By SELINA WILLIAMS
LONDON -- BG Group said it is shifting its focus back to
exploration and LNG, while reducing its spending on big
developments and streamlining its portfolio in efforts to
lure investors back.
In recent months, BG Group has fallen out of favor with
investors and analysts following a write down on the value of
its US natural gas assets, big cost overruns at a key LNG
project in Australia and downgrades to its production
They have encouraged the company to play to its strengths, a
good track record in finding oil and gas coupled with the
smaller size and streamlined decision making process that
makes the company more agile than its larger rivals.
Ahead of a strategy presentation, the company said its 2015
production would increase to 775,000 to 825,000 boepd and
confirmed its production target of 630,000 to 660,000 boe for
Spending on exploration is to increase to $1.8 billion a year
over the next three years, up from $1.2 billion last year.
Capital expenditure for the current investment program is to
fall to $8 billion to $10 billion a year from 2015, compared
with around $12 billion a year currently.
BG said its immediate priority was to deliver its 2013
targets, including big growth project
s in Australia and Brazil,
adding that the company expects to see significant oil and
gas production volume and cash flow growth in 2014 and 2015.
"BG Group is a great company with a strong pipeline of project
s and deep set skills and
expertise that differentiate us, particularly in exploration
and LNG," BG CEO Chris Finlayson said in a statement. "We are
big enough to explore the best frontier acreage, but small
enough to be agile, valuable attributes, which I intend to
BG is entering one of the most challenging periods in its
history as it attempts to deliver major oil and gas projects
in Brazil and Australia, while also making the transition to
a new management team.
BG Group had been a favorite of the oil and gas sector,
promising production growth of between 6% and 8% a year out
to 2020. Its difficult run recently highlights the
risks that midsized oil and gas companies face when they move
to the development phase of giant and technologically complex
Unlike super majors such as BP, Shell and ExxonMobil, smaller
companies have less ability to cope with cost overruns,
delays and setbacks on big projects.
BG said it would manage its portfolio more actively, selling
assets at different stages in their lifecycle and bringing in
partners to speed delivery of projects. The company didn't
say which assets could be sold.
Previously, Mr. Finlayson has said that no project
is sacrosanct and every
asset will have to earn its position in the portfolio.
Dow Jones Newswires