Jul 08 - 2008 Second Quarter & Half Year Results

Source Press Release
Company BG Group 
Tags Financial & Operating Data
Date July 24, 2008

BG Group plc reported its 2008 Second Quarter Results to the London Stock Exchange at 07:00 am (UK time) on Thursday 24 July 2008.

Second quarter Results

Revenue and other operating income increased by 49% to £3 216 million, reflecting higher volumes in E&P and higher commodity prices.

Total operating profit increased by 92% to £1 431 million primarily due to higher commodity prices and higher E&P volumes, partially offset by higher gas costs at Comgas.

Cash generated by operations increased by £759 million to £1 588 million primarily due to higher operating profits.

Capital investment in the quarter of £634 million, excluding acquisitions of £316 million, comprised continuing investment in Africa, Middle East and Asia (£254 million), Europe and Central Asia (£217 million) and Americas and Global LNG (£163 million).

Total operating profit increased by 80% to £2 833 million reflecting higher commodity prices and higher E&P and LNG volumes.

Net finance costs were £8 million lower due to increased cash balances.

The Group’s effective tax rate (including BG Group’s share of joint ventures and associates tax) was 43% for the half year.

Cash generated by operations increased by £1 239 million to £3 154 million. As at 30 June 2008, net funds were £629 million.

Capital investment in the half year of £1 281 million, excluding acquisitions of £316 million, comprised continuing investment in Africa, Middle East and Asia (£561 million), Europe and Central Asia (£396 million) and Americas and Global LNG (£324 million).

The Board has declared an interim dividend of 4.68p per share, payable on 12 September to shareholders on the register at 8 August.

In June, BG Group announced its offer to acquire all of the issued shares in  Origin Energy Limited (Origin) at A$15.50 cash per share by way of a formal bid, valuing Origin’s ordinary equity at approximately A$13.8 billion (£6.7 billion) fully diluted.

The Origin acquisition is driven by BG Group’s integrated gas strategy, linking competitively-priced exploration and production resources to downstream markets and power generation assets.

E&P total operating profit increased by 73% to £976 million reflecting higher commodity prices and increased production volumes.Production volumes increased by 2%, held back by one-off outages in the UK (Grangemouth industrial action, Armada maintenance) and India (Panna outage).

The average realised gas price per produced therm in the UK rose by 8.9 pence to 32.8 pence.Guidance for the gas year remains at 34p for contracted volumes. Unit operating expenditure increased by 50 pence to £3.24 ($6.47) per boe principally due to the impactof commodity prices on royalty costs; and tariffs.

The exploration charge of £94 million is £22 million higher than 2007, principally due to higher drilling expense. Capital investment, including acquisitions, in the quarter of £828 million included expenditure in Australia (£320 million), Tunisia (£111 million), UK (£84 million), Egypt (£82 million), Kazakhstan (£49 million), Trinidad and Tobago (£36 million), Norway (£33 million), Brazil (£29 million), Oman (£22 million),Canada (£20 million) and India (£19 million).

Half year

E&P total operating profit increased by £727 million to £1 918 million reflecting higher commodity prices and increased production volumes, partially offset by a higher exploration charge. Production volumes have increased primarily at the Buzzard field in the UK and the Tapti field in India.

Unit operating expenditure increased by 40 pence to £3.01 ($5.99) per boe principally due to the impact of commodity prices on royalty costs.

The exploration charge of £191 million is £63 million higher than 2007 reflecting higher well write-off charges.

Capital investment, including acquisitions, in the half year of £1 410 million included expenditure in Australia (£320 million), Tunisia (£259 million), UK (£186 million), Egypt (£187 million), Kazakhstan (£96 million), Trinidad and Tobago (£89 million), Norway (£46 million), Brazil (£46 million), India (£43 million), Canada (£38 million) and Oman (£31 million).Second quarter business highlights

In June, BG Group announced a further new oil discovery in the Santos Basin, offshore Brazil.

The exploration well, known as Guará, discovered oil and gas within the BM-S-9 concession area (BG Group 30%) and is the second discovery within this concession. This well is BG Group's fifth consecutive drilling success in the deep water pre-salt Santos Basin since the Group began its drilling programme in 2005.

BG Group plc – 2008 Second Quarter & Half Year Results

In Algeria, the RM-1 exploration well on the Hassi Ba Hamou Permit (HBH Permit) (BG Group 36.75% and operator) was a gas discovery. This will be appraised as part of the work programme due under the second prospecting period of the HBH Permit.

In Norway, there have been discoveries at the Jordbær and Pi North wells in the North Sea. At the Ververis well in the Barents Sea, the Norwegian Petroleum Directorate has announced this as a discovery and  BG Group is currently evaluating the results of the well.

In Thailand, the Ton Sak exploration well on Bongkot North was the seventh consecutive success on Bongkot in the last two years.

In Trinidad and Tobago on Block 5(c), the second well of a three well programme, Bounty, is a gas discovery. The well is ten kilometres from the Dolphin platform and is currently being tested.

In the UK, the recent appraisal programme undertaken at the Jasmine field (BG Group 30.5%) confirmed the presence of hydrocarbons in a separate structure to the northeast of the initial discovery well which was drilled in 2006.

The first Jackdaw appraisal well (BG Group 43.4% and operator) was successful in identifying additional reserves in a new and higher quality reservoir section. A sidetrack well has been commenced to appraise further this discovery.

On Block 23/21, located south of the Lomond field in the central North Sea, the Moth exploration well (BG Group 31.7%) was successful. BG Group will work together with the partners to prepare a programme for the development of this discovery.

On 11 April, BG Group completed its investment in  Queensland Gas Company (QGC).  BG Group has a 9.9% interest in QGC’s shares and a 20% direct interest in its coal seam gas assets which together give  BG Group a net interest in those assets of 27.9%.

In Algeria, the RM-1 exploration well on the Hassi Ba Hamou Permit (HBH Permit) (BG Group 36.75% and operator) was a gas discovery. This will be appraised as part of the work programme due under the second prospecting period of the HBH Permit.

In Norway, there have been discoveries at the Jordbær and Pi North wells in the North Sea. At the Ververis well in the Barents Sea, the Norwegian Petroleum Directorate has announced this as a discovery and  BG Group is currently evaluating the results of the well.

In Thailand, the Ton Sak exploration well on Bongkot North was the seventh consecutive success on Bongkot in the last two years.

In Trinidad and Tobago on Block 5(c), the second well of a three well programme, Bounty, is a gas discovery. The well is ten kilometres from the Dolphin platform and is currently being tested.

In the UK, the recent appraisal programme undertaken at the Jasmine field (BG Group 30.5%) confirmed the presence of hydrocarbons in a separate structure to the northeast of the initial discovery well which was drilled in 2006.

The first Jackdaw appraisal well (BG Group 43.4% and operator) was successful in identifying additional reserves in a new and higher quality reservoir section. A sidetrack well has been commenced to appraise further this discovery.

On Block 23/21, located south of the Lomond field in the central North Sea, the Moth exploration well (BG Group 31.7%) was successful. BG Group will work together with the partners to prepare a programme for the development of this discovery.

On 11 April, BG Group completed its investment in  Queensland Gas Company (QGC).  BG Group has 9.9% interest in QGC’s shares and a 20% direct interest in its coal seam gas assets which together give  BG Group a net interest in those assets of 27.9%.

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