BG Group warns Egypt problems will leave production below expectations

BG Group shares have tumbled after the company warned that problems in Egypt would leave gas production this year and next well below expectations.

In an unscheduled statement to the stock market, BG said it expected to produce between 590,000 and 630,000 barrels of oil equivalent per day (boed) this year, lower than analyst forecasts for about 650,000 boed.

The oil and gas company's shares were down more than 14% at £10.84½ in early trading.

BG also cut its 2015 guidance to between 710,000 and 750,000 boed. In September it set a target of 775,000-825,000. BG made the statement after it became clear that its own production expectations had fallen behind City forecasts.

BG, which relies on Egypt for about a fifth of its production, said it was declaring force majeure notices in the country because the government was diverting its share of gas from a joint agreement to the domestic market. It also faces production shortfalls in the US.

Chris Finlayson, BG's chief executive, said: "Despite the good progress we have made in 2013 we face short-term issues which are reflected in our revised 2014 guidance. This is very disappointing. Year-on-year decline in Egypt and the US are the drivers of volume decline from 2013 to 2014."