BG Group slashes spending and takes $8.9 billion hit as the oil price drop takes its tollComments Off on BG Group slashes spending and takes $8.9 billion hit as the oil price drop takes its toll
The company, which employs around 5,500 people, said its investment budget for 2015 now stands at between $6 and $7 billion, almost a third less than last year’s figure.
It also took a non-cash impairment charge of $8.9 billion as a result of the dramatic slide in energy prices.
Oil prices have halved since reaching a peak of around $115 last summer. They touched as low as $46 a barrel last month and after a rally in the last two days, are hovering around $55 a barrel.
BG said full-year total operating profit fell 14% year-on-year in 2014 to $6.5 billion, while earnings slipped 8% to $4 billion.
Interim Executive Chairman Andrew Gould said: “The sharp deterioration in commodity prices in the second half of the year has led us to recognise significant asset impairment charges in the fourth quarter.”
He insisted the firm would be able to manage the downturn, saying that it had reached the end of a high capital expenditure cycle and will add further production from Australia and Brazil in 2015.
“We will proactively manage our costs, both capital and operating, to adapt to the new business circumstances,” he added.
BG said new boss, former Statoil chief Helge Lund, will start “shortly”.
Additional reporting by Reuters