BG Group Declares Force Majeure in EgyptSource: www.gulfoilandgas.com 1/27/2014, Location: Egypt
BG Group has issued Force Majeure notices under its LNG agreements in Egypt reflecting the ongoing diversions of gas volumes to the domestic market in excess of the existing pooling arrangements. The Group will publish its preliminary 2013 fourth quarter and full year results on 4 February 2014.
Currently the Group expects to report:
- 2013 production volumes of around 633 thousand barrels of oil equivalent per day (kboed), in line with guidance
- LNG Shipping & Marketing total operating profit of approximately $2.6 billion, in line with guidance
- Business performance earnings flat at approximately $4.4 billion (around 130 cents per share)
- Non-cash, post-tax impairments of approximately $2.4 billion associated with Egypt (around $1.3 billion) and the US (around $1.1 billion)
- Total results earnings (post impairments) of approximately $2.2 billion (around 65 cents per share)
The Group also today updates on its outlook for 2014:
- 2014 production volumes expected in the range of 590 – 630 kboed
- 2014 E&P unit operating costs expected to be $15.50 – 16.25 per boe
- 2014 E&P unit depreciation costs expected to be $12.25 – 13.00 per boe
- 2014 LNG Shipping & Marketing total operating profit expected in the range of $2.1 - 2.4 billion
For 2015, BG Group expects production volumes to be in the range of 710 – 750 kboed excluding portfolio changes, and continues to expect to be free cash flow positive in 2015 at the Group’s reference conditions.
Commenting on the update Chris Finlayson, BG Group Chief Executive said: 'Despite the good progress we have made in 2013 we face short term issues which are reflected in our revised 2014 guidance. This is very disappointing. We have elected to issue Force Majeure notices in Egypt reflecting the ongoing diversions of gas volumes to the domestic market. Year on year decline in Egypt and the US are the drivers of volume decline from 2013 to 2014, with the rest of the base portfolio broadly flat overall. The contribution from our key growth projects in Brazil and Australia, which remain on budget and schedule, is increasing, but the growing asset base and higher royalties, combined with the decline in production, are leading to higher unit operating costs in 2014. However, our long-term strategy remains unchanged, our capital expenditure level will decline and we continue to expect to be free cash flow positive in 2015.'
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