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Oil & Gas highlights: BG, Shell, BP, Sound Energy, Rockhopper, Bahamas Petroleum, IOG & more

Published: 04:00 06 Feb 2016 EST

RigFast

Earnings reports from oil supermajors dominated the market headlines this week.

BG Group (LON:BG.) has presented what it’s called ‘an excellent operational performance’, though the impacts of lower commodity prices saw earnings fall by nearly 40%. In the fourth quarter group earnings (EBITDA) reduced by 22% to US$1.42bn from 1.8bn, which meant the tally for the full year was US$5.6bn down from US$9.17bn in 2014.

The takeover of BG by Shell, due to complete later this month, is supposed to improve the asset quality of the latter. And, indeed, BG this morning emphasised its operational successes particularly with the ramp-up of LNG operations in Australia and Brazil.

Yesterday, shares in Royal Dutch Shell (LON:RDSB) rose as investors welcomed upbeat earnings news and its decision to maintain its dividend. Shell said fourth quarter 2015 earnings were US$1.8bn compared with US$3.3bn in the same period a year ago.

Analysts at Barclays said the results were "reassuringly in line", with adjusted net income of US$1.9bn at the top end of a forecast range of US$1.6-US$1.9bn.

BP (LON:BP., NYSE:BP) blamed lower oil prices for a 51% fall in annual profit but kept its dividend unchanged at 10 cents a share. The oil major said underlying replacement cost profit for the full year was US$5.9bn, compared with US$12.1bn for 2014.

Fourth quarter underlying results were US$196mln compared with US$2.2bn for the same period a year ago. The group made an annual loss of US$5.2bn against profits of US$8.2bn a year ago, its worst for 20 years, according to analysts.

Elsewhere, in the small cap sector …

Sound Energy (LON:SOU) has confirmed the start of production from the Nervesa gas field, onshore Italy.

The Nervesa well successfully began commercial production on February 3, the company said in a statement. Production rates will be announced in due course, it added. First an initial clean-up phase will be completed and then the stable flow rates will be assessed.

Offshore Italy, meanwhile, Rockhopper Exploration (LON:RKH) has confirmed that law changes in Italy mean that a production concession will not be awarded for the Ombrina Mare field.

It told investors that Ombrina Mare had all necessary technical and environmental authorisations, however, the project won’t go ahead due to the re-introduction of a ban on exploration and production activity within 12 nautical miles of the Italian coast.

The company said it is now considering its options, which could include a claim for damages and compensation from the Republic of Italy under international treaties. Meanwhile, the company said that none of its other interests in Italy, including the Guendalina gas field, are expected to be impacted by the changes in legislation.

Bahamas Petroleum (LON:BP.) shares shot-up by 33% after a new Petroleum Bill and associated legislation was passed by the Bahamian Senate. In a stock market statement, BPC told investors that Bahamas Governor General will now receive the bills for signing and they will subsequently be passed into law.

Green Dragon (LON:GDG) exceeded its production target in 2015 and has pencilled a further rise of a third in the current year. Output at the end of 2015 was 12.1bcf and this run rate is scheduled to rise to 16 billion cubic feet (bcf) by the end of 2016.

It was the unconventional gas supplier’s first guidance for the current year. Actual production rose by 24% to 0.3bcf  (10.3bcf), with a 39% rise to 1.42bcf at those wells operated by Green Dragon.

Greka Drilling (LON:GDL) increased the number of wells drilled in 2015 by 38% as its main customer, Green Dragon Gas (LON:GDG)  ramped up its activity in China. Of the 62 wells drilled, 51 were for Green Dragon with Essar in India accounting for 9 and PetroChina the other two. In total, Greka drilled 76,690m in 2015, a 31% increase over 2014.

Independent Oil & Gas (LON:IOG) has confirmed a £10mln convertible loan funding deal with London Oil & Gas Ltd (LOG). The debt will carry interest at 9% per year, and can be converted into IOG shares at a price of 8p per share.

Mark Routh, IOG chief executive, told investors that as a result of the deal the company would have enough money to cover corporate expenses and fees until mid-2018.

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

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