BG Group back in black despite oil price pressure

Shell Ready for More Cuts on Weak Oil

Oil and gas exploration firm BG Group has guided the business back into the black despite continued pressure from tumbling oil prices.

The company - which is in the final stages of a takeover by oil giant Shell - drove home a full-year pre-tax profit of three billion US dollars (£2 billion) in 2015, turning the business around from a 2.3 billion US dollar pre-tax loss (£1.6 billion) the year before.

It stepped up its financial performance after narrowing pre-tax losses in the fourth quarter to 1.2 billion US dollars (£802 million), compared to an 8.3 billion dollar pre-tax loss (£5.7 billion) over the same period in 2014.

BG's performance has been significantly impacted by the plunging oil price, which has fallen nearly 70% since its peak in the summer of 2014.

The group is on the verge of being taken over by blue-chip giant Shell in a £34 billion deal after shareholders at both companies gave the green light to the tie-up.

BG Group shares were up 2.5p to 1,060.5p in early trading.

Helge Lund, BG Group Chief Executive, said the company had delivered an "excellent operational performance" last year, which had both met and exceeded expectations.

He said that the company would deliver a "high performing business into the combination with Shell".

The company said exploration and production was up 20% in the fourth quarter to 757 thousand barrels of oil equivalent per day (kboed) compared to the same quarter in 2014. The boost was driven by growth in Australia, Brazil, and Norway.

Production in the UK was also up 33% to 109 kboed over the same period, with full-year production for the whole group beating expectations at 704 kboed.

The liquefied natural gas shipping and marketing business also doubled the amount it delivered to 88 cargoes compared to the fourth quarter in 2014.

Shell insisted earlier this week that its tie-up with BG Group heralded the start of a "new chapter" despite seeing annual profits crash by 80%.

Shell's full-year earnings tumbled to 3.8 billion US dollars (£2.6 billion) in 2015 from 19 billion US dollars (£13 billion) in 2014 after it was hammered by the recent collapse in oil prices.