BG Group’s revenue and operating income may have decreased in 2Q 2015, but the soon-to-be acquired company has also hit several milestones, including reaching record production levels in two countries.
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BG's QCLNG pipeline in Australia. Image from BG. |
BG’s revenue and other operating income dropped 28% to nearly US$4 billion, reflecting a significant fall in realized sales prices impacting both the upstream and LNG shipping and marketing segments, the company said. Low oil prices attributed to the fall, which was partly offset by higher volumes in exploration and production (E&P) levels, up 19%, and LNG delivered with volumes up 17%.
“We achieved a number of key milestones during the quarter while continuing to deliver on our cost and efficiency programs. Production reached record levels, more than doubling in both Australia and Brazil, and we now expect output for the year to be in the upper half of our forecast range,” Helge Lund, BG chief executive said.
The company’s EBITDA decreased 48% to $1.3 billion. In upstream, EBITDA fell 39% to $1.1 billion reflecting the lower revenues. Its LNG shipping and marketing segment EBITDA fell 66% to $263 million, driven by lower revenues and a higher proportion of relatively higher cost supply from spot cargoes.
Revenue and other operating income decreased 25% to $7.9 billion, reflecting a significant fall in realized sales prices impacting both the upstream and LNG shipping and marketing segments. The impact of lower prices was partly offset by weather-related gains in North America in the LNG shipping and marketing segment and higher volumes in both segments, with E&P production volumes up 10% and LNG delivered volumes up 34%, BG’s report said.
BG’s total earnings for this quarter increased 69% at $2.2 billion, from $1.3 billion in 2Q 2014. 2Q 2015’s earning included a post-tax gain of $1.7 billion in respect of disposals, re-measurements and impairments primarily associated with the gain on sale of the Australian QCLNG pipeline.
The company’s E&P increased 19% compared to 2Q 2014 at 703,000 boe/d, and increased 10% to 671,000 boe/d for 1H 2015, compared to last year. Growth in 2Q was driven by Australia and Brazil, where volumes in both more than doubled to an average of 80,000 boe/d for Australia and 143,000 boe/d for Brazil, BG said.
BG and Shell
The $70 billion Shell and BG merger received clearance from the Brazilian Conselho Administrativo de Defesa Econômica (CADE) at the end of July, another major hurdle in the deal. Clearance from CADE is one of five pre-conditions to be satisfied in relation to the combination. The transaction is expected to complete in early 2016.
BG and Shell received anti-trust regulatory clearances for the transaction were received from the United States Federal Trade Commission in June.
Read more:
Shell, BG deal clears Brazilian hurdle
Shell, BG get Brazil green light
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