BG Group today announced revenue and other operating income increased by 21% to $5 397 million, reflecting the benefit of higher realised prices and a 1% increase in E&P production volumes. As a result of the above, total operating profit increased by 17% to $1 943 million.
Cash generated by operations increased by 59% to $2 738 million reflecting higher profits and, as anticipated, the continued reversal of prior period margin calls on the Group’s hedged LNG contracts. As of 30 September 2011, the Group’s net debt was $10 845 million with an average maturity of around 7 years, and the gearing ratio was 27%. In October 2011, BG Group issued $3 billion of bonds into the US debt market, demonstrating the attractiveness of BG Group’s credit and providing material, long-term funding for the Group. The bonds were issued in tranches of $750 million, $1 350 million and $900 million maturing in 2016, 2021 and 2041, respectively. These bonds were rated mid-single A by each of Moody’s, Standard & Poor’s and Fitch.
Management remain committed to take necessary actions to maintain the Group’s mid-single A rating. The Group’s undrawn committed facilities have been increased to $5.75 billion, with maturities ranging from 2012 to 2018. The $73 million decrease in net finance costs was driven primarily by changes in foreign exchange (2011 foreign exchange gains of $1 million compared with a $58 million loss in 2010). Capital investment of $2 900 million in the quarter comprised investment in E&P ($2 100 million), LNG ($712 million) and T&D ($88 million). This investment focused primarily on the Group’s major projects in Australia, Brazil, the USA and the UK, and represents a 39% increase in underlying organic capital investment compared with third quarter 2010. More details on project developments are provided in the third quarter business highlights section.
BG Group’s Chief Executive, Sir Frank Chapman said:
“Our third quarter total operating profit was up 17% year-on-year to $1.9 billion driven by higher realised prices and a one percent increase in E&P volumes.” “In LNG, we now expect total operating profit for 2011 to be some $2.4 billion, exceeding previous guidance.”
Sir Frank said, “we are advancing our growth programme with material progress, particularly in Brazil and Australia, alongside work to improve longer term production from existing assets.”
Australia 3Q investments hit $1.3 billion
“In Australia, where we have invested $1.3 billion in the quarter”, he said, “engineering procurement and construction are all moving ahead in line with a 2014 first production goal for our Queensland Curtis LNG (QCLNG) project. Upstream, we drilled 51 wells and progressed construction on water and compression facilities. Site preparation for the LNG plant is complete and construction of foundations for the LNG storage tanks is underway”, he added, “progress is being made with the harbour dredging and the main 42 inch steel pipeline is in location, ready for welding and trenching.”
“We are therefore making good progress with our strategic objective to globalise our LNG business through this Asia-Pacific equity LNG position.”
Brazil lula production up
“In Brazil, we made significant advances in the quarter. Commercial production at the first permanent FPSO on Lula field increased, with over 35 000 barrels of oil equivalent per day (boed) from one producing well being achieved. Further wells are due onstream by year end.”
Sir Frank added, “construction of the next two FPSO modules is on track at around 70% complete. We have also signed letters of intent for a further two 150 000 barrels of oil per day (bopd) modules which means that all of the 13 first phase FPSOs, which will deliver an aggregate production capacity of some 2.3 million boed by 2017, have now been committed.”
“Similar progress and delivery is being mirrored across our global portfolio. In India, one of the world’s fastest growing energy markets, we reached a landmark agreement for long-term LNG sales to Gujarat State Petroleum Corporation. In Egypt, the successful commencement of Phase 8a in the West Delta Deep Marine concession represents a further milestone in the development of our interests there – excellent progress especially in light of the civil unrest earlier in the year. Elsewhere in the portfolio, other projects continued to make progress, with new facilities for the Bongkot South development in Thailand on schedule and, in the UK, we saw good results from drilling at the Jasmine field and facilities construction advanced. Finally, in the US, the Department of Energy granted authorisation for potential LNG export from the Lake Charles terminal.”
UK North Sea facilities back on stream
“In the UK North Sea, all facilities are now back onstream following outages that marred production in the first nine months of the year. Outside the UK, overall production has grown in line with plans.”
Sir Frank concluded, “I am pleased with the progress we are making on delivering our key growth projects, underpinned by our strong resource base, and also on the work being undertaken to improve future production performance from existing assets.”
Source:BG Group , October 25, 2011;