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Daily Telegraph: Rosy outlook for BG as it confounds industry gloom

By Russell Hotten

Oil and gas explorer BG Group bucked the industry trend by confirming production growth targets and the long-term strength of the company’s reserves.

While BP and Royal Dutch Shell have been pessimistic about growth, BG chief executive Frank Chapman said yesterday the outlook was very positive. He underlined the point by revealing that an oil and gas field off the coast of Brazil could contain more than 10bn barrels. “The scale is potentially huge,” he said. BG has a 25pc stake in the Santos Basin field.

BG and partners have just started producing oil from the Buzzard field in the North Sea which could be the UK’s largest oil discovery for more than a decade. Mr Chapman reaffirmed that BG’s production should grow by between 5pc and 7pc until 2009 and hinted that this might accelerate after then.

The company reported net profits for the fourth quarter of £486m, an increase of 5.2pc, because of rising production and gains on gas contracts. Pre-tax profits in the quarter rose 21pc to £894m, taking the full-year pre-tax profits to £3.39bn, up from £2.5bn. Fourth-quarter revenue was up 5pc to £2.09bn, and 41pc on the year to £7.67bn.

BG’s production and Liquified Natural Gas sales are rising in Egypt and Trinidad as the company expands market access by building new import terminals. Oil and gas output jumped 19pc in 2006, versus a 4.2pc gain at Exxon Mobil, and declines of 2.2pc and 1.3pc, respectively, at BP and Shell.

“It certainly is the best production growth you can get among the major oil and gas companies,” said Tony Shepard, an oil and gas analyst at Charles Stanley.

Excluding exceptional items such as asset disposals BG’s fourth-quarter profit fell 18pc to £410m. A final dividend of 4.2p, bringing the full year dividend to 7.2p, will be paid on May 25. The shares rose 29 to 725p. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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