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Production woe strikes BG

RESULTS: BG may have announced a tasty dividend hike, but the production problems that appeared in the third quarter look set to persist throughout much of 2013
February 6, 2013

Helped by a big dividend hike, BG Group's shares (BG.) ticked up 3.5 per cent on the day these full-year figures appeared - despite a sharp contraction in fourth-quarter earnings and confirmation of the group's ongoing production difficulties. In fact, output is only likely to grow strongly in the fourth quarter of 2013, partly driven by significant volumes from its Jasmine and Margarita fields.

IC TIP: Hold at 1143p

Sagging liquefied natural gas (LNG) prices, along with last year's boost from a $277m (£175m) tax credit, meant that fourth-quarter net profits fell 29 per cent on the same period a year earlier to a below consensus $1.03bn. Overall, though, full-year earnings grew 3 per cent year on year to $4.4bn. And despite hefty cost overruns, the group's Queensland Curtis LNG operations are still on track to boost revenues in 2014. There was also news that commercial production at the 120,000 barrels of oil per day Sapinhoá field in Brazil had commenced in January. However, recommencement of production at the Elgin/Franklin North Sea field remains a big uncertainty.

Prior to these figures JPMorgan Cazenove was forecasting adjusted EPS of 86.91p for 2013, along with a core net asset value (NAV) of 1,690p a share.

BG GROUP (BG.)
ORD PRICE:1,143pMARKET VALUE:£38.9bn
TOUCH:1,142-1,143p12-MONTH HIGH:1,554pLOW: 991p
DIVIDEND YIELD:1.5%PE RATIO:19
NET ASSET VALUE:971¢*NET DEBT:32%

Year to 31 DecTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (p)
200812.65.4793.411.2
200915.45.9698.512.4
201017.25.7310013.7
201117.77.2412114.8
201218.96.3797.516.7
% change+7-12-19+13

Ex-div: 17 Apr

Payment: 31 May

$1=£1.58