Finlayson, 56, currently an executive director at BG who joined in 2010 after more than 30 years at Royal Dutch Shell Plc (RDSA), will take the helm on Jan. 1, the company said today in a statement. Chapman, 59, who’s undergoing treatment for a medical condition, will serve as an adviser to the company until his retirement in June.
Finlayson will take charge as the explorer, based in Reading, England, tries to balance record capital spending on fields from Australia to Brazil with lower-than-expected oil and gas production. The share price dropped about 20 percent since the company said on Oct. 31 output won’t grow next year because of project delays in the North Sea, U.S., Brazil and Egypt.
“This is a sensible and practical appointment,” Peter Hutton, an analyst at RBC Capital Markets in London, said in a note to clients. “Finlayson has maintained a lower profile than other candidates, but his experience as an insider’s outsider is a useful balance.”
BG started in 1997, when former state gas monopoly British Gas Plc split its exploration and production arm from its retail business. Chapman, an engineer who spent 22 years at Shell and BP Plc (BP/) before joining British Gas in 1996, became CEO in October 2000. Under his leadership the company became one of the world’s largest traders of liquefied natural gas and participated in the discovery of giant oilfields off Brazil.
He took the company’s market capitalization from 9.7 billion pounds ($15.6 billion) in the month he took charge to more than 54 billion pounds in 2011. Even after the recent share tumble, the company is more highly valued than larger competitors. Its price to earnings ratio is 15 compared with 8.1 at Shell and 7.5 at BP.
“I have known Chris for many years and he has outstanding front-line operating experience,” BG Chairman Andrew Gould, 65, said in the statement. “He has worked all over the world, often in difficult circumstances, and has a strong track record of successful delivery.”
Chapman will work as an adviser to support the new CEO until his retirement next June, the company said. Last June, he began a course of medication for very early-stage myeloma, a blood disorder that affects bone-marrow cells.
“He has experienced no symptoms from the condition, or side effects from the treatment,” the company said. “In 2013 he will undergo three to four weeks’ hospital treatment to consolidate the excellent progress made.”
Finlayson was one of three internal candidates for the top job. Chief Operating Officer Martin Houston and Chief Financial Officer Fabio Barbosa were also running for the post. In September, Barbosa was granted a leave of absence to undergo medical treatment in Brazil.
“Fabio is still in Brazil, he is still with us,” Neil Burrows, a BG spokesman, said by phone. “Martin is still with the company.”
Under Chapman’s management, BG expanded its oil and gas resources more than 10 times to more than 17 billion barrels. The increased reserves haven’t prevented the company from missing production targets since 2010, according to Stuart Joyner, an analyst at Investec Securities Ltd. in London.
“BG has been unable to deliver on its production growth targets for some time,” Joyner said in a Dec. 3 report. “The market is unlikely to view BG as a growth stock for the foreseeable future.”
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