resulting in a profit warning earlier this year.
Shares in BG were trading 3% higher at 1,235 pence at 1144 BST, one of the top four risers on the FTSE 100.
“Following the surprise departure of the CEO this week, BG’s Q1 results should prove reassuring for investors,” said analysts at Bernstein Research.
The Reading-based company lost chief executive Chris Finlayson earlier this week after just 16 months in the job and has begun the search for a successor at a time when the firm is under pressure to restore its reputation.
“The search is under way, we are ready and we will wait to get the right CEO,” interim executive chairman Andrew Gould told reporters.
BG’s first-quarter exploration and production (E&P) volumes fell 4%, hit hard by output problems in Egypt where the company’s liquefied natural gas (LNG) project failed to deliver any cargoes in the first quarter.
Production in Egypt fell 35% compared with the fourth quarter as the reservoir feeding its plant is in decline and the local Egyptian market took more supply, for which BG receives lower payments.
BG said it was expecting “very limited” cargoes from its Egyptian plant in the foreseeable future, although one shipment was planned for the second quarter.
Interim executive chairman Gould said the company had “no sacred cows” as it was reviewing its entire asset portfolio, including those in Brazil which had been earmarked as growth projects BG would hang on to.
“The issue that the board was facing was not a dispute over strategy but a dispute over the speed with which it was presented with optionality on the different parts of the portfolio. I would say that it’s more a question of pace than it is of change in strategy,” Gould said.
Its Australian Queensland Curtis LNG production facility is on schedule and budget to deliver first LNG in the fourth quarter of 2014.
BG’s oil and gas exploration programme in Brazil is also performing well, helping to deliver higher-than-expected output in the first quarter thanks to strong oil production.
The energy company’s growing oil output led it to hedge 70% of its oil price exposure between April and December this year at an average Brent price of $106 per barrel, a move which analysts said was unusual.
“[This is] sensible in light of the balance sheet pressures but equally emphasising the pressures on cash flow and balance sheet at this time,” said Deutsche Bank analyst Lucas Herrmann.