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BG Group ends independence on high note

British gas player to merge with Royal Dutch Shell in February.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Feb. 5, 2016 at 7:24 AM
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LONDON, Feb. 5 (UPI) -- In its last report as an independent company, BG Group said it was one of the few companies in the struggling sector to report a full-year profit.

The company issued its last report ahead of a $7 billion merger with Royal Dutch Shell, recording a pre-tax profit of $2.97 billion, against a loss of $2.3 billion in 2014.

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Chief Executive Helge Lund, who moves aside after the merger is completed, said the company was shielded against slumping crude oil prices because of lower operating costs and the addition of low-cost production from Brazil and Australia.

"This strong operational performance is the result of the capability and commitment of our teams across the organization and we will deliver a high-performing business into the combination with Shell," he said in a statement.

On a quarterly basis, BG reported a loss of $1.2 billion against $8.3 billion in the fourth quarter of 2014. Spending in its final quarter as a standalone company was 28 percent lower year-on-year at $1.7 million, with nearly all of that targeting exploration and production.

Last week, 99.53 percent of the shareholders in the company voted in favor of the combination with Royal Dutch Shell. More than 80 percent of the shareholders in Shell voted in favor of the deal.

Shell said combining with BG Group would mark the start of a new chapter for the company. Costs will move lower by about $4 billion for 2016, but also result in widespread redundancies. Shell CEO Ben Van Buerden confirmed Thursday the combined unit would see an estimated 10,000 layoffs from staff and direct contractor positions.

The Dutch supermajor said its full-year 2015 earnings declined 80 percent to $3.84 billion

Shell through the deal takes on a larger footprint in the liquefied natural gas sector, where BG has built a strong portfolio in Australia. The combination with BG Group should be finalized Feb. 15.

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Topics: Helge Lund
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