SA News • Wed, Oct. 29
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- BG Group is one of the leading companies in the global LNG industry, which is expected to enjoy good fundamentals over the next decade.
- BG Group has a flexible LNG business model, making it a competitive advantage over its competitors.
- Despite its growth prospects, the company has had several setbacks leading to five profit warnings in a few months.
- Nevertheless, for long-term investors, BG appears to offer value, as current expectations are relatively low.
Thu, Dec. 11, 10:45 AM
- Investors in giant gas export terminals from Australia to Canada are facing the prospect of losing nearly $250B plowed into the projects during the past seven years, as weaker oil prices threaten to wipe out returns.
- Oil-linked pricing means LNG producers stand to get much less revenue than expected on delivery of their first shipments, and oil prices have fallen so low that U.S. shale gas producers with plans to export the usually cheaper fuel to Asia suddenly find themselves facing a much tougher competitive environment.
- LNG prices in Asia have sunk below $10/MMBtu, while most Australian LNG projects would need to sell the commodity for at least $12-$14 to break even; for example, the breakeven point for the $54B Gorgon project under construction by Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (RDS.A, RDS.B), is ~$17.7/MMBtu.
- Other relevant tickers: LNG, TOT, COP, CEO, FCG, GASL, OTCPK:BRGXF, OTCQX:BRGYY, OTCPK:STOSF
Tue, Dec. 9, 4:56 PM
- BG Group (OTCPK:BRGXF, OTCQX:BRGYY) agrees to sell a pipeline network at its Australian liquefied natural gas project to APA Group for ~$5B.
- APA will take over QCLNG Pipeline Pty, which owns the 543-km pipeline network that links gas fields to BG’s Gladstone LNG export facility on Australia’s east coast.
- BG expects the deal to yield ~$2.7B in profit, to be partially offset by a $2B impairment from its remaining QCLNG assets; the sale is conditional on the start of LNG deliveries, and BG and its partners have rights to use the pipeline for 20 years.
Mon, Dec. 8, 12:30 PM
- M&A likely will become a bigger theme in the energy exploration and production sector in 2015, and Exxon Mobil (XOM -2%) is among companies rumored to be headed for a deal.
- XOM is said to be interested in BG Group (OTCPK:BRGXF, OTCQX:BRGYY); with XOM's long-term growth plans in Russia at risk in today’s environment, the company could use some new, exciting opportunities, and BG’s Brazilian assets or an E&P company’s U.S. shale prospects would fit the bill, WSJ's Liam Denning says.
- XOM may be spooked by its 2010 deal for XTO Energy, which helped cut its annual return on capital employed to 18% last year from 34% in 2008; BG's return on capital last year was ~10%.
- With XTO’s legacy still apparent, Denning says XOM needs a clear bargain price to sell a strategic deal to investors but the dismal outlook for oil prices could make it easier to do as next year unfolds.
- Earlier: Low price oil could lead to big mergers
Fri, Dec. 5, 10:19 AM
- The recent history of oil price collapses shows that M&A activity typically jumps when prices fall, so WSJ says it may be time for another wave of acquisitions to sweep through the energy sector as crude oil prices have been cut by more than a third since June.
- BP jumped by nearly 5% Tuesday on chatter that Royal Dutch Shell (RDS.A, RDS.B) was going to make a bid - the rumor was not new, but it took on a new credibility in the new low price oil environment.
- The WSJ report says several bankers believe BG Group (OTCPK:BRGXF, OTCQX:BRGYY) could be a target for a big company looking to get bigger.
- Oppenheimer analyst Fadel Gheit points out that big deals may be harder now than in the past because there are simply fewer large companies left.
Mon, Dec. 1, 8:37 AM
- BG Group (OTCPK:BRGXF, OTCQX:BRGYY) pulls back from a major dispute with shareholders, saying it will drop a special share award worth £12M for incoming CEO Helge Lund and instead pay him a lesser amount that fits with the parameters of the company’s existing pay schemes.
- The proposed award, which came on top of Lund’s salary and other bonuses, fell outside the company’s pay policy approved by shareholders in May and had required shareholder approval at a meeting scheduled for Dec. 15.
- Last week, British investor advisory group PIRC said the additional share award for Lund had not been adequately justified and that Lund already stands to receive compensation well beyond levels granted to European peers in the sector.
Wed, Nov. 26, 8:35 AM
- British Columbia's government has granted environmental approval for its Pacific Northwest LNG export plant backed by Malaysia’s Petronas and two pipelines proposed for shipping gas to terminals on Canada’s Pacific coast.
- One of the two pipelines is designed to connect the Petronas plant with gas fields hundreds of miles inland, and the other is to win approval is for a rival liquefied natural gas plant backed by BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
- The Petronas project is the second planned LNG terminal to receive B.C. environmental clearance after a competing project sponsored by Chevron (NYSE:CVX); earlier this month, a project led by Royal Dutch Shell (RDS.A, RDS.B) filed paperwork with the prorvincial government for its environmental assessment certificate.
- The approvals do not necessarily mean the projects will be built, as the companies involved have yet to make final investment decisions.
Fri, Nov. 21, 2:57 PM
- Petrobras (PBR +11.7%) says it has launched regular operations at its Cidade de Ilhabela offshore platform at the Sapinhoa field in the Santos Basin offshore Brazil.
- The facility can produce up to 150K bbl/day of oil and compress up to 6M cm/day of natural gas.
- Sapinhoa field production started in Jan. 2013 via an interconnecting well.
- PBR is the operator and owns a 45% interest, while BG Group (OTCPK:BRGXF, OTCQX:BRGYY) holding 30% and Repsol (OTCQX:REPYY, OTCPK:REPYF) 25%.
Thu, Nov. 20, 5:58 PM
- It’s time for the medium-term investor to start buying the biggest of big oil companies, HSBC says, as the market seems to have capitulated on the sector.
- HSBC views BP and Total (NYSE:TOT) as clearly the cheapest of the oil supermajors, with share price discounts to sum-of-the-parts valuation for BG Group (OTCPK:BRGXF, OTCQX:BRGYY), Statoil (NYSE:STO) and Repsol (OTCQX:REPYY, OTCPK:REPYF); Exxon Mobil (NYSE:XOM) still trades at small premium to the SoP valuation, and the firm likes Chevron (NYSE:CVX), which was penalized in its valuation by its ongoing capital intensity in 2017.
- The stocks also offer average prospective dividend yields of 5%-plus for 2015, and the dividends look robust as they are supported by strong balance sheets, more active asset disposal programs, and strong new project cash margins.
Wed, Nov. 19, 10:54 AM
- BG Group's (OTCPK:BRGXF, OTCQX:BRGYY) planned sale of its largest operations in the North Sea has stalled as depleting oil resources and higher costs in the region deter buyers, Bloomberg reports.
- BG ran a formal process to sell its Armada, Everest and Lomond fields but apparently have not agreed on a deal with potential buyers; BG reportedly was seeking as much as $2B.
Tue, Nov. 4, 8:59 AM
- Stocks in European energy companies are hit hard following Saudi Arabia's move yesterday to cut prices for crude sold in the U.S., sending oil prices tumbling.
- Seadrill (NYSE:SDRL) sank more than 6% to the bottom of the Stoxx Europe 600 index; BP, Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT), Statoil (NYSE:STO), Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY) are all more than 2% lower.
- Oil prices are sharply lower again today, with Brent crude falling to four-year lows near $82/bbl and U.S. crude touching a session low of $75.84, its weakest since Oct. 2011.
Fri, Oct. 31, 11:59 AM
- British Columbia and Alberta are banding together to push the Canadian government to let energy investors deduct costs of building liquefied natural gas shipping terminals and oil sands processing plants at the same rate as manufacturers.
- LNG facilities are allowed depreciation rates of 8% while oil sands refineries and upgraders can apply a 25% rate, but manufacturers qualify for a 50% rate under a temporary policy introduced in 2007 that’s due to expire at the end of 2015.
- Reclassification would help level the playing field with other countries, according to the BC LNG Developers Alliance, a group representing companies including Shell (RDS.A, RDS.B), Chevron (NYSE:CVX), BG Group (OTCQX:BRGYY, OTCPK:BRGXF) and Petronas.
Wed, Oct. 29, 7:55 AM
- BG Group (OTCPK:BRGXF, OTCQX:BRGYY) says it is delaying into the next decade its plans for a liquefied natural gas export terminal on the Pacific coast.
- The head of BG’s Canadian unit tells WSJ the delay is the result of shifting market conditions such as a flood of LNG expected to hit global markets from places such as the U.S., where BG has agreements to market gas from two LNG facilities.
- BG had expected to begin construction in 2016 on the $11B first phase of a LNG plant in British Columbia and start commercial production by 2020.
Thu, Oct. 2, 2:35 PM
- Liquefied natural gas projects in Africa, Canada and Australia face delays or even cancellation as global demand growth slows and U.S. output increases, Goldman Sachs says in a new report.
- Worldwide demand for LNG will grow 5%/year compounded by 2020 and 4% by 2025, the firm says after previously forecasting growth of 6% and 5%, respectively.
- Even the U.S. will not be spared from the pullback given the substantial contracts signed in recent years with U.S. LNG projects, Goldman says, adding that "investors should seek exposure to low-cost LNG export capacity, and be realistic about expectations for further contracts.”
- Several projects in Canada and Australia likely will face deferrals due to uncertain production costs and price-sensitive buyers, with Papua New Guinea having perhaps the lowest risks as it expands LNG production, Goldman says.
- "Given the industry’s renewed focus on capital discipline in recent times, we are observing a number of high-cost LNG projects deprioritized in the investment queue by major companies" such as Chevron (NYSE:CVX), Royal Dutch Shell (RDS.A, RDS.B), BG Group (OTCPK:BRGXF, OTCQX:BRGYY) and Exxon (NYSE:XOM).
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, GASX, NAGS, DCNG
Thu, Oct. 2, 10:59 AM
- BG Group's (OTCPK:BRGXF, OTCQX:BRGYY) Kamba-1 well at Block 4 offshore Tanzania has resulted in gas discoveries of 1.03T cf in two prospects, according to joint venture partner Ophir Energy (OTCPK:OPGYF).
- This discovery, plus recent volume updates on the earlier discoveries, increases Ophir's estimate of the total Block 1, 3 and 4 mean recoverable resource to 17.1T cf and provides critical mass for an LNG train to be supplied from the fields.
- Meanwhile, BG says it has withdrawn from the development of Block 3 off the African country's coast, believing it was not worth further exploration.
Tue, Sep. 30, 10:58 AM
- Exxon Mobil (NYSE:XOM) had secured the best strategic position of any western oil company in Russia, but instead its Russian ambitions are on ice because of western sanctions, and questions about its sluggish growth and weak share price performance vs. some leading rivals are returning to the fore.
- "Russia was going to be Exxon’s next mega-area, and the list of mega-areas in the world is very short," says Wolfe Research's Paul Sankey.
- FT reports many Russian oil executives believe western sanctions will prove relatively short-lived, but some analysts think the Russians may overestimate U.S. willingness to sacrifice foreign policy goals to help American businesses.
- If the road in Russia remains blocked, analysts say XOM could use its financial strength to invest more in the U.S. oil and gas boom; rumors have swirled about an XOM bid for Anadarko Petroleum (NYSE:APC), BG Group (OTCPK:BRGXF, OTCQX:BRGYY) or even BP, an option that could be particularly attractive if weak oil prices put pressure on company valuations.
Thu, Sep. 25, 10:55 AM
- Petronas CEO Shamsul Abbas warns that the Malaysian energy company could pull out of its liquefied natural gas project in Canada due to what he considers the country's slow progress on a new taxation scheme.
- Petronas is holding back for now on making a final investment decision on Pacific Northwest LNG because of the "lack of appropriate incentives," the CEO says, adding that "Canada has to buck up real fast to be a credible global LNG player if it wants to be taken seriously by potential investors."
- The $36B Petronas-led project has won an export permit from Canadian regulators and is considered a front-runner from among a dozen gas export terminals proposed for Canada's Pacific coast, which includes Shell (RDS.A, RDS.B), Exxon (NYSE:XOM) and BG Group (OTCQX:BRGYY, OTCPK:BRGXF).
BRGYY vs. ETF Alternatives
BG Group plc (LSE: BG.L) is a world leader in natural gas, with a broad portfolio of business interests focused on exploration and production and liquefied natural gas. Active in more than 20 countries on five continents, BG Group combines a deep understanding of gas markets with a proven track... More
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