3rd Quarter Results

Third Quarter Key Points

·; Total operating profit up 17% year-on-year to $1.9 billion

·; Cash flow from operations up 59% year-on-year to $2.7 billion

·; Production up 1%, held back by outages at UK facilities which are now back onstream

·; 2011 LNG total operating profit now expected to be above guidance at some $2.4 billion

·; Long-term LNG supply agreement signed with Gujarat State Petroleum Corporation, India

·; Lula to Mexilhão gas pipeline, offshore Brazil, commenced operations

·; All 13 first phase FPSO vessels now committed for BM-S-9 and BM-S-11, offshore Brazil

·; Good progress on the QCLNG project, with $1.3 billion invested in the quarter

·; In October, $3 billion of bonds issued with maturities from five to thirty years

a)  'Business Performance' excludes 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. For further information see Presentation of Non-GAAP measures (page 11) and notes 1 to 3 (pages 18 to 22). Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance.

b) Prior period taxation represents the revision of deferred tax balances at 1 January 2011 due to changes in UK taxation rates.

BG Group's Chief Executive, Sir Frank Chapman said:

"Our third quarter total operating profit was up 17% year-on-year to $1.9 billion driven by higher realised prices and a one percent increase in E&P volumes."

"In LNG, we now expect total operating profit for 2011 to be some $2.4 billion, exceeding previous guidance."

Sir Frank said, "we are advancing our growth programme with material progress, particularly in Brazil and Australia, alongside work to improve longer term production from existing assets."

"In Australia, where we have invested $1.3 billion in the quarter", he said, "engineering procurement and construction are all moving ahead in line with a 2014 first production goal for our Queensland Curtis LNG (QCLNG) project. Upstream, we drilled 51 wells and progressed construction on water and compression facilities. Site preparation for the LNG plant is complete and construction of foundations for the LNG storage tanks is underway", he added, "progress is being made with the harbour dredging and the main 42 inch steel pipeline is in location, ready for welding and trenching."

"We are therefore making good progress with our strategic objective to globalise our LNG business through this Asia-Pacific equity LNG position."

"In Brazil, we made significant advances in the quarter. Commercial production at the first permanent FPSO on Lula field increased, with over 35 000 barrels of oil equivalent per day (boed) from one producing well being achieved. Further wells are due onstream by year end."

Sir Frank added, "construction of the next two FPSO modules is on track at around 70% complete. We have also signed letters of intent for a further two 150 000 barrels of oil per day (bopd) modules which means that all of the 13 first phase FPSOs, which will deliver an aggregate production capacity of some 2.3 million boed by 2017, have now been committed."

"Similar progress and delivery is being mirrored across our global portfolio. In India, one of the world's fastest growing energy markets, we reached a landmark agreement for long-term LNG sales to Gujarat State Petroleum Corporation. In Egypt, the successful commencement ofPhase 8a in the West Delta Deep Marine concession represents a further milestone in the development of our interests there - excellent progress especially in light of the civil unrest earlier in the year. Elsewhere in the portfolio, other projects continued to make progress, with new facilities for the Bongkot South development in Thailand on schedule and, in the UK, we saw good results from drilling at the Jasmine field and facilities construction advanced. Finally, in the US, the Department of Energy granted authorisation for potential LNG export from the Lake Charles terminal."

"In the UK North Sea, all facilities are now back onstream following outages that marred production in the first nine months of the year. Outside the UK, overall production has grown in line with plans."

Sir Frank concluded, "I am pleased with the progress we are making on delivering our key growth projects, underpinned by our strong resource base, and also on the work being undertaken to improve future production performance from existing assets."

 Business Review - Group

a) Includes capital investment relating to discontinued operations for the quarter of $nil (2010 $1 million) and for the nine months of $nil (2010 $28 million).

Third quarter

Revenue and other operating income increased by 21% to $5 397 million, reflecting the benefit of higher realised prices and a 1% increase in E&P production volumes.

As a result of the above, total operating profit increased by 17% to $1 943 million.

Cash generated by operations increased by 59% to $2 738 million reflecting higher profits and, as anticipated, the continued reversal of prior period margin calls on the Group's hedged LNG contracts.

As of 30 September 2011, the Group's net debt was $10 845 million with an average maturity of around 7 years, and the gearing ratio was 27%. In October 2011, BG Group issued $3 billion of bonds into the US debt market, demonstrating the attractiveness of BG Group's credit and providing material, long-term funding for the Group. The bonds were issued in tranches of $750 million, $1 350 million and $900 million maturing in 2016, 2021 and 2041, respectively. These bonds were rated mid-single A by each of Moody's, Standard & Poor's and Fitch. Management remain committed to take necessary actions to maintain the Group's mid-single A rating. The Group's undrawn committed facilities have been increased to $5.75 billion, with maturities ranging from 2012 to 2018.

The $73 million decrease in net finance costs was driven primarily by changes in foreign exchange (2011 foreign exchange gains of $1 million compared with a $58 million loss in 2010).

Capital investment of $2 900 million in the quarter comprised investment in E&P ($2 100 million), LNG ($712 million) and T&D ($88 million). This investment focused primarily on the Group's major projects in Australia, Brazil, the USA and the UK, and represents a 39% increase in underlying organic capital investment compared with third quarter 2010. More details on project developments are provided in the third quarter business highlights section.

Nine months

Revenue and other operating income of $15 315 million was 18% higher than the same period in 2010, reflecting the benefit of higher realised prices. This revenue performance, combined with a lower exploration charge, was the main contributor to the 18% increase in total operating profit from $5 123 million to $6 060 million.

Cash generated by operations of $7 118 million was 9% higher than last year as a result of higher profits, partly offset by an increase in working capital.

The $80 million increase in net finance costs was driven primarily by changes in foreign exchange (2011 foreign exchange losses of $14 million compared with a $64 million gain in 2010).

The Group's effective tax rate (including BG Group's share of joint venture and associates' tax, but excluding prior period taxation) for the full year is expected to be 45% (2010 38.5%). The year-on-year increase reflects the higher UK North Sea taxation announced in March 2011 as well as the recognition in third quarter 2010 of a $106m credit relating to a favourable settlement for a prior period.

The Group's extensive investment programme to deliver growth continues and capital investment in the nine months was $7 733 million (including acquisitions of $432 million) and comprised investment in E&P ($5 844 million), LNG ($1 648 million) and T&D ($241 million). This investment focused primarily on the Group's major projects in Australia, Brazil, the USA and the UK, and represents a 32% increase in underlying organic capital investment compared with 2010. This expenditure is in line with the Group's previous guidance of $10 billion for the full year at reference conditions. For BG Group's reference conditions, see Glossary (page 31).

Disposals, re-measurements and impairments - continuing operations 

A post-tax gain of $38 million for the quarter (2010 $102 million charge) and a post-tax charge of $62 million for the nine months (2010 $479 million charge) was recorded in respect of disposals, re-measurements and impairments. For further information, see note 2 (page 19).

Third quarter business highlights

Australia

Activity on the LNG plant, the 540 kilometre pipeline and the upstream wells and facilities of the QCLNG project continues to advance. 

On Curtis Island, site preparation is complete, a second concrete batching plant has been commissioned and the construction of the LNG storage tank foundations has commenced, alongside the start of construction of the worker's living quarters. Construction of modules for the LNG plant is progressing at fabrication yards in Thailand with steelwork assembly of the first propane condenser underway, along with pre-assembly work for the next three propane condenser modules.

Land access for the gas collection header network is complete, with over 95% of land access secured for the export pipeline from the gas fields to Curtis Island. The 42 inch steel pipe has been coated, shipped and hauled to infield locations ready for welding and trenching.

In the gas fields, 51 development wells were drilled in the quarter, utilising four drilling rigs. Drilling activity continues to build, with up to 12 drilling rigs planned for 2012. Four petroleum leases have been granted in the quarter, with the majority of environmental authorities already in place. Work continues on the Kenya water treatment plant and construction has commenced on the first two field compression stations. An engineering and procurement contract has been signed for the Northern water treatment plant along with a contract for the supply of polyethylene pipes for gas gathering and water supply.

In the third quarter, BG Group spent $1.3 billion in Australia on the QCLNG project. The Group is entering a phase where an increasing amount of the QCLNG project expenditure is being incurred in Australian dollars, in which currency around 70% of the total cost of the project will be incurred.

In July, BG Group executed agreements to farm into ATP940, a Queensland Cooper Basin exploration permit, acquiring a 60% interest. ATP940, which covers about 2 500 square kilometres, is considered prospective for shale and tight gas.

Meanwhile, BG Group also spudded in August its first Bowen Basin conventional tight gas exploration well. These target sands underlie the Surat Basin coal measures being developed for QCLNG. The Group will drill several wells over the next 18 months, to depths of up to 5 kilometres.

Third quarter business highlights (continued)

Brazil

There were significant advances in the quarter with the growth programme in Brazil. Production at the first permanent module on the Lula field increased, with one current producer delivering over 35 000 boed. Further wells are planned to be onstream by year end.

Construction of the next two FPSO modules advanced to around 70% complete, in line with plans. Letters of intent for the supply, charter and operation of two further 150 000 barrels of oil per day (bopd) modules were signed in the quarter. One vessel will be deployed on block BM-S-9 (Guará area), with delivery scheduled for the third quarter of 2014. The other vessel will be deployed on block BM-S-11 (Cernambi area), with delivery scheduled for the fourth quarter of 2014. The initial 13 FPSO vessels for BM-S-9 and BM-S-11, having an aggregate production capacity of2.3 million boed, have now all been committed and are all due onstream by 2017. 

In July, BG Group and partners completed drilling of the second extension well, Guará Sul, in BM-S-9 in the Santos Basin. The well was drilled in a water depth of 2 156 metres and is located 315 kilometres off the coast of the state of São Paulo. Preliminary analyses confirm lateral continuity and the hydraulic communication of the reservoir. Further evaluation activity continues.

At the end of July, the Guará Extended Well Test (EWT) was concluded with a total cumulative production of2.8 mmboe. Daily production averaged 16 000 bopd, before being raised to 30 000 bopd by the end of the test.

In October, the EWT on Carioca North East commenced utilising the Dynamic Producer FPSO. Current gross production has reached 15 000 bopd, constrained by facilities. 

In September, delivery of natural gas to the Brazilian market commenced from the pre-salt fields, through the gas pipeline connecting the Lula field to the Mexilhão platform. The 350 million standard cubic feet per day capacityLula-Mexilhão pipeline has a length of 216 kilometres and diameter of 18 inches, with an operating pressure of250 bar. This gas pipeline starts at a depth of 2 145 metres, where the Cidade de Angra dos Reis FPSO is located in the Lula field, and climbs to a depth of 172 metres at Mexilhão.

BG Group has taken a step towards the development of its global technology centre by securing an area of3 000 square metres in the Technological Park at the Rio de Janerio Federal University. This facility will be a significant resource for delivery of Group-wide technological development.

Egypt

In October, gas production from Phase 8a of the West Delta Deep Marine (WDDM) Deepwater Development Project commenced. This $1 billion (gross) investment, located approximately 90 kilometres offshore the Nile Delta, will add nine subsea wells to the existing deepwater subsea infrastructure and represents another successful milestone in the phased development of the WDDM concession.

India

In September, BG Group signed a heads of agreement (HoA) with Gujarat State Petroleum Corporation (GSPC) for the long-term supply of up to 2.5 million tonnes per annum of LNG. The HoA sets out the basis on which BG Group will sell LNG to GSPC for up to a 20-year period, beginning in 2014. The LNG will be sourced from the Group's current and future global supply portfolio.

USA

In July, the US Department of Energy granted authorisation for LNG export by vessel from the Lake Charles terminal, to countries with which the US has a free trade agreement for a period of 25 years from the earlier of date of first export or July 2021. 

Exploration and Production (E&P)

Additional operating and financial data is given on page 29.

Third quarter

Revenue and other operating income increased by 28% to $2 497 million, reflecting the benefit of higher realised prices and a 1% increase in production volumes. Total operating profit of $1 183 million was 55% higher as a result of the increase in revenue and other operating income, partially offset by higher operating costs.

In the quarter, production volumes were 1% higher, as increased production across the Group's portfolio was largely offset by the impact of shutdowns, third party operated infrastructure restrictions and plant commissioning activities in the UK North Sea. Production from the UK in the quarter was approximately 4 mmboe (39%) lower than BG Group's 2011 plans. Buzzard, where new facilities are being commissioned, operated at significantly less than full capacity during the quarter; and shutdowns, largely for asset integrity maintenance, were completed at a number of fields including Armada, Everest and Lomond.

International gas price realisations were 20% higher at 39.06 cents per produced therm, reflecting changes in the production mix and the effects of higher oil prices. The average realised gas price in the UK increased by 28% to38.96 pence per produced therm as a result of higher contract and market prices. 

For the 2011/2012 UK gas year, BG Group expects to sell approximately 60% of its North Sea gas production at an average price of around 44 pence per therm.

The exploration charge of $127 million was broadly in line with 2010.

Unit operating expenditure increased to $8.96 per barrel of oil equivalent, reflecting the impact of the UK North Sea shutdowns, higher commodity prices and changes in the production mix.

Capital investment of $2 100 million in the quarter comprised investment in Australia ($638 million), the Americas($597 million), Europe and Central Asia ($495 million) and Africa, Middle East and Asia ($370 million).

Nine months

Revenue and other operating income increased by 24% to $7 794 million as a result of higher realised prices. Total operating profit increased by 43% to $3 861 million, reflecting the increase in revenue and other operating income and a lower exploration charge, partially offset by higher operating costs.

In the first nine months of 2011, production from the UK North Sea was approximately 11 mmboe (29%) lower thanBG Group's plans. With Buzzard production now re-established UK facilities are back onstream, with BG Group net output from the North Sea some 90 000 boed higher than the average in September. Achievement of the Group's annual production growth guidance will largely depend on the North Sea performance continuing for the remainder of the fourth quarter. Excluding the UK North Sea, production volumes for the Group were 6% higher than 2010, consistent with the Group's 2011 plan, with the effects on production of civil unrest in North Africa and flooding in Queensland being successfully offset.

The Group's average realised gas price per produced therm increased by 15% to 40.95 cents, reflecting higher market prices and changes in the production mix. 

Unit operating expenditure increased to $8.63 per barrel of oil equivalent, reflecting the impact of the UK North Sea shutdowns, higher commodity prices and changes in the production mix, including higher than portfolio average costs associated with production start-up activities in Brazil.

Capital investment of $5 844 million in the nine months comprised investment in the Americas ($2 047 million, including $376 million on acquisitions), Australia ($1 537 million), Europe and Central Asia ($1 293 million, including $56 million on acquisitions) and Africa, Middle East and Asia ($967 million).

Liquefied Natural Gas (LNG)

Additional operating and financial data is given on page 29.

Third quarter

LNG total operating profit for the quarter of $620 million was 14% lower than last year, but ahead of the Group's expectations as a result of favourable market conditions. BG Group diverted 89% of cargoes (2010 78%) to global markets outside the USA including 35 to Asia, 12 to South America and 2 to Europe.

BG Group's share of operating profit from liquefaction activities increased by 7% to $81 million.

As a result of continued strong performance and at current market conditions, total operating profit for the LNG segment in 2011 is now expected to be above guidance at some $2.4 billion.

Capital investment of $712 million in the quarter comprised investment in Australia ($681 million) associated with the development of the Queensland Curtis LNG (QCLNG) project, the Americas ($29 million) and Africa, Middle East and Asia ($2 million).

Nine months

LNG total operating profit of $1 743 million was 8% lower than last year. During the nine months, BG Group diverted 86% of cargoes (2010 71%) to global markets outside the USA including 76 to Asia, 35 to South America and 21 to Europe.

BG Group's share of operating profit from liquefaction activities increased by 4% to $249 million.

Capital investment of $1 648 million in the nine months comprised investment in Australia ($1 556 million), the Americas ($89 million) and Africa, Middle East and Asia ($3 million).

Transmission and Distribution (T&D)

Additional operating and financial data is given on page 29.

Third quarter

Revenue and other operating income increased by 16% to $935 million, principally reflecting favourable foreign exchange movements at Comgás in Brazil and higher volumes and prices at Gujarat Gas in India.

T&D total operating profit for the quarter of $130 million was 34% lower, largely as a result of the timing effect of gas cost recovery at Comgás.

At Comgás, excluding the timing effect of gas cost recovery, total operating profit increased by 42% as a result of higher margins and favourable foreign exchange movements. In the quarter, $72 million was passed back to customers compared with a $67 million net recovery of gas costs in 2010. At the end of the quarter, $4 million remained to be passed back to customers in future periods.

Other T&D activities' operating profit increased by $27 million principally as a result of higher profits at Gujarat Gas.

Nine months

Revenue and other operating income increased by 15% to $2 588 million, reflecting favourable sales mix and foreign exchange movements at Comgás and higher volumes and prices at Gujarat Gas.

T&D total operating profit for the nine months of $442 million was 15% lower, as the increase in revenue and other operating income was more than offset by the timing effect of gas cost recovery at Comgás.

At Comgás, excluding the timing effect of gas cost recovery, total operating profit was 29% higher, reflecting higher margins and favourable sales mix and foreign exchange movements. In the nine months, $137 million was passed back to customers compared with a $106 million net recovery of gas costs in 2010. 

Other T&D activities' operating profit increased by $73 million to $175 million, principally reflecting higher profits at Gujarat Gas and the phasing of profits at BG Italia Power.

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

Legal Notice

Presentation of Non-GAAP measures

Consolidated Income Statement

Third Quarter

a) See Presentation of Non-GAAP measures (page 11) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of theresults of joint ventures and associates.

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

c) Comprises earnings from continuing operations of $1 060 million (2010 $876 million) and from discontinued operations of $(2) million (2010 $(27) million).

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

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

Consolidated Income Statement

Nine Months

a) See Presentation of Non-GAAP measures (page 11) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of the results of joint ventures and associates.

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

c) Comprises earnings from continuing operations of $2 900 million (2010 $2 478 million) and from discontinued operations of $(2) million (2010 $(67) million).

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

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

For information on dividends paid in the period, see note 9 (page 26).

Consolidated Statement of Comprehensive Income

a) Income tax relating to hedge adjustments is a $72 million charge for the quarter (2010 $126 million credit) and a $5 million credit for the nine months (2010 $176 million credit).

b) Income tax relating to fair value movements on 'available-for-sale' assets is a $3 million charge for the quarter (2010 $nil) and a $1 million charge for the nine months(2010 $1 million credit).

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

Consolidated Balance Sheet

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

Consolidated Statement of Changes in Equity

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

Consolidated Cash Flow Statement

a) Includes profit/(loss) before tax from discontinued operations for the quarter of $(2) million (2010 $(26) million) and for the nine months of $(1) million(2010 $(159) million).

b) Includes capitalised interest for the quarter of $51 million (2010 $20 million) and for the nine months of $118 million (2010 $48 million).

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

d) The balance at 30 September 2011 includes cash and cash equivalents of $1 627million (31 December 2010 $2 533 million) and cash included within assets held for sale of $nil (31 December 2010 $18 million).

The notes on pages 18 to 28 form an integral part of these condensed financial statements.

Notes

1. Basis of preparation

These primary statements are the condensed financial statements ('the financial statements') of BG Group plc for the quarter ended and the nine months ended 30 September 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 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU and the accounting policies, methods of computation and presentation as 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.

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 19) 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 and nine months ended30 September 2011.

2. Disposals, re-measurements and impairments

Third quarter and nine months: Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a credit of $71 million for the quarter (2010 $54 million credit), of which a credit of $6 million (2010 $4 million charge) represents non-cash mark-to-market movements on certain long-term UK gas contracts. For the nine months, a charge of $148 million in respect of re-measurements is included within revenue and other operating income (2010 $249 million charge), of which a credit of $3 million represents non-cash mark-to-market movements on certain long-term UK gas contracts (2010 $27 million charge). 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 $65 million credit for the quarter (2010 $58 million credit) and a $151 million charge for the nine months (2010 $222 million charge) representing unrealised mark-to-market movements associated with economic hedges.

Third quarter and nine months: Disposals and impairments of non-current assets

During the third quarter of 2011, disposals and write-offs resulted in a pre and post-tax charge to the income statement of $1 million.

In April 2011, 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. This resulted in a pre and post-tax profit of $28 million in the second quarter of 2011. Other disposals and write-offs resulted in a pre and post-tax charge of $4 million in the second quarter.

During the first quarter of 2011, disposals and write-offs resulted in a pre-tax charge to the income statement of$5 million (post-tax $8 million credit).

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.

During the second quarter of 2010, BG Group completed the disposal of its Canadian E&P assets. This resulted in a pre-tax profit on disposal of $12 million (post-tax $7 million) in the quarter. Also during the second quarter of 2010, a pre-tax impairment charge of $191 million (post-tax charge $138 million) was recognised against certain assets in the E&P segment. Other disposals and impairments resulted in a pre-tax charge of $8 million (post-tax $4 million) in the quarter.

During the third quarter of 2010, a pre-tax impairment charge of $169 million (post-tax $124 million) was recognised against certain exploration assets in the E&P segment. Other fixed asset disposals resulted in a pre and post-tax charge of $2 million in the quarter.

Third quarter and nine months: 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.

Third quarter and nine months: Taxation

During the first quarter of 2011, taxation includes a $47 million credit which primarily relates to the impact of the increase in UK North Sea taxation on re-measurement balances.

3. Segmental analysis

a) Business Performance Other operating income is attributable to segments as follows: E&P $(4) million (2010 $(8) million) and LNG $7 million (2010 $47 million).

3. Segmental analysis continued

a) External sales are attributable to segments as follows: E&P $6 961 million (2010 $5 726 million), LNG $5 754 million (2010 $4 869 million) and T&D $2 588 million(2010 $2 254 million). Intra-group sales are attributable to segments as follows: E&P $843 million (2010 $553 million) and LNG $nil (2010 $34 million).

b) Business Performance Other operating income is attributable to segments as follows: E&P $(10) million (2010 $20 million) and LNG $22 million (2010 $131 million).

3. Segmental analysis continued

4. Net finance costs

a) In 2011, interest payable includes foreign exchange gains of $1 million for the quarter and foreign exchange losses for the nine months of $14 million. In 2010, interest receivable includes foreign exchange losses of $58 million for the quarter and foreign exchange gains for the nine months of $64 million.

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 (costs)/income on disposals, re-measurements and impairments for the quarter of $(11) million (2010 $(5) million) and for the nine months of $(36) million(2010 $4 million) is included in note 2 (page 19) and principally reflects mark-to-market movements on 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 $16 million (2010 $12 million) and for the nine months of $46 million (2010 $35 million).

5. Taxation

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

Business Performance taxation for the nine months, excluding prior period taxation but including share of taxation from joint ventures and associates, was $2 642 million (2010 $1 950 million). The effective tax rate for the nine months is based on the best estimate of the weighted average annual income tax rate expected for the full year.

6. Discontinued operations

The post-tax profit/loss of the businesses comprising discontinued operations for the third quarter, including profits and losses on disposals and impairments, was a $2 million loss (2010 $27 million loss) and for the nine months was a$2 million loss (2010 $67 million loss).

During the first quarter of 2010, BG Group signed a Sale and Purchase Agreement (SPA) 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.

During the second quarter of 2010, BG Group completed the disposal of its power plants in the USA. This resulted in a pre and post-tax profit on disposal of $4 million. The Group also completed the sale of its investment in the Seabank power plant in the UK, which resulted in a pre and post-tax profit on disposal of $142 million.

During the third quarter of 2010, BG Group completed the disposal of Premier Power Limited. This resulted in a pre and post-tax loss on disposal of $41 million in the quarter. In September 2010, BG Group signed a SPA for the sale of its interests in both the Santa Rita and San Lorenzo power stations in the Philippines. Accordingly, these assets were reclassified as held for sale at their carrying value.

In April 2011, 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.

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 of3 390 million for the quarter and 3 388 million for the nine months.

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 3 412 million for the quarter and 3 410 million for the nine months, 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) - Nine Months

Net borrowings attributable to Comgás were $887 million (31 December 2010 $798 million).

As at 30 September 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 $1.5 billion. These net borrowings are included in BG Group's share of the net assets in joint ventures and associates which are consolidated inBG Group's accounts.

a) Net borrowings are defined on page 31.

b) Excludes $18 million relating to a decrease in cash and cash equivalents classified as held for sale.

c) Excludes $2 million relating to a decrease in borrowings classified as held for sale.

d) Net borrowings comprise:

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

f) Includes finance lease receivable of $189 million (2010 $134 million) included within non-current assets on the balance sheet.

8. Reconciliation of net borrowings - Nine Months continued

Liquidity and Capital Resources

All the information below is as at 30 September 2011

The Group's principal borrowing entities are: BG Energy Holdings Limited (BGEH), including wholly owned subsidiary undertakings, the majority of whose borrowings are guaranteed by BG Energy Holdings Limited (collectively BGEH), and Comgás and Gujarat Gas which conduct their borrowing activities on a stand-alone basis.

BGEH had a $4.0 billion US Commercial Paper Programme, of which $990 million was unutilised, and a $2.0 billion Eurocommercial Paper Programme, of which $1 257 million was unutilised. BGEH also had a $7.5 billion Euro Medium Term Note Programme, of which $3.1 billion was unutilised.

BGEH had aggregate committed multicurrency revolving borrowing facilities of $5.75 billion, of which $1 billion expires in 2012, $2.32 billion in 2013, $2.18 billion in 2016 and $250 million in 2018. There are no restrictions on the application of funds under these facilities, which were undrawn as at 30 September 2011.

In addition, BGEH had uncommitted borrowing facilities including multicurrency lines, overdraft facilities of £45 million and credit facilities of $20 million, all of which were unutilised.

Comgás had committed borrowing facilities of Brazilian Real (BRL) 1 573 million, of which BRL 193 million was unutilised, and uncommitted borrowing facilities of BRL 252 million, of which BRL 100 million was unutilised.

9. Dividends

The final dividend of 11.78 cents per share ($401 million) in respect of the year ended 31 December 2010 was paid on 20 May 2011 to shareholders on the register at the close of business on 15 April 2011. The interim dividend of 10.80 cents per share ($359 million) in respect of the year ended 31 December 2011 was paid on 8 September 2011 to shareholders on the register as at 5 August 2011.

10. Quarterly information: earnings and earnings per share