BG Group joins the oil price slump casualties as profits plummet 65%Comments Off on BG Group joins the oil price slump casualties as profits plummet 65%
Capping a week which saw arch-rivals BP and Shell reporting dramatic slumps in their financial fortunes, BG revealed a $429 million (£275 million) second-quarter profit, down from $1.2 billion a year earlier.
This came despite a doubling of production in Brazil and Australia, taking group output to its highest-ever level.
The company, which used to be the exploration arm of British Gas, also revealed it had cut costs by 34% to $3.1 billion in the first half.
“Our costs are lower, our production is higher. This is more or less only driven by the lower oil price in the market,” said chief executive Helge Lund, adding he was “not disappointed” with the result given the tough operating environment.
The oil price has tumbled over the past year after the US shale boom created a glut in supply.
Hopes that the price was beginning to rebound have been dashed in recent weeks following an international agreement to relax restrictions on Iranian oil exports in return for curbing its nuclear programme.
The benchmark Brent crude oil index averaged $62 a barrel in the second quarter, down from $110 a year earlier. The price fell a further $0.55, or 1%, to $52.76 today.
BG’s results come a day after Shell revealed a 38% drop in second quarter profit to $3.25 billion and said it was cutting 6500 jobs this year.
On Tuesday, BP slumped to a $6.3 billion second-quarter loss after a further multi-billion charge relating to the Gulf of Mexico disaster, as well as falling prices.