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The Guardian: Liquefied gas will help BG beat forecasts

Mark Milner
Tuesday April 4, 2006
The Guardian
Oil and gas group BG said yesterday that its first-quarter performance was on course to beat expectations thanks to a strong performance by its fast growing liquefied natural gas business. The LNG arm was expected to make an operating profit of at least £130m over the period. That compares with £79m in the fourth quarter of last year and £172m for 2005 as a whole.
BG said it had shipped 40 LNG cargoes in the first three months of the year, of which two-thirds were sold outside the United States, with strong demand from Europe and Japan. The first quarter figure was similar to the previous quarter but the cargoes commanded higher prices. “It wasn't volumes it was much more the price realisations,” according to a spokeswoman.
Britain is among a number of countries building LNG facilities, which allow the import of gas from sources too distant to be linked by pipeline.
Analysts at Citigroup said the first-quarter performance of the LNG business was roughly double consensus expectations. BG said its largest source of profits, its exploration and production business, which made an operating profit of almost £2bn last year, was trading in line with expectations as were the smaller transmission and distribution and power businesses.
Yesterday BG shares rose 9p to 728.5p compared with 426p a year ago. The rise has been driven by high energy prices and increased production. In recent weeks takeover speculation has provided an additional spur.
Exxon Mobil, the world's largest listed oil company, is the latest name to be linked with that of BG, the former exploration and production arm of British Gas. BP and Royal Dutch Shell have previously been tipped as possible suitors. At yesterday's closing price BG has a market capitalisation of about £25bn.
The company is expected to report first quarter results at the beginning of next month.

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