The share price of BG Group (BG.) plummeted following a third-quarter update, which revealed that output through 2013 would only be broadly in line with this year's. Production will be held in check due to deferrals linked to the Elgin/Franklyn shutdown, schedule changes at the Sapinhoa and Lula NE wells, delay in the Jasmine start-up, and scaling back of the US rig count.
The change in guidance dismayed analysts at BG's media presentation, but BG's chief executive, Sir Frank Chapman, maintained that the extent of the Sapinhoa/Lula schedule tie-ins, and problems at the Phase 7 compression project in Egypt, have only recently come to light. BG expects that production growth in the current year will be restricted to 3 per cent, partly due to the extended shutdown at the Elgin/Franklyn North Sea field, although Sir Frank stressed that BG's expansion plans beyond 2013 remain on track.
The production revelation took the gloss off a respectable third-quarter performance, with earnings and operating profits up by 22 per cent on the comparable period in 2011. It also may have diverted attention from news that BG had sold a $1.93bn (£1.2bn) stake in its Queensland Curtis LNG project to its joint-venture partner - China National Offshore Oil Corporation (CNOOC). The deal also includes a 20-year agreement to supply CNOOC with LNG, making BG the largest supplier to the Chinese market. CNOOC will obviously cover pro-rata legacy and forward development costs.