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Saturday, October 21 2017 @ 05:29 PM AST

BG Group focused on three pillars of strategy

From Morgan Stanley's Global Natural Resources Conference in September:

BG Group, Martin Houston, COO

The company’s focus remains on three pillars of strategy: emphasis of value over volume, an active portfolio management and a higher return of cash to shareholders. Although the timely execution of development projects in Australia and Brazil remains the top priority for management, the company would also continue to add value through exploration, with Kenya, Uruguay and the northern licenses in Brazil identified as exciting exploration hotspots within BG’s portfolio.

Progress in Brazil, including the ramp-up of Sapinhoa and Lula NE and the construction of further FPSOs for 2014/15, has been encouraging and is going according to plan. The consortium for BM-S-11 recently lifted the 17th cargo, implying 17 million barrels have been produced already. In Australia, the QCLNG project is on track for first gas into the plant by year end. Post the testing of all the systems, the volumes will be ramped-up to full capacity in 2014, thereby leading to the commissioning of the project.

Elsewhere, LNG markets are expected to remain tight in both the short and long term. The COO believes that the company’s LNG business model, which includes maintaining a steady flow of uncontracted LNG supply capacity, enables it to take advantage of these strong markets. He highlighted that the company currently has the option to pick and choose from a wide variety of investment opportunities.

Application for FERC approval of the Lake Charles LNG project will be submitted later this year, and FID will be taken in 2015. The key challenge for Tanzania LNG is regarding the development of the upstream: whether to unitise the entire discoveries made so far or to develop these discoveries as individual projects feeding a common plant. Regarding Canada LNG, he highlighted that there are currently five LNG projects proposed in Canada and an evaluation of any potential synergies between these projects is necessary before taking a final decision on the project.

Repsol

Miguel Martinez, CFO

On track for achieving 2013 production growth target: Management confirmed that Libyan production had resumed overnight after the disruption over the last couple of weeks. The company also confirmed there should be two more wells tied in on Sapinhoa (Brazil) before year-end as well as a ramp up in Margarita (Bolivia). Repsol remained confident on the 10% production growth target for 2013.

Update on sale of LNG business and stake in Gas Natural: Repsol indicated that completion of the LNG asset sale to Shell should take place by November this year. Management also re-iterated that this remains the first priority ahead of any consideration of disposals or acquisitions for the remainder of the portfolio. Repsol also indicated that proceeds from any Gas Natural sale would likely be invested into the upstream in the OECD.

Busy near-term exploration activity: The company also provided a brief update on drilling activity. In 2H13, exploration and appraisal plans include: 1) two wells offshore Canada 2) two wells in US GoM, 3) one well in Libya and 4) one well in Kurdistan. Next year, we should see a resumption of the Alaska drilling campaign, while other highlights in 2014 include the appraisal of Pao de Azucar (BM-C-33, Brazil) and the start of the pre-salt drilling campaign in Angola.

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