BG shares hit record high on growth forecasts

City A.M. Reporter
Energy giant BG Group has beat forecasts with a 13 per cent rise in its fourth-quarter profit and said Brazil and US resources would raise its future production further.

Earnings of $1.06bn (£657m) in the final three months of last year were boosted by higher natural gas prices and surpassed the $931m it made in the same period of 2009.

Analysts had on average expected a result of $924m, according to a company-supplied poll of 14 banks and brokerages.

BG's share price rose as high as 1,485 pence, beating a previous peak of 1,484p set last week.

BG, which said it was on track to grow its exploration and production business by seven per cent a year, also almost doubled its five-year production forecast from US shale gas and lifted estimates for production from Brazil in 2020 by 37.5 per cent.

"BG's strategy update reinforces our 'growth leader' thesis," said Bernstein Research analyst Oswald Clint, referring to the company's longer-term outlook on production.

Some analysts have argued that BG's share price does not reflect the company's substantial resources in Brazil and have suggested the company might consider a partial flotation or sale of its assets there, an option Chief Executive Frank Chapman did not rule out.

"If, in the fullness of time, that value isn't recognised of course we'll consider other options but for the moment the market is starting to turn its attention clearly on what we are doing," he told reporters at a company presentation.

BG said its organic reserve replacement ratio was 229 per cent, 100 per cent being the level at which production is matched by new reserves, a result which analysts at JP Morgan called "exceptional".

The company also sold gas to the international and British markets for prices which were 22 per cent and 18 per cent higher, offsetting a two per cent dip in production.