Gas sale means BG will miss output target

 

Shares in BG Group tumbled today after the former exploration arm of British Gas warned that it would not hit its production target of more than one million barrels of oil equivalent a day by 2015.

To make matters worse, BG cautioned that production could actually fall this year as shutdowns and maintenance on key oil and gas fields, such as the Elgin/Franklin complex off Scotland, threaten to drag on. The group blamed its missing the 2015 milestone on the sale of a stake in an Australian liquefied natural gas project to China’s CNOOC in October, as well as this year’s slowdown.

The warnings sent BG’s shares down 23p, or 2.1%, to 1,081.0p.

BG said production came in at 658,000 barrels of oil equivalent a day last year and that its output in 2013 could be as low as 630,000.

However, chief executive Chris Finlayson was upbeat. “We continued to deliver excellent performance in exploration and appraisal with 18 successful wells out of 19 tests in the year, including a further four successes in Tanzania,” he said.

Pre-tax profits was $6.3bn (£4bn) for 2012, down from $7.2bn a year earlier, as it suffered a $1.4bn writedown. Revenues rose from $17.7bn to $18.9bn over the period. BG increased its full-year dividend by 10% to 26.14 cents a share.

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