LONDON -- BG Group today announced that CFO Fabio Barbosa will be stepping down after being on medical leave since September and has decided to take a lesser role with the company, presumably to aid in his recovery.
Until a successor is appointed, the responsibilities of the CFO will be handled by Den Jones, who stepped in as an interim director during Barbosa's leave. Jones has been with BG since 2000 and has 25 years' experience in the trenches of corporate finance -- and all that experience will be needed.
BG's shares fell out of favor with the market last year when the company said it expected no growth in production this year. For all the promise that the company's major projects -- the massive gas reserves off Brazil's coast and the Queensland Curtis Liquid Natural Gas (QCLNG) plant in Australia -- hold, shareholders are becoming a bit anxious.
The QCLNG project has suffered from significant cost overruns -- the final cost estimate has risen to $20.4 billion from an initial estimate of $15 billion -- and Brazil's offshore reserves are proving trickier to exploit than many had suspected.
To fund these promising prospects, BG has been involved in selling off assets and wrangling up new financing deals -- tasks that fall to the CFO and his team. The market appears to be waiting for BG to prove it can deliver on its promise, and being able to successfully maneuver the company's financials through this expensive period in the company's operations will be important to that delivery. Jones is being promoted at a critical time for the company but he isn't exactly new to the situation, which should provide shareholders some comfort.
BG Group is trading on a price-to-earnings ratio of 19, well above the market average, but if it succeeds in bringing QCLNG and its Brazilian assets into production without further cost issues, then BG will likely see dramatic growth in production and cash flow, which could make the current multiple look like a steal. While there is quite a distance between here and there, those growth prospects are certainly tantalizing.
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