Chris Finlayson’s shock departure as CEO from BG Group in advance of the U.K. company’s first quarter results, which indicated progress on developments including deepwater Brazil, has caught many by surprise.
His departure was announced “for personal reasons” and BG’s chairman and now acting CEO Andrew Gould commented that BG needed to accelerate creation and delivery of longer term value, adding: “The Board felt that it was in the best interests of the group to accept Chris’ resignation and seek fresh leadership to deliver both of these priorities.”
However London-based investment analyst Investec had its own view, “In the event, the results were absolutely fine, making his exit all the more mystifying.”
BG reported first quarter results with total operating profit down 6% to US $2.009 billion from $2.147 billion a year ago, while earnings for the first quarter were $1.152 billion, down 3% from $1.183 billion last year.
Commenting on BG’s results, Investec said, “BG suggests Mr .Finlayson lacked deal-making skills, yet he said last May that disposals would not be material until after 2015. The stock has rallied on hopes of either a corporate takeover (unlikely in our view) or accelerated asset disposals. The latter may also prove difficult though given the current glut of sellers.”
Investec noted that BG is today “oilier”, as this now accounts for 36% of its production total as projects in Brazil came onstream in the first quarter.
BG said its production from Brazil increased via three new FPSOs in the Santos Basin to 220,000 boe/d by the end of the first quarter. This follows the startup of a second well from FPSO 2 on the Sapinhoa South Field—the first field to use a buoyancy supported riser (BSR) system—which is producing 35,000 bbl/d. A third well is now adding another 30,000 bbl/d. Plateau production from FPSO 2 is expected to be reached mid-year via just four wells.
At the Lula North East Field, the first BSR has been connected to FPSO 3; connection of new production wells is “imminent,” BG reported, and a second BSR is in position and being tethered. Plateau production from this FPSO is due by the end of the year.
Another unit, FPSO 4, is due for installation in the third quarter at the Sapinhoa North Field, and FPSO 5 at Iracema South by year-end. FPSO 6, destined for Iracema North and which is currently 60% complete, is due onstream in fourth-quarter 2015.
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