BG Group's CEO search concluded Wednesday

BG Group's CEO search concluded Wednesday with the appointment of Statoil CEO Helge Lund to fill the vacancy, effective March 2015

Allen Good 15.10.2014 | 15:50

 We view the hire positively, albeit with some ambivalence. Positively, BG removes an element of uncertainty about the future leadership of the company by hiring a known industry veteran. On the other hand, Statoil's operational and financial performance has deteriorated under Lund's leadership the past five years, leaving the share price unchanged during that period. Like many of its peers, Statoil saw returns decline as greater investment failed to increase production. To Lund's credit, however, earlier this year Statoil abandoned previously aggressive growth targets and committed to trimming investment.

BG also faces different challenges than Statoil as its opportunity set is among the largest of its peers, but execution has been poor with an inability to deliver on production targets the past several years. In this case, Lund could prove an asset as Statoil is known as a quality operator. Another key to BG's future lies with its ability to realize value through asset monetization. In this respect, Lund could be valuable as well, since Statoil has regularly sold mature or lower-quality assets in recent years. In fact, the previous CEO's inability to do this effectively created a conflict with the board that ultimately contributed to his resignation.

Our fair value estimates and moat ratings are unchanged for BG and Statoil.

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Om forfatteren

Allen Good

Allen Good  er senior aksjeanalytiker hos Morningstar, og han dekker olje- og gassindustriene. 

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