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BG Group in ‘excellent’ shape for Shell’s £35bn takeover

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BG GROUP said it was in “excellent” shape ahead of a £35billion takeover by former rival Shell as it ramped up production and drove down costs in the face of sliding oil prices.

The FTSE 100 oil and gas group reported a surge in output in Australia and Brazil – key growth markets identified by Shell to justify the deal – beating its target to deliver a daily average of 704,000 barrels of oil per day last year, up 16 per cent on the previous year.

Volumes increased by 20 per cent in the fourth quarter.

Its liquefied natural gas business, which will help turn Shell into the world’s biggest LNG trader, delivered 63 per cent more volumes in 2015 as activity was stepped up at its Queensland Curtis facility in Australia.

The company slashed spending by nearly a third to $6.4billion and achieved cost savings of $300million.

However, the sharp fall in crude prices sent fourth-quarter earnings 54 per cent lower to $423million.

Annual pre-tax earnings dropped by 39 per cent to $5.6billion.

BG chief executive Helge Lund said: “We are pleased to have delivered an excellent operational performance with results in line with, or ahead of, our guidance for the year.

“The addition of new low cash-cost volumes in Brazil and Australia and delivery of our operating and capital cost savings has helped to partly mitigate the impact of lower commodity prices.

“We will deliver a high-performing business into the combination with Shell.”

Broker Killik said: “These results show the continued resilience of BG’s extensive low-cost assets in the weak oil price environment.

“We continue to believe that the company will significantly strengthen Shell’s asset base and give it an excellent platform to reposition production costs downwards.”

BG shares rose 4½p to 1062p.

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