* To miss goal of producing 1 million boed by 2015
* Q4 earnings down 29 percent
* Shares down 0.6 percent
By Sarah Young
LONDON, Feb 5 BG Group has abandoned
ambitions to become a 1 million barrels per day oil and gas
producer by 2015 after taking stock of setbacks that have
hammered its share price in the past three months.
BG, struggling to bring huge new developments in Australia
and Brazil onstream, shocked the market on Oct. 31 when it
forecast flat output in 2013 because of project delays and a
scaling back in U.S. shale gas activities as prices there fell.
Chief executive Chris Finlayson, announcing the first set of
results under his stewardship, said on Tuesday the latest
downgrade to guidance was not a sign of systemic issues at BG.
"I am here to get the best possible value for the
shareholders and that, at this time comes, from ... getting our
short-term production right and developing our long-term
projects," he said.
BG posted a 29 percent drop in fourth-quarter earnings to
$1.03 billion, meeting expectations.
Its reputation as a growth stock in a world where big oil
companies have been struggling to raise production has looked
less solid since the October downgrade.
It said it would miss its 2015 target because its share of
production from the Queensland Curtis LNG (QCLNG) project in
Australia will be less than previously estimated after a deal to
sell a stake to Chinese group CNOOC in October.
Lower production in 2013 because of issues at fields in the
North Sea and Egypt also contributed to the 2015 target being
pushed out, BG said.
It forecast 2013 production of 630,000-660,000 boed, raising
the possibility it could be lower than last year's 658,000 boed.
The company forecast in October output would be flat this year.
NO SACRED COWS
BG shares, down almost a fifth since October, were 0.6
percent lower on the day at 1,097.5 pence at 1320 GMT.
Finlayson said he was reviewing long-term strategy and would
present the findings in May, a chance for the man who joined
from Shell in 2010 and replaced long-standing CEO Frank
Chapman at the beginning of this year to make his mark at BG.
"I think there is an element of 'kitchen-sinking' with the
new chief executive in play. A more conservative management
style tempering all of the estimates as he starts out,"
Santander analyst Jason Kenney said.
The downgraded forecast highlights the scale of the task
facing the new CEO. The sale of the QCLNG stake in October
raised funds to help pay for BG's development projects - QCLNG
itself, for example, will cost $20.4 billion in total - and BG
said planned capital expenditure in 2013 was $12 billion.
Analysts have said divestments in Brazil, seen as BG's crown
jewels, and Australia were possible to help fund developments,
something which Finlayson did not rule out.
"There will no sacred cows. Every asset will have to earn
its position in the portfolio," he said.
BG posted a 29 percent drop in fourth-quarter earnings,
which it said were hit by the loss of a one-off $277 million tax
credit from which it benefited in the 2011 period.
Earnings of $1.03 billion in the last three months of the
year, compared with a company-supplied consensus forecast of
$994 million. Bernstein analyst Oswald Clint said reduced taxes
in the fourth quarter was the reason for the beat.
Excluding the impact of the 2011 tax credit, earnings were
13 percent lower, BG said, adding the earnings fall was because
of lower volumes which offset higher realised prices and a
weaker performance in its LNG business.
Earnings in the LNG business, which sells the transportable
form of gas primarily to countries in Asia, were 16 percent
lower because of fewer LNG cargoes being delivered combined with
lower prices in the spot market.
Investec analyst Stuart Joyner said he expected to cut his
forecasts on the back of the production downgrade, adding he saw
risks to a pick-up in LNG earnings for this year.
BG's partner in Brazil, state-run Petrobras,
posted a 53 percent rise in fourth-quarter net profit on Monday,
helped by unexpected financial gains and, like BG, guided that
production will be flat in 2013.
BP also published fourth-quarter results on Tuesday, beating
expectations thanks to a record performance from refining.