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BG Group plc, Dragon Oil plc And Falkland Oil and Gas Limited Are Being Crushed By Low Oil Prices

If plummeting oil prices have been bad news for the big operators, they’re positively devastating for some of our smaller explorers. But for some, we could be in bargain territory.

Brent crude has now fallen to a five-year low of just a smidgen over $66 per barrel, and that really hasn’t helped the share price of BG Group (LSE: BG) which has lost 28% over the past 12 months to 888p. At Q3 time the company recorded a 29% crash in earnings per share (EPS) in the quarter itself, although over nine months the fall was only 4%.

Upstream operating profit fell 36% to $746m in Q3, due to a combination of those falling prices and higher costs.

A smaller explorer

The share price fall for Dragon Oil (LSE: DGO) over the past year hasn’t been quite so drastic, with an 11% slip to 490p. But unlike some smaller explorers, Dragon is a significant producer as well, and is comfortably in profit. In fact, with its exploration success in 2014, the company reached average production levels of 80,510 barrels of oil per day (bopd) in its third quarter this year with September production as high as 82,540 bopd.

Dragon has been trying to take advantage of a depressed market by looking for acquisitions, although its recent interest in Petroceltic didn’t get anywhere.

Dragon Oil shares are on a forward P/E of only a little over 5 now, and there are well-covered dividends of around 5% forecast for this year and next — it could turn out nice when oil prices recover.

Falklands woes

If we want to see a real struggler, we need look no further than Falklands Oil & Gas (LSE: FOGL). Its shares are actually down only 9% in the past 12 months, but from a five-year peak in June 2010 the price has crunched down 90% to today’s 22.5p level — and that takes in a recent fall of 27% since 3 September.

Hopes of rich paydays from the Falklands oil fields have been dashed in recent years, as exploration results from a number of firms prospecting in the area have been mixed at best — and Falklands Oil & Gas in some ways doesn’t look any closer to profitability than it did five years ago.

Still, the company did have cash reserves of $109m as of 30 June, and is fully funded for its 2015 drilling programme scheduled to start in the first quarter.

Buy for recovery?

There’s clearly still plenty of hope for Falklands operators, but it’s looking riskier and riskier as time goes on. But established producers like Dragon and FTSE 100 giants like BG could be attractive propositions right now.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.