Cheap oil claims new casualty as BG Group profits slide

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BG Group’s profits slumped by 37 per cent during the third quarter as the former exploration arm of British Gas became the latest casualty of tumbling oil prices.

The company, which is in the process of being taken over by Shell, reported a $1.2bn (£783m) profit for the period as the oil price – which stood at $115 a barrel last summer – averaged around $50.

BG slashed its spending plans in response, revealing yesterday that investment will be cut by around 30 per cent on last year to $6.5bn.

“We are on track to deliver our promised operating and capital cost savings for 2015 and are adding new, low cash-cost volumes through Australia and Brazil,” said the chief executive Helge Lund.

“Our objective is to make sure we are resilient at current oil prices. We have to make sure we live within our means.”

The profit fall capped a tough week for the oil industry with BP announcing a 40 per cent decline in third-quarter profits and Shell a record $7.4bn loss in the same period.

And in the US Exxon Mobil yesterday reported a 47 per cent dive in third-quarter profits to $4.2bn as revenues fell 37 per cent to $63.75bn, again as a result of the low oil price. This pushed profits at the group’s “upstream” exploration and production business down 79 per cent to $1.36bn, despite a 2.3 per cent rise in production to 3.9 million barrels of oil equivalent a day.

However, Exxon Mobil’s “downstream” refining division benefited from the low oil price. Profits at the unit nearly doubled over the period to $2bn.