UNREST in Egypt caused shares in BG Group to plunge almost 14 per cent during trading yesterday, after the oil and gas company declared force majeure notices under its liquefied natural gas agreements in the troubled country.
The FTSE 100-quoted firm slashed its production forecasts for this year and next year, missing market expectations by around 10 per cent.
“Despite the good progress we have made in 2013 we face short term issues which are reflected in our revised 2014 guidance,” said chief executive Chris Finlayson. “This is very disappointing.”
In an unexpected announcement, BG warned that 2013 earnings would be down around 33 per cent at $2.2bn (£1.3bn) this year. The company attributed this to the difficult environment in Egypt and lower forward gas prices in the US. BG also said that investment in projects in Brazil and Australia would lead to higher operating costs in 2014, while a project off the British coast would ramp up more slowly than expected and its production entitlement in Trinidad and Tobago would decline. This is BG Group’s fourth production downgrade in 18 months.
Egypt, which makes up 18 per cent of BG’s production, has been in a state of flux since president Hosni Mubarak was ousted in a coup in 2011.
BG said that the Egyptian government had not honoured their agreement and had diverted more gas to the domestic market than expected, preventing BG from fulfilling its export obligations.
Shares closed 13.78 per cent down.