UK: BG 2011 Operating Profit at USD 8.2 Billion

BG Group plc today reported total operating profit of $8.2 billion for 2011.

2011 Key Points

• Total operating profit up 19% to $8.2 billion

• Strong cash flow from operations, up 17% to $9.8 billion

• Full year dividend increased by 10% to 23.76 cents per share (14.82 pence per share)

• Significant progress on major projects in Australia and Brazil

• Signed 20-year US LNG export agreement for 5.5 mtpa, commencing 2015

• Three-year proved reserve replacement ratio exceeding 200%

• $5.6 billion bonds issued in dollar, sterling and euro currencies

BG Group’s Chief Executive, Sir Frank Chapman said: “Revenue and other operating income increased by 22%. Higher realised prices in the Group’s exploration and production and LNG businesses led to a 19% increase in total operating profit for 2011 to $8.2 billion.”

“The increase in profits and a lower outflow in working capital produced strong cash flow from operations, up 17% over the year to $9.8 billion.” Sir Frank said, “in the USA, we signed a landmark agreement with Sabine Pass Liquefaction, securing 5.5 million tonnes per annum of LNG export volumes for 20 years.”

“This further expands and diversifies our supply portfolio and will enable BG Group to exceed its 2015 LNG supply target of 20 million tonnes per annum.” Sir Frank added, “in addition, we made significant progress on our major growth programme across our global portfolio, particularly in Australia and Brazil.”

“In Australia, we invested a further $1.2 billion in the quarter as we advanced the upstream development, pipeline and LNG plant towards first LNG in 2014. In the gas fields, drilling is ramping-up to an 11-rig programme for 2012 and work is advancing with gas and water treatment facilities. Welding of the 42-inch steel pipe is underway, with nearly 150 kilometres of pipe now in position along the route. On Curtis Island, construction has started on the LNG storage tanks, with one reinforced concrete base completed and the second underway. The module yard in Thailand is currently assembling process and piping modules.”

“In Brazil, the Declaration of Commerciality for the Sapinhoá field, formerly known as Guará, was submitted in December, 12 months early, marking the start of the production phase for the field. On Lula, production increased to around 90 000 barrels of oil equivalent per day from just three production wells; testimony to the exceptional reservoir characteristics. We also continued to make good progress on development, with unit costs falling for the most recent FPSO vessels and substantially shorter drilling durations. The second FPSO arrived in Brazil for integration work prior to deployment on the Sapinhoá field in 2013. We are on track to deliver 2.3 million barrels of oil equivalent per day of capacity by 2017.”

“Elsewhere, in Kazakhstan we reached a comprehensive agreement with the Republic that paves the way for the future development of the giant Karachaganak gas-condensate field. In Egypt, the second stage of the West Delta Deep Marine Concession Phase 7 started gas production, while in Norway we made another oil discovery, known as Jordbær West, near the Knarr field.”

“Production volumes were 1% lower for the year, as they were adversely affected by a series of outages and third-party infrastructure restrictions in the UK North Sea. Excluding the UK, BG Group production from international assets grew by 5% in line with expectations.”

Sir Frank concluded, “in a changing and challenging operational, economic and political environment, I believe these are a good set of results for 2011, which also saw significant progress towards delivering our key growth projects.”

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LNG World News Staff, February 9, 2012