BG Group beat forecasts with a rise in second-quarter profits on Thursday driven by stronger gas prices and sales but warned of dipping production later this year and risks to its operations in Egypt. BG, which counts on Egypt for about a fifth of its natural gas production, warned that the future of its liquefied natural gas (LNG) production there was at risk as it continues to encounter difficulties in expanding and selling volumes. "In the absence of concerted action from the Egyptian government, the future commercial operation of Egyptian LNG remains at risk," it said in a statement. Production in Egypt declined by more than half from a year earlier to 57,000 barrels of oil equivalent per day (boed) as a result of the depletion of the reservoir and as the local Egyptian market took more supplies for which BG received lower payments. Egypt has undergone a period of political and civil unrest since President Hosni Mubarak was ousted in 2011. BG's shares were up 2.75 percent at 1.212 pounds per share at 0815 London time, leading the London Stock Exchange .FTSE along with Royal Dutch Shell (RDSa.L). The oil and gas sector .FTNMX0530 was up 2.2 percent. BG's largest gas project, Australia's Queensland Curtis LNG production facility, remained within budget and on track to deliver first LNG in the fourth quarter of 2014, the company said. "In Australia, commissioning of the gas turbine generators at the QCLNG liquefaction plant has begun and, subject to the current risk of industrial action on Curtis Island, we remain on track for first LNG by the end of the year," interim executive chairman Andrew Gould said in a statement. BG was thrown into turmoil in April after losing its chief executive Chris Finlayson after just 16 months in the job. He was replaced temporarily by Gould, who has vowed to review assets due to declining production and revenues. Profits up, Production down BG reported an 11 percent rise in second-quarter operating profit to $1.99 billion, driven by higher LNG volumes and higher realised prices in Asia and South America as well as increased oil production in Brazil, which reached 300,000 boed in July. "A decent set of Q2 results from BG which should provide some relief," said analysts at London-based investment firm Investec, maintaining a sell recommendation. Earnings per share were up 22 percent at 35.5 cents per share, while it raised its interim dividend by 10 percent to 14.38 cents. Exploration and production "performance reflects the growing proportion of oil in the portfolio, principally from Brazil, and the deferral of maintenance shutdown activity in the UK to later in the year," Gould said. BG's second-quarter production was down 10 percent at 591,000 barrels of oil equivalent per day (boed) due to declining output in Egypt and the United States. The decline was offset by the delaying of planned maintenance at the company's North Sea assets from the second and third quarters to the fourth quarter of 2014."Group volumes are now expected to be slightly below the second quarter for the remainder of the year, as this downtime will materially offset production from new developments expected onstream," it said. The group said its 2014 production guidance remained at the lower end of its target of 590,000-630,000 barrels of oil equivalent per day. http://english.ahram.org.eg/News/107514.aspx
