LONDON, Oct 28 (Reuters) – Britain’s third-biggest energy company BG Group reported a worse-than-expected 26 percent fall in third-quarter operating profit on the back of a continued decline of production in Egypt and a steep drop in oil prices.
Oil companies have seen billions wiped off their stock market values in recent weeks as crude prices dropped 25 percent over the past four months due to slowing global demand, particularly in China, and ample supplies.
BG’s total operating profit came to $1.3 billion in the third quarter, undershooting a company-provided consensus of $1.4 billion, as its Egyptian output halved compared with the previous year to 55,000 barrels of oil equivalent per day (boepd) due to its depleting reservoir.
In the third quarter BG sold its oil at an average of $104 per barrel, down from $112 the previous year, while its average UK gas price fell 17 percent to 37 pence per therm.
The oil and gas producer has however started to reap benefits of costly projects in Brazil and Australia.
BG’s third-quarter revenue rose 4 percent to $4.6 billion as oil output from Brazil rose to more than 100,000 barrels of oil equivalent per day.
It is also on track to deliver its first liquefied natural gas (LNG) cargo from the Queensland Curtis LNG project by the end of the year.
The positive outlook from these projects meant the group was able to reiterate its full-year production guidance of the lower end of the 590,000-630,000 boed.
“Our developments in Brazil and Australia are progressing well and, in the case of Brazil, beginning to have a material impact on our business,” said BG Group’s interim Executive Chairman, Andrew Gould.
The energy firm appointed former Statoil chief executive Helge Lund this month to head up the company from March next year.
Major oil producers are under intense scrutiny as they are expected to present cost-cutting strategies to shield earnings from a steep drop in oil prices.
BG is in the middle of a radical asset review to weed out projects that have weighed on its performance as its shares have dived 30 percent since the start of the year.
On Tuesday BG hinted at cutting its Canadian Prince Rupert LNG project as it said it was “taking a prudent approach to development in Canada by moderating future expenditure”. (Editing by Kate Holton)
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