1st Quarter Results

BG Group plc

2011 FIRST QUARTER RESULTS

First Quarter Key Points

·; Higher UK North Sea tax reduces earnings by $265 million

·; LNG operating profit for 2011 expected towards upper end of $1.9 to $2.2 billion range

·; Significant progress on long-term growth programme

·; Positive appraisal results on the Guará and Iara discoveries in Brazil

·; LNG sales agreements signed with Tokyo Gas and Chubu Electric

·; Third exploration success offshore Tanzania

BG Group's Chief Executive, Frank Chapman said:

"It was a challenging quarter for our E&P operations, with civil unrest in North Africa, flooding in Australia, an increase in UK tax and a shutdown in the North Sea. We now expect modest production growth in 2011. The plans for a ramp-up in production in 2012 and 2013, as well as our 2020 goals, are unaffected and are supported by significant progress with our growth projects in Brazil, the USA and Australia, as well as further exploration and appraisal success in Brazil and Tanzania."

a) 'Business Performance' excludes discontinued operations and disposals, certain re-measurements and impairments as exclusion of these items provides a clear and consistent presentation of the underlying operating performance of the Group's ongoing business. During the first quarter, Total results included a pre-tax charge of

$408 million (2010 $140 million credit) in relation to mark-to-market movements on long-term commodity contracts and economic hedges. For further explanation of

Business Performance and the presentation of results from joint ventures and associates, see Presentation of Non-GAAP measures (page 8), note 1 (page 14) and

note 3 (page 16). For further details of the items included in disposals, re-measurements and impairments, see note 2 (page 15). Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance.

b) 2010 results have been restated to reflect the presentation of the majority of the businesses that comprised the Power Generation segment as discontinued operations, see note 1 (page 14) and note 6 (page 18).

c) Prior period taxation represents an additional charge of $195 million in respect of the revision of deferred tax balances at 1 January 2011 due to changes in UK taxation rates. This comprised a charge of $203 million as a result of the increase in North Sea taxation and a credit of $8 million as a result of a reduction in the UK taxation rate applicable outside the North Sea.

d) In addition to (c) above, prior period taxation includes a $47 million credit which primarily relates to the impact of the increase in North Sea taxation on certain

re-measurement balances.

Business Review - Group

a) See note 1 (page 14).

b) Includes capital investment relating to discontinued operations for the quarter of $nil (2010 $2 million).

First quarter

Revenue and other operating income increased by 7% to $4 803 million, reflecting the benefit of higher realised prices, partially offset by lower E&P production volumes.

Total operating profit of $1 965 million was 1% higher, as the increase in revenue and other operating income was offset by a higher exploration charge and lower profits from the LNG segment.

Cash generated by operations of $1 799 million was in line with fourth quarter 2010, but 28% lower than last year, principally reflecting changes in working capital associated with margin calls on the Group's hedged LNG contracts. The cash outflow associated with margin calls will reverse in future periods when the underlying LNG contracts settle.

Net finance costs of $79 million (2010 $10 million) included foreign exchange losses of $22 million (2010 $51 million gains).

The Group's effective tax rate (including BG Group's share of joint venture and associates' tax) for 2011 increased to 45% (2010 42%) primarily as a result of the recently announced change in UK North Sea taxation. This increase in UK taxation led to an additional charge of $265 million, consisting of a $62 million charge for the quarter in addition to a one-off tax charge of $203 million in respect of the revision of opening deferred tax balances. Taking into account this tax rate change, the Group's effective tax rate is expected to be 43% to 44% in the near term and trend downwards thereafter as more of the Group's profits are generated from outside of the North Sea.

As at 31 March 2011, the Group's net debt was $8 510 million, with an average maturity of around 9 years, and the gearing ratio was 23%. The increase in the gearing ratio has been largely driven by investment in the Group's major growth projects. In the quarter, capital expenditure was 21% higher at $2 296 million (including acquisitions of $319 million) and comprised investment in E&P ($1 826 million), LNG ($399 million) and T&D ($71 million).

Disposals, re-measurements and impairments - continuing operations

A post-tax charge of $223 million for the quarter (2010 $66 million credit) was recorded in respect of disposals,

re-measurements and impairments. This included a post-tax charge of $281 million (2010 $90 million credit) in relation to mark-to-market movements on long-term commodity contracts and economic hedges and a $47 million credit (2010 $nil) which primarily relates to the impact of the increase in North Sea taxation on certain re-measurement balances. For further information, see note 2 (page 15).

Board change

Fabio Barbosa was appointed to the Board as an Executive Director and as Chief Financial Officer, effective 31 March 2011. Fabio Barbosa succeeds Ashley Almanza who stood down from the Board on 31 March 2011.

Exploration and Production (E&P)

a) See note 1 (page 14).

Additional operating and financial data is given on page 21.

First quarter

Revenue and other operating income increased by 9% to $2 510 million, reflecting higher realised prices, partially offset by a 5% fall in production volumes. Total operating profit was 6% higher as a result of the increase in revenue and other operating income, partially offset by a higher quarterly exploration charge.

Production volumes were principally impacted by the shutdown, largely for elective maintenance, of the Everest and Lomond platforms in the UK North Sea. Everest and Lomond are now back onstream, with the restart of the Erskine satellite imminent.

Production in the quarter was also affected by civil unrest in North Africa. In Tunisia, the restart of the Hasdrubal plant was delayed, and in Egypt there was significant disruption to normal patterns of gas demand. As a consequence of delays already incurred and continuing unrest, BG Group expects development projects in Egypt's West Delta Deep Marine concession, scheduled for later in 2011, to be delayed by several months. In addition, production volumes in the quarter were affected by extreme weather conditions and extensive flooding in Queensland, Australia.

As a result of these factors, BG Group expects modest production growth in 2011, ahead of the strong ramp-up in production volumes which begins in 2012 and continues through the decade. The Group's goals for 2020 are also unaffected and are supported by significant progress with growth projects in Brazil, the USA and Australia, as well as further exploration and appraisal success in Brazil and Tanzania.

The Group's average realised gas price per produced therm increased by 6% to 39.45 cents, reflecting generally higher market prices and changes in the production mix.

The exploration charge increased to $184 million due to phasing of the exploration programme.

Unit operating expenditure increased to $7.99 per barrel of oil equivalent, principally reflecting the impact of the UK North Sea shutdown, changes in the production mix and higher commodity prices.

Capital investment of $1 826 million in the quarter comprised investment in the Americas ($777 million, including $263 million on acquisitions), Australia ($403 million), Europe and Central Asia ($355 million, including $56 million on acquisitions) and Africa, Middle East and Asia ($291 million).

First quarter business highlights

Brazil

There were significant advances in the quarter with the growth programme in Brazil. Production at the first permanent module on Lula Sul increased to some 25 000 barrels of oil per day (bopd), and construction of the next two Floating Production, Storage and Offloading (FPSO) modules advanced to around 50% complete, in line with plans. Tenders for the fourth and fifth FPSOs are expected in this quarter, and work to construct the hulls for eight further modules is also progressing to plan.

In April, the Extended Well Test on Lula North East commenced utilising the BW Cidade de São Vicente FPSO. Current gross production has reached 18 000 bopd, constrained by facilities.

In April, BG Group announced the conclusion of a Drill Stem Test (DST) on the Guará Norte well (3-SPS-69) in Block BM-S-9 in the Santos Basin. The DST confirmed high productivity of some 6 000 bopd of light oil (approx 30˚ API) with flow rates constrained by test facility capacity. Production potential from this well is estimated at around 50 000 bopd. The Guará Norte well was drilled at a water depth of 2 118 metres, approximately 305 kilometres (kms) off the coast of São Paulo state and around 15 kms northeast of the original discovery well.

In March, BG Group announced the successful completion of drilling on the Iara Horst well in the BM-S-11 concession in the Santos Basin. The well encountered good quality oil (28˚ API) in a thick reservoir section. Initial results from Iara Horst have demonstrated superior reservoir characteristics to the discovery well located around eight kms away. A DST, completed in April, confirmed reservoir quality and well productivity. Further evaluation activity continues.

In February, BG Group announced a new discovery of oil (approximately 26˚API) in Block BM-S-10 in the Santos Basin. The discovery well, known as Macunaíma, is located in a water depth of 2 134 metres, approximately 244 kms off the coast of Rio de Janeiro state. Further evaluation of the discovery continues.

USA

BG Group's shale gas operations continued to gather momentum, with 46 wells spudded and 22 drilling rigs operating in the Haynesville shale during the quarter. Seven wells were drilled in the Marcellus shale.

Tanzania

In April, BG Group announced its third Tanzanian gas discovery. The Chaza-1 well is located in Block 1 approximately 18 kms offshore southern Tanzania in a water depth of around 950 metres. The discovery is some 200 kms south of BG Group's Pweza and Chewa discoveries. To date, approximately 5 000 square kilometres (sq kms) of new 3D seismic data has been acquired in Blocks 1, 3 and 4. It is intended that a second drilling campaign will commence in late 2011.

Kenya

In March, BG Group signed a Heads of Agreement with the Kenyan government to acquire a 40% equity interest in the exploration block L10A and a 45% interest in block L10B, subject to negotiation of Production Sharing Contracts. BG Group would operate both blocks.

India

In April, following India's New Exploration Licensing Policy (NELP) IX licensing round, a consortium led by BG Group (50% and operator), was identified as the qualifying bidder for an exploration block (MB-DWN-2010/1) offshore the west coast of India. The block is approximately 350 kms from the coast, covering an area of 7 963 sq kms and in water depths in excess of 2 000 metres. The award of the contract will be subject to final confirmation from the government of India and regulatory approvals.

Norway

In the 21st licensing round held in April, the Norwegian government awarded BG Group a 40% interest in and operatorship of licence PL599, located in the Norwegian Sea.

Liquefied Natural Gas (LNG)

a) See note 1 (page 14).

Additional operating and financial data is given on page 21.

First quarter

Total operating profit for the quarter was $570 million.

Shipping and marketing total operating profit of $501 million was in line with expectations but below first quarter 2010 results which benefited from strong weather-related gas demand.

BG Group's share of total operating profit from liquefaction activities increased by 5% to $87 million.

At the strategy presentation in February, BG Group published guidance that its LNG segment would achieve an operating profit for 2011 and 2012 of between $1.9 billion to $2.2 billion per annum; the outcome for 2011 is now expected to be towards the upper end of that range.

Capital investment of $399 million in the quarter included $366 million in Australia.

First quarter business highlights

Australia

In March, BG Group signed a sales agreement with Tokyo Gas Co. Ltd. (Tokyo Gas), concluding negotiations announced in March 2010 for the supply of 1.2 million tonnes of LNG a year for 20 years from 2015. Tokyo Gas will be supplied with LNG from the Queensland Curtis LNG (QCLNG) facility in Australia, and from the Group's global LNG portfolio. Tokyo Gas has acquired a 1.25% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland. Tokyo Gas has also become a 2.5% equity investor in QCLNG Train 2, the second of two liquefaction trains which will form the first phase of the QCLNG development, which is planned to come onstream in 2014.

BG Group has signed a sales agreement with Chubu Electric Power Co. Inc, (Chubu Electric) concluding negotiations announced in October 2010 for the long-term supply of LNG. Under the agreement, Chubu Electric will purchase up to 122 cargoes over 21 years, starting in 2014. This will be supplied from BG Group's global LNG portfolio, including the QCLNG facility in Australia.

Progress continued with the QCLNG project during the quarter. Mitigation of the effects of the severe flooding, which has primarily impacted the drilling programme, is in hand with the 2014 first LNG date unchanged.

Transmission and Distribution (T&D)

a) See note 1 (page 14).

First quarter

Revenue and other operating income increased by 11% to $785 million, principally reflecting higher volumes at Comgás in Brazil and Gujarat Gas in India.

T&D total operating profit increased by 4% to $145 million.

At Comgás, $21 million was passed back to customers in the quarter compared with a $11 million net recovery of gas costs in 2010. At the end of the quarter, $116 million is due to be passed back to customers in future periods. Excluding the timing effect of gas cost recovery, total operating profit at Comgás was 13% higher, principally reflecting 8% higher volumes and favourable foreign exchange movements.

Capital investment mainly represents the development of the Comgás pipeline network.

First quarter business highlights

In April, BG Group signed and completed a Sale and Purchase Agreement (SPA) with its partners in Genting Sanyen Power in Malaysia for them to acquire the Group's 20% interest in the power plant for approximately $80 million.

In April, the SPA for the sale of BG Group's 40% interests in both the Santa Rita and San Lorenzo power stations in the Philippines was terminated as certain consents and waivers were not received. BG Group's holding in these assets will continue to be classified as held for sale and treated as discontinued operations.

Presentation of Non-GAAP measures

Legal Notice

Consolidated Income Statement

First Quarter

a) See note 1 (page 14).

b) See Presentation of Non-GAAP measures (page 8) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of the results of joint ventures and associates.

c) Operating profit/(loss) is before share of results from joint ventures and associates.

d) Includes earnings from continuing operations of $595 million (2010 $1 163 million) and from discontinued operations of $2 million (2010 $(203) million).

e) This measurement is shown by BG Group as it is used as a means of measuring the underlying performance of the business.

Consolidated Statement of Comprehensive Income

a) Income tax relating to hedge adjustments is a $113 million credit for the quarter (2010 $73 million credit).

b) Income tax relating to fair value movements on 'available-for-sale' assets is a $1 million credit for the quarter (2010 $nil).

Consolidated Balance Sheet

Consolidated Cash Flow Statement

a) Includes profit/(loss) before tax from discontinued operations for the quarter of $3 million (2010 $(299) million).

b) Includes capitalised interest for the quarter of $29 million (2010 $14 million).

c) Cash and cash equivalents comprise cash and short-term liquid investments that are readily convertible to cash.

d) The balance at 31 March 2011 includes cash and cash equivalents of $1 142 million (31 December 2010 $2 533 million; 31 March 2010 $803 million) and cash included within assets held for sale of $17 million (31 December 2010 $18 million; 31 March 2010 $8 million).

Notes

1. Basis of preparation

These primary statements are the unaudited interim consolidated financial statements ('the financial statements') of

BG Group plc for the quarter ended 31 March 2011. The financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006, and should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2010 which have been prepared in accordance with IFRS as adopted by the EU, as they provide an update of previously reported information. The latest statutory accounts delivered to the registrar were for the year ended 31 December 2010 which were audited by BG Group's statutory auditors PricewaterhouseCoopers LLP and on which the Auditors' Report was unqualified and did not contain statements under Sections 498(2) or 498(3) of the Companies Act 2006. These financial statements are Interim Management Statements and have been prepared in accordance with the requirements of the Disclosure and Transparency Rules issued by the Financial Services Authority and the accounting policies set out in the 2010 Annual Report and Accounts.

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

From September 2010, following the decision to dispose of the majority of the Group's Power Generation segment, these operations have been treated as discontinued operations. Power businesses that remain with BG Group have been allocated to other business segments based on their activity and location. A single amount is presented on the income statement for discontinued operations, comprising the post-tax results of these businesses and the post-tax profit or loss recognised on re-measurement to fair value less costs to sell and on disposal of the businesses. Comparative information has also been restated to reflect the presentation of discontinued operations as a separate line item.

Presentation of results

The presentation of BG Group's results separately identifies the effect of:

·; The re-measurement of certain financial instruments; and

·; Profits and losses on the disposal and impairment of non-current assets and businesses.

These items, which are detailed in note 2 to the financial statements (page 15), are excluded from Business Performance in order to provide readers with a clear and consistent presentation of the underlying operating performance of the Group's ongoing businesses.

New accounting standards and interpretations

A number of amendments to accounting standards issued by the IASB are applicable from 1 January 2011. They have not had a material impact on the Group's financial statements for the quarter ended 31 March 2011.

2. Disposals, re-measurements and impairments

First quarter: Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a charge of $408 million for the quarter (2010 $140 million credit), of which a charge of $51 million (2010 $42 million credit) represents non-cash mark-to-market movements on certain long-term UK gas contracts. Whilst the activity surrounding these contracts involves the physical delivery of gas, the contracts fall within the scope of IAS 39 and meet the definition of a derivative instrument. In addition, re-measurements include a $357 million charge for the quarter (2010 $98 million credit) representing unrealised mark-to-market movements associated with economic hedges.

First quarter: Disposals of non-current assets and impairments

During the first quarter, disposals and write-offs resulted in a pre-tax charge to the income statement of $5 million (post-tax $8 million credit).

Also during the quarter, BG Group committed to sell its investment in Genting Sanyen Power. Accordingly, as at 31 March 2011, this asset was classified as held for sale at its carrying value.

During the first quarter of 2010, BG Group committed to sell its Canadian E&P assets. Accordingly, these assets were reclassified as held for sale and revalued to the lower of their carrying amount and fair value less costs to sell. This resulted in a pre-tax impairment charge of $52 million (post-tax charge $37 million) against these assets.

First quarter: Net finance costs

Re-measurements presented in net finance costs include certain derivatives used to hedge foreign exchange and interest rate risk, partly offset by foreign exchange movements on certain borrowings.

First quarter: Taxation

During the first quarter, taxation includes a $47 million credit which primarily relates to the impact of the increase in North Sea taxation on re-measurement balances.

3. Segmental analysis

a) Business Performance Other operating income is attributable to segments as follows: E&P $(8) million (2010 $41 million) and LNG $18 million (2010 $104 million).

3. Segmental analysis continued

4. Net finance (costs)/income

a) In 2011, foreign exchange losses for the quarter of $22 million are included in interest payable. In 2010, foreign exchange gains for the quarter of $51 million are included in interest receivable.

b) Relates to the unwinding of the discount on provisions and amounts in respect of pension obligations which represent the unwinding of discount on the plans' liabilities offset by the expected return on the plans' assets.

c) Net finance income on disposals, re-measurements and impairments for the quarter of $5 million (2010 $19 million) is included in note 2 (page 15) and principally reflects certain derivatives used to hedge foreign exchange and interest rate risk, partly offset by foreign exchange movements on certain borrowings.

d) Excludes Group share of net finance costs from joint ventures and associates for the quarter of $14 million (2010 $13 million).

5. Taxation

Business Performance taxation for the first quarter, excluding prior period taxation but including share of taxation from joint ventures and associates, was $849 million (2010 $822 million).

a) Prior period taxation relates to the revision of deferred tax balances at 1 January 2011, primarily as a result of the increase in North Sea taxation announced in March 2011.

6. Discontinued operations

The post-tax profit/loss of the businesses comprising discontinued operations for the first quarter, including profits and losses on disposals and impairments, was a $2 million profit (2010 $203 million loss).

During the first quarter of 2010, BG Group signed a Sale and Purchase Agreement for the sale of its power plants in the USA and its investment in the Seabank power plant in the UK. Accordingly, these assets were reclassified as held for sale and revalued to the lower of their carrying amount and fair value less costs to sell. This resulted in a pre-tax impairment charge of $325 million (post-tax charge $226 million) against the Group's US power plants.

7. Earnings per ordinary share - continuing operations

Basic earnings per share calculations in 2011 are based on the weighted average number of shares in issue of

3 387 million for the quarter.

The earnings figure used to calculate diluted earnings per ordinary share is the same as that used to calculate earnings per ordinary share given above, divided by 3 410 million for the quarter, being the weighted average number of ordinary shares in issue during the period as adjusted for dilutive equity instruments.

8. Reconciliation of net borrowings(a) - First Quarter

Net borrowings attributable to Comgás were $871 million (31 December 2010 $798 million).

As at 31 March 2011, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately $1.8 billion, including BG Group shareholder loans of approximately $1.4 billion. These net borrowings are included in BG Group's share of the net assets in joint ventures and associates which are consolidated in BG Group's accounts.

a) Net borrowings/funds are defined on page 24.

b) Excludes $1 million relating to a decrease in cash and cash equivalents classified as held for sale.

c) Net borrowings comprise:

d) These items are included within commodity contracts and other derivative financial instrument balances on the balance sheet.

e) Includes finance lease receivable of $135 million (2010 $134 million) included within non-current assets on the balance sheet.

9. Capital investment: geographical analysis

a) Includes capital investment relating to discontinued operations for the quarter of $nil (2010 $2 million).

10. Quarterly information: earnings and earnings per share

Supplementary information: Operating and financial data

Supplementary information: Operating and financial data continued

Historical information

Supplementary information: Operating and financial data continued

Historical information continued

Price and exchange rate sensitivity

BG Group's exposure to the oil price varies according to a number of factors including the mix of production and sales. Management estimates that, other factors being constant and assuming a constant relationship between commodity prices, a $1.00 rise (or fall) in the Brent oil price would increase (or decrease) E&P business operating profit in 2011 by approximately $70 million to $100 million.

Management estimates that in 2011, other factors being constant, a 10 cent strengthening (or weakening) in the US Dollar/Pounds Sterling exchange rate would increase (or decrease) operating profit by approximately $10 million to

$30 million.

Glossary