Rising gas prices lift BG profits by 44%
2005-5-12
    BG, the energy group, today said that soaring oil and gas prices and volumes had helped it to a 44 per cent rise in profits.
    BG said higher prices and production in its core exploration and production arm and strong performances in liquefied natural gas and transmission and distribution had lifted its total operating profits to £483 million in the first quarter.
    Operating profits in its core exploration and production division increased by 47 per cent to £387 million.
    Exports from the group's activities in the giant Karachaganak oil and gas field in north-west Kazakhstan and production rises in the Scarab Saffron gas fields in Egypt helped BG increase volumes by 7 per cent to the equivalent of 43.7 million barrels of oil.
    Price rises also contributed, with the average price of a barrel of oil rising by 42 per cent to £25.35 against the same period last year. The average realised price of a produced therm of gas rose by 9 per cent to £17.48. The increase in profits came despite higher exploration charges and the impact of the weaker dollar.
    BG said it also reflected an 80 per cent rise in total operating profits in its liquid natural gas operations to £27 million.
    Frank Chapman, the BG chief executive, said that strong underlying growth had driven the increase. "BG has made an excellent start to the year," he added.
    The former British Gas group was created in 1997 when British Gas shareholders approved the demerger and renaming of the former state-owned gas group's retail arm, Centrica. BG plc was later renamed BG Group.
    The company's distribution arm, Lattice, was later demerged and is now part of National Grid Transco.
    BG said that it had invested £245 million of capital in its exploration and production operations, including £67 million in Kazakhstan, £55 million in Egypt and £49 million in north-west Europe.
    It produced its first gas from the Simian Sienna fields in Egypt for export to Western Europe and the US in April, while the Rosetta field also produced its first gas for the Egyptian domestic market.
    The company said that it had completed 11 exploration and appraisal wells since the start of the year, of which eight, or 73 per cent, had been successful. In liquefied natural gas, a £30 million increase in turnover and other operating income reflected higher volumes in the shipping and marketing business.
    Capital investment included £25 million relating to three liquefied natural gas vessels being built for delivery in 2006 and continued investment in LNG operations in Egypt and the Atlantic.
    Transmission and distribution lifted total operating profits by 53 per cent to £46 million, with strong volume growth across the business driving a 22 per cent rise in turnover to £169 million.
    BG shares stood 0.25p higher at 418.75p in afternoon trade.
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