BG Group has a Cracker 4th Quarter, LNG Gains Momentum

Methane Kari Elin
Methane Kari Elin, image (c) BG Group

LONDON (Dow Jones)–Shares in BG Group PLC (BG.LN) rose sharply Thursday after the company revised higher its outlook for earnings from a key division and gave fresh production guidance from its large Brazilian oil fields.

The company also said its fourth-quarter net profit rose by 43%, due largely to strong crude prices and its ability to divert liquefied natural gas, or LNG, cargoes to higher-value markets outside the U.S.

BG Group“The outlook for global gas and LNG demand is strong,” said Chief Executive Frank Chapman. “BG Group is well set to capitalize on these opportunities and is making good progress with delivering its plans.”

At 0906 GMT, BG Group shares were up 40 pence, or 2.7%, at 1485p.

Profits from the company’s LNG division, which cools natural gas and then ships it to more lucrative destinations, are now expected to be some 30% higher this year than previously thought. Chapman said the company now expected to beat its previous LNG supply target, of 20 million metric tons a year by 2015, and could even reach 30 million tons a year by 2020.

“Our LNG business is set fair with the prospect of excellent profit momentum for many years,” said Chapman.

Anticipated output from its large Brazilian offshore oil fields was also revised upwards. Chapman said BG Group now expects its net share of production from the Santos Basin to number 600,000 barrels of oil equivalent by 2020, a 10% increase on its previous target.

The U.K.’s third-largest natural gas producer said net profit for the three months ended Dec. 31 totaled $1.34 billion, compared with $940 million for the fourth quarter 2010.

BG’s bottom line benefited from an unusually low tax rate during the period, but even stripping this out, the result was still 8% higher than consensus, said JPMorgan analyst Fred Lucas.

Adjusted for exceptional costs or benefits not derived from regular operations, BG’s profit for the quarter was $1.48 billion, far above average expectations of $1.11 million in a Dow Jones Newswires poll of nine analysts.

Total oil and gas production was 654,000 barrels of oil equivalent a day, a fall of 1% on the year and below analyst expectations of 669,000 barrels of oil equivalent a day. The slight decline highlighted a frustrating year for BG in this regard, with long maintenance delays in the North Sea and unrest in Egypt and Tunisia curbing much of the annual production growth that had been anticipated at the beginning of 2011.

Revenue for the quarter was up 34%, to $5.77 billion, and diluted earnings per share were 39.1 cents compared with 26.6 cents the previous year. In keeping with its larger peers Royal Dutch Shell (RDSA) and BP PLC (BP), BG also said it would boost pay outs to shareholders, raising its annual dividend 10%, to 2160 cents a share.

-By Alexis Flynn, Dow Jones Newswires