BG Group Plc (BG/) Chief Executive Officer Chris Finlayson resigned after little more than a year in the job as the third-largest U.K. oil and gas producer ditched an output forecast that’s just three months old.
Finlayson, 58, will be replaced immediately by Chairman Andrew Gould until a permanent successor is found, BG said today in a statement. The company said Finlayson resigned for personal reasons.
BG said today oil and gas output this year would be at the lower end of an estimated range on falling production in Egypt. The company’s reviewing operational, investment and portfolio management plans and won’t offer 2015 guidance until February, it said, abandoning a forecast Finlayson made in January.
“The board felt that it was in the best interests of the group to accept Chris’s resignation and seek fresh leadership,” said Gould, who becomes interim executive chairman. BG needs to accelerate returns to shareholders, he said.
BG closed little changed at 1,146 pence in London. It earlier fell as much as 6.8 percent in the biggest intraday decline since the outgoing chief unveiled project delays on Jan. 27.
Finlayson, a former Royal Dutch Shell Plc executive who joined BG in 2010 before taking over from long-term CEO Frank Chapman at the start of last year, was forced to issue a profit warning in January because of delays at projects in Australia, Brazil and the North Sea, as well as political turmoil in Egypt. The shares dropped 14 percent that day.
“Only two and a half months ago he was still confirmed in the job, obviously frustrated by Egypt, and seemed to be the savior of BG a year ago,” said Jason Kenney, an analyst at Banco Santander SA in Edinburgh. “The surprise resignation could be seen as a reaction or a frustration that a growth period for BG is struggling to get started.”
The Reading, England-based company will report its first-quarter earnings on May 1.
Egyptian oil and gas production dropped 35 percent in the first quarter to 66,000 barrels of oil equivalent a day from the prior three months because of deteriorating reservoir performance and the diversion of fuel to the domestic market, BG said. That means total output for 2014 will be at the lower end of its forecast of 590,000 to 630,000 barrels a day.
In January, BG had said 2015 production would be 710,000 to 750,000 barrels a day as new fields started output.
“Egypt has further deteriorated,” said Bertrand Hodee, an analyst at Raymond James Financials Inc. in Paris, cutting his output forecast 4.6 percent to 587,000 barrels a day this year.
Finlayson was charged with balancing record capital spending with lower-than-expected oil and gas production after taking over from Chapman. BG shares rose 28 percent last year under his leadership before plummeting this year following the January profit warning and today’s resignation.
He won the top job at BG in competition with former Chief Operating Officer Martin Houston, who led the company’s liquefied natural gas business. Houston decided to retire in November ending his more than 30-year career with the company.
BG, formed in 1997 when former state gas monopoly British Gas Plc split its exploration and production arm from its retail business, is the biggest U.K.-listed gas producer after Royal Dutch Shell Plc (RDSA) and BP Plc. Chapman was CEO from 2000 to 2012.
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