BG Group Rises After Output and LNG Profit Beat Expectations

BG Group Plc (BG/), the U.K.’s third-largest oil and gas producer, rose the most in almost a year after reporting production and liquefied natural gas earnings that exceeded analysts’ expectations.

Shares climbed 4.3 percent to 1,136 pence in London, the most since June 19. Santander SA and RBC Capital Markets said that output and LNG sales came in higher than expected even though total production slipped.

“This is a positive start to a critical year for BG,” said RBC analyst Peter Hutton in an e-mailed note. “Starting the year slightly ahead of our forecasts on both production and income gives a solid base, and supports company guidance.”

Chief Executive Officer Chris Finlayson on May 14 will hold a presentation on strategy after BG last year reported project delays in Egypt, Brazil, the North Sea and the U.S. Production fell 3 percent in the first quarter after the company in February scrapped an output target of 1 million barrels a day for 2015.

Profit excluding disposals and one-time items slipped 3 percent to $1.18 billion from $1.23 billion a year earlier, the company said today in a statement. That was close to the $1.12 billion mean estimate in a Bloomberg survey of 12 analysts. Net income fell to $1.21 billion from $1.22 billion.

Production Drop

BG’s production fell 3 percent to 659,000 barrels of oil equivalent a day. Deliveries of LNG dropped 6 percent to 3 million tons. At the same time, profit from the LNG business rose 3 percent.

In Egypt, only one LNG train is operating at Egyptian LNG and about half of the gas is being diverted from the West Delta Deep Marine concession into the domestic market, Finlayson said on a conference call today. The country owed BG about $1.2 billion at the end of the first quarter, $100 million less than at the end of 2012, he said.

In Algeria, BG is relinquishing its assets and leaving the country to focus on other opportunities, he said.

BG, based in Reading, England, expanded pumping off Brazil with the start of the Sapinhoa field in January and will benefit from the North Sea Buzzard oil field, restarted by Nexen Inc. in November. Total SA (FP) resumed Elgin operations in March.

BG fell the most on record on Oct. 31 when it said production wouldn’t grow this year. Since then, former CEO Frank Chapman has stepped down and managers have skipped bonuses.

Shell and BP Plc (BP/) are the U.K.’s biggest gas producers.

To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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