Bloomberg: BG Group Plc raised it’s output forecast in a boost for Royal Dutch Shell Plc, which agreed to buy the U.K.’s third-biggest oil and gas company in a deal scheduled to be completed early next year.
The company increased its oil and natural gas production target to 680,000 to 700,000 barrels a day this year from an earlier estimate of as much as 690,000. Third-quarter adjusted net income fell 63 percent to $280 million from $759 million a year earlier, Reading, England-based BG said Friday in a statement. That beat the $200.5 million average estimate of 11 analysts surveyed by Bloomberg as output rose 26 percent.
“BG is at the very beginning of big ramp-ups in production, especially from Australia and Brazil,” said Jason Gammel, a London-based analyst with Jefferies International Ltd. “Shell decided to buy BG at just the right time of it’s operations cycle.”
The slump in crude has hit energy producers hard, driving Shell to its biggest loss in more than a decade, curbing profit at BP Plc and forcing companies to prepare for a prolonged downturn by cutting spending and delaying projects. BG is one of the few that’s increasing its output guidance for the year as projects in Australia and Brazil start up.
BG took a non-cash charge of $344 million because of the impact of currency movements on deferred and current tax balances in Brazil and Australia, resulting in net loss of $101 million, according to the statement.
“We are on track to deliver our promised operating and capital cost savings for 2015 and are adding new low cash-cost volumes through Australia and Brazil,” Chief Executive Officer Helge Lund said in the statement. “These actions will help mitigate the impact of lower commodity prices on our financial results.”
BG shares fell 0.1 percent to 1,029 pence at 11:18 a.m. in London, trimming this year’s gain to 19 percent. The company’s shares are still 9.9 percent below Shell’s offer price.
Brent crude in London trading averaged $51.30 a barrel in the third quarter, 50 percent lower than a year earlier and the least since 2009.
Production in Australia almost trebled to 98,000 barrels of oil equivalent a day in the quarter and rose 95 percent to 158,000 in Brazil, the company said. It was partly offset by a 22 percent drop in Egypt and 11 percent in the U.S.
The company delivered 75 liquefied natural gas cargoes, or 4.8 million metric tons, in the third quarter, 31 cargoes more than the same period a year earlier.
Shell reported a third-quarter net loss of $7.42 billion, compared with a profit of $4.46 billion a year earlier. Adjusted for one-time items and inventory changes, profit dropped 70 percent to $1.77 billion, The Hague-based Shell said Thursday.
