Beyond Growth

27 January 2014 By Fiona Maharg-Bravo

The UK gas company’s shares fell 15 pct after it predicted lower production this year and the next due to problems in Egypt and America. BG has traditionally enjoyed a premium valuation for its growth. But it clearly faces the same output and cost pressures as its peers.

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BG shares fell 15 percent after the UK natural gas company issued a profit warning for 2013, and predicted lower production volumes this year and the next. It blamed turmoil in Egypt and lower gas prices in the United States, saying earnings would fall by a third in 2013 to $2.2 billion. BG said the Egyptian government was diverting a larger share than agreed to the domestic market, which prevented BG from meeting its liquid natural gas export obligations.

BG predicted it would produce between 590,000 and 630,000 of barrels of oil equivalent per day (boed) this year, well below analyst forecasts and below last year’s production of 633,000 barrels. The group also cut its 2015 guidance to between 710,000 and 750,000 boed, from a previous target of 775,000-825,000.

Over the past 18 months, it has cut its output forecasts three times, including abandoning a goal to produce 1 million boed by 2015.

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