BG Group PLC (BG.LN) Tuesday said it is shifting its focus back to exploration and liquefied natural gas, while reducing its spending on big developments and streamlining its portfolio in efforts to lure investors back.
BG Group PLC (BG.LN) Tuesday said it is shifting its focus back to
exploration and liquefied natural gas, while reducing its spending on big
developments and streamlining its portfolio in efforts to lure investors back.
In recent months, BG Group has fallen out of favor with investors and analysts
following a write-down on the value of its
U.S.
natural gas assets, big cost overruns at a key LNG project in
Australia
and
downgrades to its production forecasts.
They have encouraged the company to play to its strengths--a good track record
in finding oil and gas coupled with the smaller size and streamlined
decision-making process that makes the company more agile than its larger
rivals.
Ahead of a strategy presentation due later Tuesday, the company said its 2015
production would increase to 775,000 to 825,000 barrels of oil equivalent a day
and confirmed its production target of 630,000 to 660,000 barrels of oil
equivalent for this year.
Spending on exploration is to increase to $1.8 billion a year over the next
three years, up from $1.2 billion last year. Capital expenditure for the
current investment program is to fall to $8 billion to $10 billion a year from
2015, compared with around $12 billion a year currently.
BG said its immediate priority was to deliver its 2013 targets, including big
growth projects in
Australia
and
Brazil
,
adding that the company expects to see significant oil and gas production
volume and cash flow growth in 2014 and 2015.
"BG Group is a great company with a strong pipeline of projects and
deep-set skills and expertise that differentiate us, particularly in
exploration and LNG," BG Chief Executive Chris Finlayson said in a
statement. "We are big enough to explore the best frontier acreage, but
small enough to be agile--valuable attributes, which I intend to keep."
BG, the U.K.'s third-largest oil and gas company by market value, is entering
one of the most challenging periods in its history as it attempts to deliver
major oil and gas projects in Brazil and Australia, while also making the
transition to a new management team.
BG Group had been a favorite of the oil and gas sector, promising production
growth of between 6% and 8% a year out to 2020. Its difficult run recently
highlights the risks that mid-sized oil and gas companies face when they move
to the development phase of giant and technologically complex projects.
Unlike super majors such as BP PLC (BP.LN), Royal Dutch Shell PLC (RDSB.LN) and
Exxon Mobil Corp. (XOM), smaller companies have less ability to cope with cost
overruns, delays and setbacks on big projects.
BG said it would manage its portfolio more actively, selling assets at
different stages in their lifecycle and bringing in partners to speed delivery
of projects. The company didn't say which assets could be sold.
Previously, Mr. Finlayson has said that no project is sacrosanct and every
asset will have to earn its position in the portfolio.
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