3rd Quarter Results

Third Quarter Key Points

·; Earnings up 16% to $1 189 million

·; E&P production up 5% to 59.4 mmboe; E&P total operating profit up 13%

·; Full year 2012 E&P production growth forecast at some 3%; 2013 production expected in line with 2012

·; LNG total operating profit up 24%; full year forecast at upper end of guidance range

·; QCLNG progressed towards first LNG in 2014, with a record 135 wells drilled in the quarter

·; In Brazil, good progress with drilling and FPSO programmes; reserves/resources independently certified

·; Heads of agreement signed to sell QCLNG stake and an additional 5 mtpa of LNG to CNOOC

·; Portfolio rationalisation to release $7.6 billion of capital by mid-2013, exceeding target

·; Tanzania gross recoverable resources near 10 tcf after sixth consecutive gas discovery

·; Exploration progress in Australia, Brazil, India, Kenya and Uruguay

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 20). Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance.

b) Includes a charge in respect of prior period taxation (Business Performance $195 million, Total results $148 million) arising on the revision of deferred tax balances at1 January 2011 due to changes in UK taxation rates.

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

"BG Group produced strong third quarter financial results across the business. We achieved good cost and schedule performance on key projects in Australia and Brazil and reached further asset sales agreements placing us well ahead of our capital release plan.

"Earnings for the third quarter increased 16% to $1.2 billion, driven by a 13% rise in E&P operating profit to $1.3 billion and a continued robust performance of the LNG business, where operating profit was up 24% to $767 million.

"Production rose by some 5% as new projects ramped up, but was held back by the previously announced shutdown of the non-operated Elgin/Franklin field and our earlier decision to scale back drilling in the USA due to low natural gas prices. As a result of these factors, along with the deferral of the Jasmine start-up to 2013, production growth in 2012 of some 3% is now forecast.

"Alongside these factors, which will continue to affect production in 2013, we have adjusted our 2013 plans to accommodate an extended sub-sea tie-in schedule for Brazil's Sapinhoá and Lula NE wells. We have also reflected lower production in Egypt where the Phase 7 compression project has been less effective than expected in arresting reservoir decline. In aggregate, these factors are expected to result in 2013 volumes being broadly in line with 2012.

"Looking ahead, our growth projects continue with the planned installation in Brazil of the two new FPSOs in 2013.This will be followed in 2014 by the installation of two further FPSOs in Brazil and the start-up of QCLNG in Australia. We also progressed the six further FPSOs planned to come onstream in Brazil in 2015 and 2016. The BM-S-9 partners intend to tender for a further FPSO for Carioca, which will bring to 15 the total number of FPSOs to be deployed on the 'big-five' Santos Basin discoveries."

Sir Frank commented: "Critical to our investment proposition is the delivery of our Australia and Brazil ventures. These projects will deliver unit earnings substantially higher than the current Group average, which alongside the growing contribution from the expanding LNG business, will result in Group earnings growing considerably faster than upstream production.

"In Australia, we continued to make good progress with our Queensland Curtis LNG project, keeping it on track for first LNG in 2014. We now have contracts and other agreements in place for more than 90% of the project scope to 2014, and we reconfirm the $20.4 billion capital budget. In the upstream, 135 wells were drilled in the quarter, a 71% increase on the second quarter. Construction of the pipeline infrastructure continues, with the gas collection header system and more than 50% of the gas export pipeline now welded. On Curtis Island, the construction of the LNG plant continues on track, with the first pre-fabricated modules from Thailand being installed."

Sir Frank added: "In Brazil, drilling momentum continues with up to 11 drilling rigs operating simultaneously. Drilling costs, which account for some 50% of project capex, have continued to fall as average drilling durations this year have fallen to 75 days, with the best well taking just 43 days. The prospect of continued drilling cost reductions in the future is highlighted by the best composite well duration of just 34 days.

"Additionally, contracts are in place for 90% of the next four leased and eight locally purchased FPSOs and costs are tracking on or under budget. Falling drilling durations and the confirmation of costs for FPSOs and other capital scope reconfirms the developments' very low unit costs*. The conversion of the two FPSOs scheduled for 2013 start-up continued on track. These units will more than triple gross production capacity from around 130 000 boed to430 000 boed. Production will ramp up as wells are connected, until plateau is reached in 2014 and 2015.

"In the quarter, we received independent certification from Miller and Lents of the reserves and resources within our 'big-five' Santos Basin discoveries. This confirmed our view of both the mean reserves and resources of 6 billion boe and the upside case of 8 billion boe respectively, net to BG Group*."

On the portfolio rationalisation programme, Sir Frank said: "Our agreement today to sell an interest in part of the QCLNG project to CNOOC means that we have now completed or reached asset sales agreements that should release a total of $7.6 billion of capital by mid-2013, with a material benefit to the Group's balance sheet."

On the Group's exploration programme, he noted: "The Papa-1 discovery in Block 3 produced our sixth consecutive exploration success offshore Tanzania. We currently estimate gross recoverable resources discovered to date to be near 10 tcf with extensive further potential to be explored.

"Elsewhere, exploration of other high potential prospects continued in Australia, Brazil and Egypt. In Kenya, seismic activity identified significant prospectivity in multiple gas and oil prone plays and future opportunities were added to our portfolio offshore Uruguay and India."

In conclusion, Sir Frank said: "During the quarter, BG Group produced good financial results, advanced the execution of our key growth projects within our capital cost estimates and reached agreements that will release substantially more capital earlier than planned. We also delivered exploration success while securing new exploration potential for the future."

*BG Group view, not the operator or relevant consortium

Business Review - Group

a) Includes a charge of $195 million in respect of prior period taxation arising on the revision of deferred tax balances at 1 January 2011 due to changes in UK taxation rates.

b) For a definition of capital investment on a cash basis see Glossary (page 31). For a reconciliation between capital investment on a cash basis and total capital investment see Supplementary Information (page 28).

Third quarter

Revenue and other operating income increased by 4% to $5 588 million, reflecting the benefit in the E&P segment of higher realised gas prices and a 5% increase in production volumes.

Total operating profit increased by 17% to $2 273 million as a result of the increase in E&P revenue and other operating income and strong results in the LNG segment as a result of continuing favourable market conditions.

Cash generated by operations of $2 701 million decreased by 1% as higher operating profits were offset by adverse working capital movements, primarily resulting from the timing of LNG cargoes.

As of 30 September 2012, the Group's net debt was $10 974 million and the gearing ratio was 25.3%. The average maturity of the Group's gross borrowings remains at around 17 years.

Net finance costs of $57 million included foreign exchange losses of $18 million (2011 net finance costs of $50 million including foreign exchange gains of $1 million).

Capital investment (excluding acquisitions and on a cash basis) of $2 770 million comprised investment inE&P ($2 057 million), LNG ($622 million) and T&D ($91 million). This investment was focused primarily on the Group's major projects in Australia, Brazil and the UK. Further details on key project developments are provided in the third quarter business highlights section.

Nine months

Revenue and other operating income increased by 11% to $16 958 million, reflecting the benefit in the E&P segment of higher realised gas and liquids prices, a 4% increase in production volumes and favourable changes in the production mix. This was combined with continued strong demand for the Group's LNG cargoes, particularly from Asia.

Total operating profit increased by 9% to $6 622 million, as the increase in revenue and other operating income was partly offset by higher operating costs and depreciation in the E&P segment. Cash generated by operations increased by 19% to $8 467 million, reflecting the combined result of the strong business performance and the reversal of prior period margin calls on the Group's hedged LNG contracts.

The Group's effective tax rate (including BG Group's share of joint venture and associates' tax) for the full year is expected to be 44.5%, slightly lower than the underlying rate of 45% for 2011, excluding the $195 million prior period charge in 2011 which resulted primarily from the increase in UK North Sea taxation.

Net finance costs of $136 million included interest received on tax refunds of $23 million and foreign exchange losses of $9 million (2011 net finance costs of $188 million including foreign exchange losses of $14 million).

Capital investment (excluding acquisitions and on a cash basis) of $7 660 million comprised investment inE&P ($5 452 million), LNG ($1 955 million) and T&D ($253 million).

2013 production

For 2013, BG Group now expects production to be in line with 2012. This revised outlook for 2013 reflects predominantly production deferrals related to:

·; the shutdown at Elgin/Franklin;

·; delay of the Jasmine start-up;

·; an extended sub-sea tie-in schedule for the Sapinhoá and Lula NE wells; and

·; scaling back drilling in the USA due to low natural gas prices.

In respect of the deferrals, the Elgin/Franklin and Jasmine effects are restricted to 2013 as Elgin/Franklin will be progressively returned to production in 2013 and Jasmine will enter service in the second half of the year.

At Sapinhoá and Lula NE, a semi-rigid riser sub-sea architecture will be deployed for the first time. An extendedtie-in period for each well-head has been allowed for following detailed execution planning.

The decision to scale back the US rig count was driven by capital expenditure rationing considerations in the light of falling US gas prices. BG Group has a short lead time to re-establish rig count, and therefore can increase production, should US gas price levels improve the economic ranking of the US opportunities. Meanwhile, BG Group continues to develop its US LNG export opportunities, which benefit from the effects of low US gas prices.

In addition, the Phase 7 compression project in Egypt has been less effective than expected in arresting reservoir decline. Near-field exploration to mature resources for plateau extension already forms part of our 2012 work programme.

Beyond 2013, the Group's production plans, including Brazil and Australia, are unchanged.

Disposals, re-measurements and impairments 

Total results included a post-tax gain of $101 million (2011 $38 million gain) for the third quarter in respect of disposals, re-measurements and impairments, and a post-tax charge of $985 million for the nine months (2011 $62 million charge). The nine months comprised a non-cash, post-tax charge of $1 295 million as a result of the impairment of certain assets associated with the shale gas business in the USA following the weaker outlook for US natural gas prices, and a post-tax credit of $310 million in respect of other disposals, re-measurements and impairments.For further information see Presentation of Non-GAAP measures (page 11) and notes 1 to 3 (pages 18 to 20).

Third quarter business highlights

Australia

The Queensland Curtis LNG (QCLNG) project continues on track. A further $1.3 billion was invested during the quarter, bringing total capital expenditure for the first nine months of 2012 to $3.7 billion. The Group now has contracts and other agreements in place for more than 90% of the project scope to 2014, reconfirming BG Group's $20.4 billion capital budget.

In the upstream, the pace of drilling ramped up with 135 wells in the quarter and a record 51 wells in August. This brings the total number of wells drilled to more than 1 000. In September, the Group added its eighth rig and expects to be operating 11 drilling rigs by the year end. In addition, compressors at the Argyle field compression station (FCS) are undergoing final commissioning. Pre-construction and site preparation work has commenced on an additional six FCSs and one central gas processing plant.

Construction of the pipeline infrastructure continues to progress. Welding of the 200 kilometre gas collection header system has been completed, and approximately 40% of the pipeline has been lowered in and backfilled in the right of way. The 340 kilometre export pipeline to Curtis Island is more than 50% welded. During the third quarter, the Group reached a key milestone with the receipt of the required environmental and government permits to enable dredging to begin for the Narrows Crossing to Curtis Island.

Good progress on the LNG plant at Curtis Island continued with delivery of the second shipment of pre-fabricated LNG plant modules from Thailand. The steel roof on the first of the two LNG storage tanks is now complete and will soon be lifted in place. Construction on the second LNG storage tank is progressing.

Exploration activity is ongoing, with stimulation and production testing of three of the Bowen Basin tight gas sands wells, each of which has intersected gas-bearing sections. Testing of coal seam gas discoveries in the Bowen Basin is also continuing. The results of both programmes to date have been encouraging.

Brazil

Significant development and exploration and appraisal activities continue in the Santos Basin with up to 11 drilling rigs operating simultaneously. BG Group lifted five cargoes from FPSO 1 on Lula for export this year totalling in excess of5 million barrels of oil.

The development of the FPSO fleet continues as planned. Construction of FPSO 2, the 150 000 boed Cidade de São Paulo which will be located on the Sapinhoá field, is 95% complete, and the unit is scheduled to leave the shipyard in Brazil to be ready to start production in early 2013.

The topside integration work on FPSO 3, the 150 000 boed Cidade de Paraty, is more than 91% complete. This unit is destined for Lula NE and is due onstream later in 2013. Five producer wells and five injector wells for these two FPSOs have been pre-drilled. Hull conversions continue in China for FPSOs 4 and 5, which are both around 35% complete.In addition, the BM-S-9 partners intend to tender for an additional FPSO to develop the Carioca area which will bring to15 the total number of FPSOs to be deployed on the 'big-five' discoveries.

During the third quarter, BG Group received updated independent expert certification of the resource estimates on the Lula, Cernambi, Sapinhoá, Iara and Carioca discoveries from the oil and gas consulting firm Miller and Lents, Ltd. (MLL). This certification confirmed BG Group's current estimate of the reserves and resources range of 4 billion barrels of oil equivalent (boe) to 8 billion boe, with a mean of 6 billion boe*. MLL was given full access to BG Group's data and development models for these fields in order to undertake its probabilistic analysis**.

India

In September, BG Group signed a production sharing contract (PSC) with the Government of India for the deep-water block MB-DWN-2010/1, offered under the NELP IX bidding round. BG India (50% interest) is the operator for this block. This block represents BG Group's first deep-water operated exploration licence on the west coast of India.

Tanzania

In August, BG Group achieved its sixth consecutive Tanzanian gas discovery with the Papa-1 exploration well located in Block 3, offshore southern Tanzania. Papa-1 is BG Group's first discovery in Block 3 and is within the deeper Cretaceous play section. This discovery is located approximately 100 kilometres offshore and 50 kilometres south-east of the earlier Pweza-1 discovery.

The Group currently estimates gross recoverable resources discovered to date to be near 10 tcf with extensive further potential to be explored.

*BG Group view, not the operator or relevant consortium

**Miller and Lents, Ltd. were not asked to differentiate reserves from total discovered resource volumes.

Third quarter business highlights (continued)

Tanzania (continued)

The drillship, Deepsea-Metro 1, has now commenced the third phase of the drilling campaign which is anticipated will consist of at least four wells. The initial focus will be on appraisal of the Jodari area in Block 1 with the first well being the Jodari North appraisal. Additional targets may include new prospects arising from the Group's recent 3D seismic programme in the eastern outboard area of Block 1.

Trinidad and Tobago

In October, BG Group sanctioned the Starfish field development in the East Coast Marine Area (ECMA), which also contains the existing producing fields Dolphin and Dolphin Deep. This project represents the next planned development phase for the ECMA joint venture and is expected onstream in 2014.

Uruguay

In October, final PSCs were signed in relation to Blocks 8, 9 and 13, initially awarded in April 2012, outlining an extensive geophysical work programme. The first phase will be 3D seismic evaluation of the three blocks over athree-year period.

Portfolio rationalisation and funding plan

BG Group has now completed or reached asset sales agreements that should release approximately $7.6 billion of capital by mid-2013, surpassing the plan announced in February.

These transactions include the Heads of Agreement (HOA) signed today to sell a part of the QCLNG project to CNOOC for $1.93 billion. CNOOC will reimburse BG Group for its proportionate share of capital for the period from1 January 2012 to the completion of the transaction, which is expected in mid-2013.

In addition, the HOA provides that BG Group will supply CNOOC with 5 mtpa of LNG for 20 years, making BG Group the largest LNG provider to China, the world's fastest growing energy market.

In September, BG Group completed the sale of the initial tranche of 20% equity in the Quintero LNG regasification facility in Chile for $176 million. The second tranche of 20% equity is expected to complete by the end of 2012.In addition, the Group has completed the transfer of the associated project financing to third parties, realising additional cash inflow of $326 million.

In October, BG Group received final approval from ARSESP required to complete the sale of the Group's entire60.1% holding in Comgás, originally announced in May, for Brazilian Reais 3.4 billion in cash ($1.7 billion) toCosan S.A. Indústria e Comércio. The transaction is expected to complete in November and will also eliminate$1.0 billion of debt currently presented within liabilities associated with assets held for sale on the Group's balance sheet.

In October, BG Group announced it had reached agreement to sell its 65.12% interest in Gujarat Gas Company Limited (GGCL) in India for approximately Indian Rupees 24.6 billion ($470 million) to GSPC Distribution Networks Limited, a subsidiary of Gujarat State Petroleum Corporation. The agreement, which is subject to regulatory approval,is expected to complete during the first half of 2013.

In light of the agreements to sell Comgás and GGCL, BG Group plans to review the structure and constituent parts of its operating business segments, including the presentation of certain businesses in the Transmission & Distribution segment as discontinued operations.

Exploration and Production (E&P)

Additional operating and financial data is given on page 28.

Third quarter

Revenue and other operating income increased by 14% to $2 859 million, reflecting a 5% increase in production volumes, higher realised gas prices and improved production mix.

The Group's average realised gas price increased by 18% to 47.95 cents per therm. International gas price realisations were 19% higher at 46.32 cents per therm, reflecting higher market prices and changes in the production mix. The average realised gas price in the UK increased by 7% to 41.86 pence per therm as a result of higher market prices. 

Total operating profit of $1 331 million was 13% higher as a result of the increase in revenue and other operating income and a lower exploration charge, partially offset by higher operating costs and depreciation.

The exploration charge of $109 million was $18 million lower than the third quarter of 2011 mainly as a result of lower well write-offs. Gross exploration expenditure of $298 million included spend in Australia ($73 million),Egypt ($64 million), Brazil ($43 million), the UK ($38 million) and Tanzania ($31 million).

Unit operating expenditure increased to $10.75 per barrel of oil equivalent, principally reflecting the impact of higher royalty costs arising from changes in the production mix and higher commodity prices. As a result of changes in the production mix, lower than expected volumes and higher commodity prices, BG Group now expects unit operating costs for the full year to be between $10.10 and $10.30 per barrel of oil equivalent. The unit depreciation charge increased to $9.07 per barrel of oil equivalent due to higher depreciation from new developments and as a result of changes in the production mix.

Capital investment on a cash basis of $2 057 million included investment in Australia ($727 million),Brazil ($414 million), the UK ($312 million) and Egypt ($159 million).

Nine months

Revenue and other operating income increased by 11% to $8 648 million, reflecting higher realised gas and liquids prices, a 4% increase in production volumes and improved production mix. Total operating profit was 5% higher as a result of the increase in revenue and other operating income, partially offset by higher operating costs and depreciation charges.

The Group's average realised gas price increased by 9% to 44.44 cents per therm, reflecting generally higher market prices and changes in the production mix.

Unit operating expenditure increased to $10.00 per barrel of oil equivalent, principally reflecting the impact of higher royalty costs arising from changes in the production mix and higher commodity prices. The unit depreciation charge increased to $8.93 per barrel of oil equivalent as a combined result of changes in the production mix and the impact of new fields coming onstream.

Capital investment on a cash basis of $5 452 million included investment in Australia ($1 776 million),Brazil ($1 019 million), the UK ($869 million), Egypt ($450 million) and the USA ($332 million).

Liquefied Natural Gas (LNG)

Additional operating and financial data is given on page 28.

Third quarter

LNG total operating profit increased by 24% to $767 million due to a 25% increase in Shipping and marketing operating profit, reflecting continuing favourable market conditions. These results were in line with expected phasing and the Group continues to expect total operating profit to be at the upper end of its $2.6 billion to $2.8 billion guidance for 2012.

BG Group delivered 88% of cargoes (2011 89%) to global markets outside the USA including 31 to Asia, 8 toSouth America and 4 to Europe (2011 35 Asia, 12 South America and 2 Europe). Deliveries to Japan increasedfrom 13 to 20 as LNG imports remained near record high levels.

BG Group's share of operating profit from liquefaction activities increased by 7% to $87 million.

Capital investment on a cash basis of $622 million was primarily associated with the development of the QCLNG project.

Nine months

LNG total operating profit of $2 173 million was 25% higher than last year as a result of favourable market conditions, with continuing strong demand for cargo deliveries, particularly from Japan.

BG Group delivered 90% of cargoes (2011 86%) to global markets outside the USA including 92 to Asia, 34 to South America and 7 to Europe (2011 76 Asia, 35 South America and 21 Europe). Deliveries to Japan increased from24 to 52, reflecting record demand as all nuclear units were offline by the end of the second quarter, only two of which are back online to date.

BG Group's share of operating profit from liquefaction activities increased by 4% to $258 million.

Capital investment on a cash basis of $1 955 million was primarily associated with the development of the QCLNG project.

Transmission and Distribution (T&D)

Additional operating and financial data is given on page 28.

Third quarter

Total operating profit of $198 million was 52% higher, primarily as a result of the timing effect of gas cost recovery at Comgás in Brazil. In the quarter, $4 million was recovered from customers compared with $72 million passed back to customers in 2011. At the end of the quarter, the cost of gas to be recovered from customers in future periods was $178 million.

Excluding the timing effect of gas cost recovery, total operating profit at Comgás was 1% higher. 

Other T&D activities' operating profit decreased by $10 million principally as a result of lower volumes atBG Italia Power and higher gas costs at Gujarat Gas in India.

Nine months

Revenue and other operating income increased by 7% to $2 757 million, principally as a result of higher prices and volumes at Comgás and higher prices at Gujarat Gas.

T&D total operating profit decreased by 4% to $425 million. Total operating profit at Comgás of $297 million was11% higher as a result of the timing effect of gas cost recovery. In the first nine months of the year, $110 million was passed back to customers compared with $137 million passed back to customers in 2011. Excluding this timing effect, total operating profit at Comgás was 1% higher than in 2011.

The $47 million reduction in Other T&D activities' operating profit included the impact of adverse foreign exchange movements and higher gas costs at Gujarat Gas and BG Italia Power.

Capital investment on a cash basis of $253 million 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 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 $1 289 million (2011 $1 060 million) and from discontinued operations of $nil (2011 $(2) 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 27 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 $2 539 million (2011 $2 900 million) and from discontinued operations of $254 million (2011 $(2) 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 27 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 $208 million charge for the quarter (2011 $72 million charge) and a $258 million charge for the nine months(2011 $5 million credit).

b) Income tax relating to fair value movements on 'available-for-sale' assets is a $2 million credit for the quarter (2011 $3 million charge) and a $6 million credit for the nine months (2011 $1 million charge).

The notes on pages 18 to 27 form an integral part of these condensed financial statements.

Consolidated Balance Sheet

a) As at 30 September 2012 assets classified as held for sale include Comgás in Brazil and GNL Quintero S.A. in Chile (2011 includes First Gas in the Philippines).

The notes on pages 18 to 27 form an integral part of these condensed financial statements.

Consolidated Statement of Changes in Equity

The notes on pages 18 to 27 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 $nil (2011 $(2) million) and for the nine months of $255 million(2011 $(1) million).

b) Includes profit on disposal of discontinued operations for the quarter of $nil (2011 $nil) and for the nine months of $255 million (2011 $nil).

c) Includes capitalised interest for the quarter of $131 million (2011 $51 million) and for the nine months of $336 million (2011 $118 million).

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

e) The balance at 30 September 2012 includes cash and cash equivalents of $4 598 million (31 December 2011 $3 601 million; 30 September 2011 $1 627 million) and cash included within assets held for sale of $69 million (31 December 2011 $nil; 30 September 2011 $nil).

The notes on pages 18 to 27 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 2012. 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 2011 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 2011 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 2011 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 and certain other exceptional items.

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 2012. They have not had a material impact on the Group's financial statements for the quarter ended and nine months ended30 September 2012.

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 charge of $2 million for the quarter (2011 $71 million credit), of which a credit of $2 million (2011 $4 million credit) represents non-cash mark-to-market movements on certain long-term gas contracts. For the nine months, a credit of $148 million in respect ofre-measurements is included within revenue and other operating income (2011 $148 million charge), of which a creditof $74 million represents non-cash mark-to-market movements on certain long-term gas contracts (2011 $1 million credit). 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 $4 million charge for the quarter (2011 $67 million credit) and a $74 million credit for the nine months (2011 $149 million charge) representing unrealised mark-to-market movements associated with economic hedges.

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

In September, BG Group completed the sale of the initial tranche of 20% equity in the Quintero LNG regasification facility in Chile. This resulted in a pre-tax profit on disposal of $146 million (post-tax $110 million).

The second quarter included a pre-tax charge of $1 800 million (post-tax $1 295 million charge) in respect of the impairment of certain assets associated with the shale gas business in the USA, as a result of the weaker outlook for US natural gas prices.

In June 2012, the Group disposed of 10% of its interest in the Karachaganak gas-condensate project for $651 million in cash, additional capacity in the Caspian Pipeline Consortium pipeline, and the final settlement of cost recovery and other claims. This resulted in the recognition of a pre-tax profit on disposal in the quarter of $9 million (post-tax$9 million) and in the nine months of $400 million (post-tax $164 million). 

Other disposals, impairments and other items in 2012 resulted in a pre-tax charge to the income statement of$23 million in the third quarter (post-tax $23 million charge) and a pre-tax charge of $128 million in the nine months (post-tax $68 million charge).

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 $1 million in the third quarter of 2011 and a pre-tax charge of $10 million in the nine months (post-tax$3 million credit).

Third quarter and nine months: Net finance costs

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

Third quarter and nine months: Taxation

In 2011, taxation for the nine months 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 $3 million (2011 $(4) million), LNG $(2) million (2011 $7 million) andT&D $6 million (2011 $nil).

3. Segmental analysis continued

a) External sales are attributable to segments as follows: E&P $8 162 million (2011 $6 961 million), LNG $6 025 million (2011 $5 754 million) and T&D $2 741 million(2011 $2 588 million). Intra-group sales are attributable to segments as follows: E&P $475 million (2011 $843 million) and LNG $226 million (2011 $nil).

b) Business Performance Other operating income is attributable to segments as follows: E&P $11 million (2011 $(10) million), LNG $3 million (2011 $22 million) andT&D $16 million (2011 $nil).

3. Segmental analysis continued

4. Net finance (costs)/income

a) In 2012, interest payable includes foreign exchange losses of $18 million for the quarter and foreign exchange losses for the nine months of $9 million. 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.

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 $5 million (2011 $(11) million) and for the nine months of $8 million(2011 $(36) million) is included in note 2 (page 19) and principally reflects foreign exchange movements on certain borrowings, partly offset by mark-to-market movements on certain derivatives used to hedge foreign exchange and interest rate risk.

d) Excludes Group share of net finance costs from joint ventures and associates for the quarter of $4 million (2011 $16 million) and for the nine months of $28 million(2011 $46 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 $2 886 million (2011 $2 642 million). The effective tax rate of 44.5% 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 $nil (2011 $2 million loss) and for the nine months was a $254 million gain (2011 $2 million loss).

In May 2012, the Group disposed of its 40% equity interest in two gas-fired power generation plants in the Philippines to its partner, First Gen Corporation, for net cash proceeds of $360 million. The sale and purchase agreement, completed on signing, covers the 1 000 megawatt Santa Rita power plant and the 500 megawatt San Lorenzo power plant, both on the island of Luzon. This resulted in a pre and post-tax profit of $252 million in the second quarter of 2012.

7. Earnings per ordinary share - continuing operations

Basic earnings per share calculations in 2012 are based on the weighted average number of shares in issue of3 397 million for the quarter and 3 396 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 3 417 million for the quarter and 3 415 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 as at 30 September 2012 were $nil (31 December 2011 $963 million), with$973 million included in assets and liabilities classified as held for sale.

As at 30 September 2012, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately $1.4 billion, including BG Group shareholder loans of approximately $0.8 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.

Net borrowings comprise:

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

b) Includes finance lease receivable of $195 million (2011 $193 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 2012

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 $3.82 billion was unutilised, and a $2.0 billion Eurocommercial Paper Programme, which was unutilised. BGEH also had a $15.0 billion Euro Medium Term Note Programme, of which $7.98 billion was unutilised.

BGEH had aggregate committed revolving borrowing facilities of $5.0 billion, of which $2.32 billion expires in 2013, $2.18 billion in 2016 and $0.5 billion in 2017. There are no restrictions on the application of funds under these facilities, which were undrawn.

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 Reais 1 625 million, all of which were utilised.

9. Dividends

The final dividend of 12.96 cents per ordinary share ($443 million) in respect of the year ended 31 December 2011 was paid on 25 May 2012 to shareholders on the register at the close of business on 13 April 2012. The interim dividend of 11.88 cents per ordinary share ($404 million) in respect of the year ending 31 December 2012 was paid on7 September 2012 to shareholders on the register as at 3 August 2012.

10. Quarterly information: earnings and earnings per share