BG down on E&P dive

by on July 26, 2012 7:26 am BST

Operating profit from its LNG business, however, is expected
to be at the upper end of a previously-forecasted range for the full year.

Net profit for the three months to the end of June hit $1.07 billion as compared with $1.12 billion a year earlier.

Total revenues, however, shot up 9% from $5.12 billion to $5.59 billion.

The exploration and production wing saw operating profit slump 11% from $1.42 billion to $1.26 billion. It was a different story for LNG, however, which went from $553 million to $594 million.

E&P production was, however, up to 61.3 million barrels of oil equivalent per day, a hike of 4%.

BG said it booked a $1.3 billion non-cash, post-tax impairment on US shale gas assets as the pricing of US Henry Hub slipped significantly.

Chief executive Frank Chapman said: “In keeping with our new US gas price premise, we have further reduced our rig count to six.”

Commenting on production, Chapman continued: “Although upstream production continued to grow this year, the long-term shut down at the Elgin/Franklin field, the deferral of the Jasmine field start-up to 2013, and the scaling back of drilling operations in the US, are expected in aggregate to reduce the year-end production rate by some 50 000 boed.

“Opportunities elsewhere in the portfolio are expected to offset some 40% of this impact.

“The net result is that we expect production at year-end to be some 720,000 boed. The full resumption of Elgin/Franklin production and the start-up of Jasmine are expected during 2013.”

Shares in BG were down around 2.5% in London at around 08:30 on Thursday.