BG Group Earnings Hurt by Low Oil Prices

By Selina Williams

LONDON--The U.K.'s third-largest oil and gas company, BG Group PLC (BG.LN), the target of a $70 billion offer from Royal Dutch Shell PLC (RDSA.LN), on Friday became the latest company to report a sharp drop in profit due to the collapse in oil prices.

Underlying earnings, or profit excluding exceptional items such as disposals and impairments, declined 65% in the second quarter to $429 million from $1.21 billion a year earlier.

While BG's production increased 19% to 703,000 barrels of oil equivalent a day, the greater proportion of oil in the mix at a time of lower oil prices undermined earnings, along with the related softness in the market for liquefied natural gas.

BG's production in the second quarter was up as production more than doubled in Brazil and at the giant Queensland Curtis liquefied natural gas project in Australia.

BG moved its full-year production guidance to the upper half of its range of 650,000-690,000 barrels of oil equivalent a day.

Revenue was down 28% at $3.95 billion compared with $5.51 billion in the same period a year ago due to the fall in oil prices.

Earnings per share decreased 65% to 12.6 cents a share.

-Write to Selina Williams at [e-mail]

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