BG Group's CEO Chris Finlayson has resigned, with immediate effect, the UK-based exploration firm announced today, raising calls for the firm to be broken up and suggestions it would now be a takeover target.
In a statement, BG said the resignation, which comes just a year after Finlayson took up the post, and profit warnings at the firm, was for personal reasons. BG Group said chairman Andrew Gould would become interim executive chairman until a permanent replacement is appointed. A recruitment process to find an external successor to Finlayson is now underway.
The announcement comes days before the firm is due to announce its Q1 results (May 1). BG said the Q1 results would show the group's key projects were on schedule. However, BG said: "The Group is reviewing its operational, investment and portfolio management plans and will not provide 2015 guidance until its full year results in February 2015." The firm later told analysts that the decision to not provide 2015 guidance was not a profit warning.
BG said that progress continues in its Australian operation, with the start up of the Ruby Jo central processing plant. In its Brazilian operation, the firm said that all four buoyancy-supported risers are in position on FPSOs 2 and 3 with two new permanent wells connected. The group's other 1Q milestone, the commissioning of Bongkot South Phase 4b, was completed in February.
It said Egypt remains challenging, with volumes in the Q1 declining 35% from the Q4 2013 to 66,000 boe/d. "This is a result of deteriorating reservoir performance and the high level of diversions to the domestic market, where the Group is entitled to a lower share of production," BG said.
Industry analysts reacted with surprise to the news, with one calling for a major of the firm's business.
London based Investec said: "Chris Finlayson became CEO in late 2012. Just over one year and three profit warnings later, he has resigned with immediate effect. This is a strange announcement. He cites ‘personal reasons’ yet the Board seems happy to usher him through the exit while reiterating its commitment to his strategy. His focus was on project delivery and Brazil and Australia still appear to be on track. Egypt may have deteriorated, but this is a political situation over which Finlayson had little control."
Analyst and commentator Malcolm Graham-Wood said that he previously said he felt that "senior management had lost the ability to manage the company and that whilst I felt that the assets were still of significant value, something more had to be done. Today's announcement not only proves that that was a correct call but BG has now lost the ability to decide its future and needs to be broken up, probably by some exterior organisation."
He added: "BG has no longer the mandate to manage these assets and right now the board should not be sitting down with head-hunters but with industry experts who can split up and sell the business while they still have one worth the while. I have said many times that BG is eminently breakable, Brazil, Australia, LNG and the E&P business are valuable stand alone businesses or could be more valuable to other companies."
Before joining BG Group, Finlayson spent gained 33 years' technical and commercial experience in the oil and gas industry, at Royal Dutch Shell.
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