BG Group drops on North Sea field concerns despite strong earnings growth

BG Group is currently down 2.2 percent at 1419p despite a strong growth in underlying earnings on news that production from the North Sea Jasmine field (which is 30% owned by BG) is delayed until 2013 from the end of 2012.  

Jasmine is operated and and 36.5% owned by Conoco Phillips. This delay is on top of the issues that BG is having at the Total operated Elgin Platform also in the North Sea relating to a gas leak. BG owns 14% of the field. A cost escalation in a proposed Australian LNG (liquefied natural gas) facility for the second time from a revised figure of $17 billion to $20 billion also caused frustration.

Group revenues rose from $4.8 billion to $5.8 billion and total operating profit was up 21% to $2.37 billion from $1.97 billion a year earlier. Net earnings rose by 55% to $1.27 billion from a restated $819 million the year before.  Earnings per share increased to 37.3 cents from 24.2 cents in the first quarter of 2011, a 54% increase.

Revenues at BG’s exploration and production division increased 13 per cent to $2.8bn and operating profits rose 15 per cent to $1.45bn

Operating profits at the LNG division, which supplies gas across the world, rose 42 per cent to $812m, helping drive up pre-tax profit for the three months to the end of March from $1.45bn to $2.2bn.

The company also agreed to sell a majority stake in Comgás, Brazil’s largest gas distribution company, for about $1.8bn to Cosan, Royal Dutch Shell’s Brazilian partner.

The deal, which is subject to partner consent and expected to be closed by the end of the year, is part of an asset sale programme aimed at ensuring BG can develop assets such as a pre-salt fields offshore Brazil.

Operating profits at the LNG division, which supplies gas across the world, rose 42 per cent to $812m, helping drive up pre-tax profit for the three months to the end of March from $1.45bn to $2.2bn.

Contrarian Investor UK