BG Group reported Tuesday that earnings were up 27%, with cash generated by operations up 11%.
The company noted that reserves and resources doubled in Brazil since 2010, with upside potential now 8 billion boe net. According to the BG, Brazil reservoir performance significantly reduces unit costs
BG Group’s Chief Executive, Sir Frank Chapman said, “We made good progress in both our E&P and LNG businesses. In Brazil, we saw major increases in our reserves and resources; with the new resources delivering a higher unit value as their production is expected to require no additional surface facilities. We have invested $4.4bn in organic growth in the first half and made good progress across our major growth projects in Australia, Brazil and the USA; progress that continues to de-risk the delivery of our growth programme.”
Revenue and other operating income increased by 26% to $5 115 million, reflecting the benefit of higher commodity prices and a 3% increase in E&P production, with solid operational performance across the Group’s assets.
As a result of the above and a lower exploration charge in the quarter, total operating profit increased by 43% to $2 152 million.
Cash generated by operations increased by 11% to $2 581 million as a result of higher profits and, as anticipated, the partial reversal of prior period margin calls on the Group’s hedged LNG contracts.
As of 30 June 2011, the Group’s net debt was $9 468 million with an average maturity of around 8 years, and the gearing ratio was 24%. During the quarter, BG Group signed a cooperation agreement with Bank of China that allows for up to $1.5 billion of new funding alternatives to support the Group’s major growth programme. The Group’s undrawn committed facilities have been increased to $5.5 billion with maturities from 2012 to 2016.
Net finance costs amounted to $59 million for the quarter, against $25 million income in 2010, including foreign exchange gains of $7 million (2010 $71 million gain).
Capital investment (including acquisitions of $113 million) in the quarter was $2 537 million and comprised investment in E&P ($1 918 million), LNG ($537 million) and T&D ($82 million). This investment focused primarily on the Group’s major growth projects in Australia, Brazil and the USA and represents a 58% increase in underlying organic capital investment compared with second quarter 2010. More details on project developments are provided in the relevant segmental business highlights.