Despite a one-third drop in earnings, BG (BG.) decided to keep shareholders onside with another generous hike in the full-year dividend. That's probably just as well given that mean production guidance for 2014 is down by 4 per cent on last year's average of 0.63m barrels of oil equivalent per day (boepd).
Last week, BG declared 'force majeure' in respect of its LNG agreements in Egypt, but the group's troubles were compounded by the pricing effects of a shale-gas glut in the US. The end result was $3.7bn (£2.3bn) in impairments before tax, and an operating loss of $1.6bn for the fourth quarter, against a corresponding profit of $1.5bn in 2012.
With no sign that these problems are abating, and increased royalty and commissioning costs on assets in Brazil, Bolivia and Australia, the squeeze on margins looks set to continue. Midrange unit-cost guidance for 2014 is up by 30 per cent on last year's average to $15.9 a barrel, while mean depreciation and depletion charges are predicted at $12.6 a barrel ($11.3 in 2013). Net cash flow fell 2 per cent in 2013 to $7.8bn, against a capital expenditure bill of $12.2bn. However, management said that the group's commitments had peaked, and it should return to positive free cash flow in 2015.
| BG GROUP (BG.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,023p | MARKET VALUE: | £35bn | |
| TOUCH: | 1,023-1,024p | 12-MONTH HIGH: | 1,356p | LOW: 1,006p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 937¢ | NET DEBT: | 35% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 15.4 | 5.96 | 98.5 | 12.4 |
| 2010 | 17.2 | 5.73 | 100 | 13.7 |
| 2011 | 17.7 | 7.24 | 121 | 14.8 |
| 2012 (restated) | 18.9 | 6.35 | 97.0 | 16.7 |
| 2013 | 19.2 | 3.89 | 64.8 | 18.0 |
| % change | +2 | -39 | -33 | +8 |
Ex-div: 23 Apr Payment: 30 May £1=$1.63 | ||||
