BG Group's Earnings Drop
BG Group’s upstream business posted earnings of $4.1 billion at the EBITDA level last year, marking a 35 percent decrease from 2014.
The group’s revenue and other operating income dropped by 16 percent in 2015 to $16.4 billion and its net cash flow from operating activities plunged by 42 percent to $4.3 billion. BG’s upstream earnings at the EBIT level also dropped by 72 percent to $1 billion. During the year, BG reduced its net debt by 16 percent to $10 billion and the company’s capital expenditure was slashed by 32 percent to $6.3 billion. BG also revealed that it exceeded its $300 million cost savings target for the year.
BG’s production volumes increased by 16 percent in 2015 to 757,000 barrels of oil equivalent per day. This was driven by output growth in Australia, Brazil the UK and Norway, which offset production declines in Egypt and Trinidad and Tobago.
On January 28, BG Group shareholders voted to approve the acquisition of the company by Royal Dutch Shell plc. BG is now seeking the sanction of the transaction at a court hearing which is scheduled for February 11, 2016, following which, the acquisition will become effective. This is currently expected to occur on February 15.
BG Group’s Chief Executive, Helge Lund said:
“We are pleased to have delivered an excellent operational performance in 2015 with results in line with, or ahead of, our guidance for the year. The ramp up of both LNG trains at our QCLNG project in Australia and the ramp up in Brazil, including the start-up of our sixth FPSO, drove a strong E&P operational performance.
“The addition of new low cash cost volumes in Brazil and Australia and delivery of our operating and capital cost savings has helped to partly mitigate the impact of lower commodity prices.
“This strong operational performance is the result of the capability and commitment of our teams across the organisation and we will deliver a high-performing business into the combination with Shell.”
BG’s decrease in earnings follows similar fiscal declines by Statoil ASA and Shell.
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