It’s been a difficult 12 months for BG Group (LSE: BG) (NASDAQOTH: BRGYY.us). This time last year it warned of lower production levels and saw its shares fall by almost 20% over the following two days.
Although BG’s share price has slowly worked its way back up since last October, it’s still a little below the level it enjoyed previously.
This morning’s third-quarter results demonstrated that BG is still having numerous short-term issues with its production — some planned, others not so much. In the US, BG has reduced its rig count as it moves away from low-margin business. In the North Sea, maintenance shutdowns have had an impact. Finally, the ongoing political uncertainly in Egypt continues to hang over BG’s operations.
This all led to a 6% drop in revenue and a 10% fall in production for the third quarter. Profits for the period fell slightly less (4%) to $1.07bn.
BG’s longer-term prospects still look pretty decent, however. New production facilities in Brazil have seen excellent flow rates, and the construction of additional platforms appears to be on track. The reshaping of its portfolio seems to be progressing nicely, while testing is underway at its huge LNG operation in Australia.
For the whole of 2013, BG is expected to post a small drop in earnings per share, meaning the company currently trades on a forward P/E of around 16 times. By mid-morning the shares were trading 1.5% higher at 1,263p.
