BG Group Profit Drops as Production, LNG Shipments Decline

BG Group Plc (BG/)’s profit dropped 4 percent in the third quarter as the U.K.’s third-largest gas producer cut output and shipped less liquefied natural gas.

Earnings excluding disposals and one-time items slipped to $1.07 billion from $1.11 billion a year earlier, the Reading, England-based company said today in a statement. That beat the $943 million average estimate in a Bloomberg survey of nine analysts. Production fell 10 percent from a year earlier.

Chief Executive Officer Chris Finlayson has almost restored the value of the company since taking over from Frank Chapman in January. The shares fell by a record a year ago after the company reduced output targets. Finlayson in September flagged more project delays into next year.

The drop in earnings was “largely as a result of lower volumes in both upstream and LNG segments,” Finlayson said. “We will see production recover in the fourth quarter.”

Production dropped 10 percent to 53.4 million barrels of oil equivalent (about 580,000 barrels a day) in the quarter.

“Third quarter will be the low point of production for the year, with high levels of maintenance in the U.K. North Sea and lower gas production from Egypt,” Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co., said before the earnings announcement. He estimated BG’s LNG cargoes would drop to 38 in the quarter from 50 a year earlier because less fuel will be available from Nigeria and Egypt.

Africa Disruption

BG’s LNG operations in Africa were disrupted after Nigeria LNG Ltd. declared force majeure on shipments and supplies from Egypt were reduced by expanding domestic demand and political turmoil in the country.

BG, which plans to become the world’s largest seller of LNG in 2017, is looking at purchasing fields in Canada to produce the fuel for customers in Asia. This month, it sold its stake in TGGT, a U.S. pipeline joint-venture company, to Azure Midstream Energy LP for cash and shares.

In July, Finlayson appointed Simon Lowth of AstraZeneca Plc as chief financial officer, replacing Fabio Barbosa. Lowth will start next month.

BG, the biggest U.K.-listed gas producer after Royal Dutch Shell Plc and BP Plc, will host a webcast presentation at 12 p.m. London time.

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

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

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