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BG Shares Surge as CEO Gives First Presentation to Investors (1)

Feb. 5 (Bloomberg) -- BG Group Plc, the U.K.’s third- largest oil and gas company, surged in London as the new Chief Executive Officer Chris Finlayson gave his first investor presentation.

BG reversed declines earlier in the day, posted after the company announced lower profits and scrapped a production forecast, to rise 3.4 percent to 1,142 pence in London, the biggest gain since June 27. The shares are down 20 percent in the last year.

“Very good performance from the new CEO,” said Jason Kenney, an Edinburgh-based analyst at Banco Santander SA, who listened to the presentation. “Pragmatic, credible and reinvigorating a sense of believe in credibility.”

BG won’t reach its 1 million-barrel-a-day production target in 2015 and expects to pump 630,000 to 660,000 barrels a day this year, the Reading, England-based company said in a statement today. Fourth-quarter profit after disposals and one- time items fell 29 percent to $1.03 billion.

The adjusted profit was almost in line with the $1.06 billion mean estimate in a Bloomberg survey of 11 analysts. Earnings were cut by a one-time $277 million tax credit in 2011 and a smaller contribution from the liquefied natural gas business, Finlayson said in the statement.

“Fewer LNG cargo deliveries combined with lower spot prices resulted in a 16 percent lower contribution from LNG shipping and marketing,” BG said.

Net income rose to $1.73 billion in the fourth quarter from $1.34 billion a year earlier. Full-year production rose 3 percent to 240.5 million barrels of oil equivalent (657,000 barrels a day).

Record Drop

BG fell by a record 14 percent in one day on Oct. 31, when it said output won’t grow in 2013 because of project delays in the North Sea, U.S., Brazil and Egypt, two months before Finlayson became the company’s first new CEO in more than a decade. The company is trying to defend its credit rating while managing record investment in fields from Brazil to Australia.

Shipments of liquefied natural gas sold under contract will drop to 11.3 million tons this year, 2.6 percent less than 2012, the company said today.

The 2013 LNG “supply forecast also assumes minimal spot cargoes, given current tight market conditions,” BG said. “The portfolio is substantially unhedged in 2013.”

BG expects to generate between $2.5 billion and $2.7 billion in operating profit at its LNG shipping and marketing unit this year. That will be more than $2.6 billion it earned last year.

Strong Volume

Extraction “is expected to be slightly down in the first half; lower in the third quarter, when the Group performs most of its maintenance program, and then grows strongly in the fourth quarter” on ramp up in Brazil, said BG. There will be “strong volume and cash flow growth in 2014 and 2015.”

Nexen Inc. restarted in November the North Sea Buzzard oil field, where BG has a stake, after it was shut for about a month. Total SA said Jan. 24 it expected to resume pumping at its Elgin and Franklin fields, in which BG is also a partner, within weeks following a natural gas leak in March.

“The timing for Elgin/Franklin resuming production remains a key uncertainty,” BG said today.

BG said in October its West Delta Deep Marine project in Egypt wasn’t meeting expectations and in November told clients in Chile about a possible LNG supply reduction this year partly because of less fuel available from the African nation.

“We have seven projects coming on stream over the year,” BG said. “We have sanctioned the next phase of development for the West Delta Deep field, subject to partner approval, which will come on stream in 2014.”

BG increased its asset sale target to $8.1 billion up from the $7.6 billion guidance in October. In the fourth quarter, it completed sale of BG Italia Power and signed agreements to dispose of its interests in Argentine gas distributor Metrogas SA and the Bolivia-to-Brazil pipeline.

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