BG Says Earnings to Rise Faster Than Production on LNG Sales
BG Group Plc (BG/), the U.K.’s third-largest natural-gas producer, said earnings growth will outpace production as it expands trading in liquefied natural gas.
The company expects to market 17 million to 20 million tons a year of LNG from 2015 with new supplies from Australia and the U.S. It plans to trade 10.5 million to 12 million tons from 2013 to 2015, the Reading, U.K.-based company said today in a statement.
“In a period where LNG demand is expected to grow twice as fast as overall gas demand, with underlying supply needing to grow by nearly 9 percent to meet total demand, BG Group is well positioned to capitalise on this growing market,” Chief Executive Officer Chris Finlayson said in the statement.
Finlayson presented his first strategic development plan for the company today after succeeding Frank Chapman in January. He’s tasked with reviving output at the oil and gas producer after project delays from Egypt to the U.S. led BG to scrap its 2015 production outlook in February.
BG now expects to pump 775,000 barrels to 825,000 barrels of oil equivalent a day in 2015, it said today. It plans to invest $12 billion in projects next year with capital spending declining to $8 billion to $10 billion in 2015 and 2016.
The development of new ventures in Australia and Brazil has helped BG shares outpace gains in the Stoxx 600 Oil & Gas Index this year. The company, which plunged the most on record at the end of October after warning of slower output growth, plans to invest about $12 billion in projects in 2013.
“With 2013 the peak of its capex cycle and production expected to start a multiyear ramp from the final quarter of this year, we see the second and third quarters of 2013 as the turning point for business momentum,” Lucas Herrmann, a London-based analyst at Deutsche Bank AG, wrote in a May 8 report, upgrading his recommendation on the stock to buy.
BG is a partner in Brazil’s Lula field, the biggest oil in the nation’s history. The company, which has boosted output from the country with the start of the Sapinhoa field this year, has estimated its Brazilian deposits hold about 6 billion barrels of oil equivalent, with potential for as much as 8 billion barrels.
In Australia, BG plans to ship its first liquefied natural gas from the $20 billion Curtis Island LNG project in Queensland next year. The company “achieved a critical project milestone” when it connected the LNG plant to gas fields with the nation’s longest large-diameter twin pipelines, Finlayson said May 2.
BG, the largest U.K.-listed gas producer after Royal Dutch Shell Plc and BP Plc, said in February it expects to pump 630,000 barrels to 660,000 barrels of oil equivalent a day this year.
BG will host a webcast presentation at 12 p.m. London time today.
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