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Higher prices boost BG profits
Wednesday, April 30, 2008
BG Group boosted first-quarter pre-tax profits by 73 per cent to £1.35bn and forecast higher full-year earnings for its liquefied natural gas division.
The results were unveiled on Wednesday as the UK energy group confirmed a $12bn bid for Origin Energy of Australia, which would build on its recently completed acquisition of a stake in Queensland Gas.
Operating profits rose 70 per cent to £1.4bn on higher oil and gas prices and production volumes. BG said that even with constant prices and exchange rates, operating profit would still have risen 24 per cent.
The exploration and production division remains the driver of BG operating profits, accounting for two-thirds of the total. In the period it increased profits by 50 per cent, largely due to price increases as volumes only rose by around 4 per cent as the contribution from the Buzzard field in the North Sea entered the numbers.
The burgeoning LNG business more than trebled operating profits to £383m, driven by Asian demand. BG now estimates its LNG business will deliver full-year operating profit of £1.1bn. In 2004, it contributed less than £100m.
The smaller transmission and distribution business saw operating profits halve to £20m, largely due to changes in the exchange rate of the Brazilian Real. Power generation earnings fell slightly to £41m.
The earnings were well ahead of market forecasts but the share price slipped 3 per cent to £12.67 in early London trading as investors digested news of the bid for Origin.
This article was featured on The Financial Times Website.
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