BG Group 2011 Fourth Quarter and Full Year Results

2011 FOURTH QUARTER & FULL YEAR RESULTS

Full Year Key Points

·; Total operating profit up 19% to $8.2 billion 

·; Strong cash flow from operations, up 17% to $9.8 billion 

·; Full year dividend increased by 10% to 23.76 cents per share (14.82 pence per share)

·; Significant progress on major projects in Australia and Brazil

·; Signed 20-year US LNG export agreement for 5.5 mtpa, commencing 2015

·; Three-year proved reserve replacement ratio exceeding 200%

·; $5.6 billion bonds issued in dollar, sterling and euro currencies

BG Group has issued its annual strategy update (available at www.bg-group.com) in conjunction with these results.

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 9) and notes 1 to 3 (pages 17 to 19). 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:

"Revenue and other operating income increased by 22%. Higher realised prices in the Group's exploration and production and LNG businesses led to a 19% increase in total operating profit for 2011 to $8.2 billion."

 "The increase in profits and a lower outflow in working capital produced strong cash flow from operations, up 17% over the year to $9.8 billion."

Sir Frank said, "in the USA, we signed a landmark agreement with Sabine Pass Liquefaction, securing 5.5 million tonnes per annum of LNG export volumes for 20 years."

"This further expands and diversifies our supply portfolio and will enable BG Group to exceed its 2015 LNG supply target of 20 million tonnes per annum."

Sir Frank added, "in addition, we made significant progress on our major growth programme across our global portfolio, particularly in Australia and Brazil."

"In Australia, we invested a further $1.2 billion in the quarter as we advanced the upstream development, pipeline and LNG plant towards first LNG in 2014. In the gas fields, drilling is ramping-up to an 11-rig programme for 2012 and work is advancing with gas and water treatment facilities. Welding of the 42-inch steel pipe is underway, with nearly 150 kilometres of pipe now in position along the route. On Curtis Island, construction has started on the LNG storage tanks, with one reinforced concrete base completed and the second underway. The module yard in Thailand is currently assembling process and piping modules."

"In Brazil, the Declaration of Commerciality for the Sapinhoá field, formerly known as Guará, was submitted in December, 12 months early, marking the start of the production phase for the field. On Lula, production increased to around 90 000 barrels of oil equivalent per day from just three production wells; testimony to the exceptional reservoir characteristics. We also continued to make good progress on development, with unit costs falling for the most recent FPSO vessels and substantially shorter drilling durations. The second FPSO arrived in Brazil for integration work prior to deployment on the Sapinhoá field in 2013. We are on track to deliver 2.3 million barrels of oil equivalent per day of capacity by 2017."

"Elsewhere, in Kazakhstan we reached a comprehensive agreement with the Republic that paves the way for the future development of the giant Karachaganak gas-condensate field. In Egypt, the second stage of the West Delta Deep Marine Concession Phase 7 started gas production, while in Norway we made another oil discovery, known as Jordbær West, near the Knarr field."

"Production volumes were 1% lower for the year, as they were adversely affected by a series of outages and third-party infrastructure restrictions in the UK North Sea. Excluding the UK,BG Group production from international assets grew by 5% in line with expectations."

Sir Frank concluded, "in a changing and challenging operational, economic and political environment, I believe these are a good set of results for 2011, which also saw significant progress towards delivering our key growth projects."

Business Review - Group

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

Fourth quarter

Revenue and other operating income increased by 34% to $5 833 million, reflecting the benefit of higher realised prices and strong demand, particularly from Asia, for the Group's LNG cargoes.

Total operating profit of $2 149 million was up 19%. The increase in revenue and other operating income was partly offset by the timing effect of gas cost recovery at Comgás in Brazil (see page 8).

Cash generated by operations increased by 46% to $2 655 million, primarily as a result of higher profits and a lower working capital cash outflow.

The Group's effective tax rate (including BG Group's share of joint venture and associates' tax) was 30% for the quarter and included a $277 million credit resulting from one-off adjustments in respect of tax positions in a number of jurisdictions.

As of 31 December 2011, the Group's net debt was $11 336 million and the gearing ratio, at 27%, was unchanged from the third quarter. The average maturity of the Group's gross borrowings was significantly extended to 10 years through bond issuance and a reduction in short-term borrowing. During the quarter, BG Group issued $3 billion of bonds in the US debt market in tranches of $750 million, $1 350 million and $900 million maturing in 2016, 2021 and 2041, respectively. The Group also issued bonds of £750 million due 2036 and €1 billion due 2018 under its Euro Medium Term Note Programme. All of these bonds were rated A, A2 and A by Fitch, Moody's and Standard & Poor's, respectively. The Group's undrawn revolving committed facilities at 31 December 2011 were $4.5 billion, up from$3.5 billion at the end of 2010, with maturities ranging from 2013 to 2016.

Net finance costs of $31 million included foreign exchange gains of $14 million (2010 $48 million including foreign exchange gains of $18 million).

Capital investment of $2 869 million in the quarter comprised investment in E&P ($2 153 million), LNG ($632 million) and T&D ($84 million). This investment focused primarily on the Group's major projects in Australia, Brazil, the USA and the UK, and represented a 15% increase in organic capital investment compared with the fourth quarter 2010. More details on project developments are provided in the fourth quarter business highlights section.

Full year

Revenue and other operating income of $21 148 million was 22% higher than 2010, reflecting the benefit of higher realised prices and an increase in the number of LNG cargoes sold to markets outside of the USA, particularly Asia. Total operating profit increased by 19% to $8 209 million as this revenue performance, combined with a lower exploration charge, was partly offset by the timing effect of gas cost recovery at Comgás in Brazil. 

Cash generated by operations of $9 773 million was 17% higher than last year primarily as a result of higher profits and a lower working capital cash outflow.

The $63 million increase in net finance costs was driven primarily by the impact of foreign exchange movements(2011 foreign exchange impact of $nil compared with an $82 million gain in 2010).

The Group's underlying(a) effective tax rate for the full year (including BG Group's share of joint venture and associates' tax but excluding prior period taxation) was 44% compared to 40% in 2010. The year-on-year increase primarily reflects the impact of the higher UK North Sea taxation announced in March 2011. The underlying effective tax rate for 2012 is expected to be approximately 45%.

Capital investment in the year of $10 602 million (including acquisitions of $432 million) was in line with expectations and comprised investment in E&P ($7 997 million), LNG ($2 280 million) and T&D ($325 million). This investment focused primarily on the Group's major projects in Australia, Brazil, the USA and the UK, and represented a 27% increase in organic capital investment compared with 2010. 

In considering the dividend level, the Board takes account of the outlook for earnings growth, cash flow and the balance sheet position. Taking these factors into account, the Board has recommended a final dividend of 12.96 cents per share (8.19 pence per share), bringing the full year dividend to 23.76 cents per share (14.82 pence per share), an increase of 10% compared with last year. The final dividend will be paid to shareholders in Pounds Sterling on25 May 2012.

a) The underlying effective rate for 2011 excludes a $277 million credit resulting from one-off adjustments recognised in the fourth quarter in respect of tax positions in a number of jurisdictions. The underlying rate for 2010 excludes a $106 million credit relating to a favourable settlement for a prior period recognised in the third quarter.

Disposals, re-measurements and impairments - continuing operations

A post-tax charge of $143 million in the quarter (2010 $152 million charge) and a post-tax charge of $205 million in the full year (2010 $631 million charge) was recorded in respect of disposals, re-measurements and impairments. For further information, see note 2 (page 18).

Fourth quarter business highlights

Australia

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

In the gas fields, over 60 development wells were drilled in the quarter, using four drilling rigs. Drilling is being ramped up significantly with 11 rigs expected to be operating in 2012. The aim is to drill 40 to 50 wells per month at peak. Of the 28 petroleum leases required for first LNG in 2014, eight leases were granted in the quarter, bringing the total atyear end to 19. The remaining nine petroleum leases are expected to be granted in 2012. The first water treatment plant, at Windibri, has been commissioned, and work continues on the first two field compression stations, at Argyle and Bellevue.

Welding of the 42-inch steel pipe is underway, with nearly 150 kilometres of pipe already in position along the route.

On Curtis Island, the construction dock and concrete batch plants are fully operational. Construction has started on the LNG storage tanks, with one reinforced concrete base completed and the second underway. The module yard in Thailand is currently assembling two propane condenser modules for Train 1 and eight rack modules.

Brazil

The pace of activity across our operations in the Santos Basin continues to build with further exploration and appraisal wells drilled, extended well tests (EWTs) completed and production and delivery of FPSOs progressing.

In December, a Declaration of Commerciality (DoC) was submitted, 12 months early, with the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) for the accumulations of light oil and gas in the Guará area. In the proposal, the consortium suggests that the field be renamed Sapinhoá. The DoC marks the start of the production phase for the field, which comprises an excellent reservoir with good quality 30˚ API oil, and is another significant milestone in the development of BG Group's large and high quality discoveries in the pre-salt Santos Basin.

Fourth quarter business highlights (continued)

Brazil (continued)

In November, BG Group announced an EWT had increased the production potential of the Carioca discovery located on the BM-S-9 concession in the Santos Basin. Results from the EWT at Carioca Nordeste indicate potential initial well production rates above expectations at approximately 28 000 barrels of oil per day (bopd). The potential of the Carioca area was further underlined by an exploration discovery, informally known as Abaré, where wireline samples showed good quality oil. A drill stem formation test is planned to evaluate the productivity of the interval. 

In November and December, the second and third producing wells were connected to the first permanent module on the Lula field. Production has now increased to around 90 000 barrels of oil equivalent per day.

In December, the second FPSO arrived in the BrasFELS yard at Angra dos Reis. The vessel safely docked for topsides integration in Brazil, ahead of an expected first oil date on the Sapinhoá field in 2013. 

Egypt

In January 2012, BG Group announced that gas production had started from the second stage of the West Delta Deep Marine (WDDM) Concession Phase 7. This represents another milestone in the phased development of WDDM. The second stage of Phase 7 comprises onshore gas receiving facilities, five new compressors and a new power plant.

Kazakhstan

In December, BG Group announced that the Republic of Kazakhstan and the contracting companies in the giant Karachaganak gas-condensate field in north-west Kazakhstan had reached a comprehensive agreement that will support the further development of the field. The agreement, effective from 30 June 2012 on satisfaction of conditions precedent, involves a subsidiary of Kazakhstan's KazMunaiGas acquiring a 10% interest in the project. From the effective date BG Group's interest in the Karachaganak project will reduce to 29.25% from the 32.5% previously held. BG Group will remain joint operator.

Norway

In December, BG Group made a further oil discovery in production license PL373S. The discovery, known as Jordbær West, is located some four kilometres southwest of the Knarr field where development works are on-going and production is planned to start in 2014. The Jordbær West discovery will be evaluated for a tie-back to the Knarr field, with an intention of combining the two developments.

US

In October, BG Group signed a fully-termed sale and purchase agreement (SPA) for the purchase of 3.5 million tonnes per annum (mtpa) of liquefied natural gas over a 20-year period from the Sabine Pass LNG terminal located in Louisiana, USA. The agreement was the first long-term LNG purchase agreement from a project on the US Gulf Coast.

Additionally, in January 2012, BG Group reached agreement to purchase a further 2.0 mtpa from Sabine Pass over the same 20-year period. The additional volumes have been incorporated into the initial SPA. This agreement adds further volumes to the Group's diversified global LNG supply portfolio and builds upon BG Group's proven track record in capturing and developing new opportunities that continue to drive the global growth of its LNG business. LNG exports from the Sabine Pass facility are expected to commence in 2015.

Board changes

In October, Sir Robert Wilson announced his intention to stand down as Chairman of BG Group at the conclusion of the Company's Annual General Meeting in May 2012. He will be succeeded by Andrew Gould, currently Chairman of Schlumberger Limited and a non-executive director of BG Group. Mr Gould is due to stand down as Chairman of Schlumberger in April 2012.

In November, BG Group announced further changes to its Board. These changes will ensure BG Group continues to deliver its growth plans and will enhance succession planning at the Executive level.

Chris Finlayson became an Executive Director and Managing Director BG Advance, joining the BG Group Board.

Fabio Barbosa added Strategy and Portfolio Development to his existing Chief Financial Officer and Executive Director accountabilities.

In addition to his existing Executive Director accountabilities, Martin Houston became Chief Operating Officer with Board level responsibility for all of the Group's Regions and Assets, as well as Group-wide business development.

In February, BG Group announced the appointment of Vivienne Cox as a Non-Executive Director. Exploration and Production (E&P)

Additional operating and financial data is given on page 26.

Fourth quarter

Revenue and other operating income increased by 24% to $2 841 million, reflecting the benefit of higher realised prices, offset by 1% lower production volumes. Total operating profit of $1 288 million was 21% higher as a result of the increase in revenue and other operating income, partially offset by higher operating costs and a higher exploration charge.

In the quarter, increased production across the Group's portfolio was offset by the impact of a further shutdown of the Lomond platform following storm damage to equipment and short-term commissioning related outages at Buzzard in the UK North Sea. In addition, the Hasdrubal field in Tunisia remained shut-in at year end for maintenance that commenced in November.

International gas price realisations were 17% higher at 38.54 cents per produced therm, reflecting the benefit of higher oil prices and changes in the production mix. The average UK realised gas price was 47.92 pence per produced therm, 9% higher than 2010, as a result of higher contract and market prices. 

The exploration charge of $216 million was $54 million higher primarily as a result of higher well write-off costs.

Unit operating expenditure increased to $9.19 per barrel of oil equivalent, reflecting changes in the production mix, the impact of the UK North Sea shutdowns and higher commodity prices.

Capital investment of $2 153 million in the quarter comprised investment in the Americas ($728 million), Australia($595 million), Europe and Central Asia ($449 million) and Africa, Middle East and Asia ($381 million). 

Full year

Revenue and other operating income increased by 24% to $10 635 million as a result of higher realised prices, partly offset by a 1% reduction in production volumes. Total operating profit of $5 149 million was 37% higher, reflecting the increase in revenue and other operating income and a lower exploration charge, partly offset by higher operating costs.

As a result of the impact of a series of elective shutdowns, third-party operated infrastructure restrictions, plant commissioning activities and extreme weather, production from the UK North Sea in 2011 was approximately12 mmboe (24%) lower than BG Group's plans. Excluding the UK North Sea, production volumes for the Group were around 5% higher than 2010, with the effects on production of civil unrest in North Africa and flooding in Queensland being largely recovered or offset elsewhere.

The Group's average realised gas price per produced therm for the full year increased by 15% to 41.45 cents, reflecting generally higher market prices. 

Unit operating expenditure increased to $8.77 per barrel of oil equivalent, reflecting changes in the production mix, including higher than portfolio average costs associated with production start-up activities in Brazil, the impact of the UK North Sea shutdowns and higher commodity prices.

The exploration charge fell by $118 million to $647 million, primarily as a result of lower well write-off costs.

Capital investment of $7 997 million in the year comprised investment in the Americas ($2 775 million, including$376 million on acquisitions), Australia ($2 132 million), Europe and Central Asia ($1 742 million, including $56 million on acquisitions) and Africa, Middle East and Asia ($1 348 million). Liquefied Natural Gas (LNG)

Additional operating and financial data is given on page 26.

Fourth quarter

LNG total operating profit for the quarter of $830 million was 51% higher than last year and exceeded expectations as a result of favourable market conditions, with strong demand for cargo deliveries outside of the USA, particularly from Asia. During the quarter, BG Group delivered 87% of cargoes (2010 85%) to global markets outside the USA including 33 to Asia, 9 to South America and 2 to Europe (2010 18 Asia, 16 South America and 7 Europe).

BG Group's share of operating profit from liquefaction activities of $65 million was $21 million lower than last year principally due to planned shutdowns for maintenance at Atlantic LNG in Trinidad.

Capital investment of $632 million in the quarter comprised investment in Australia ($626 million) associated with the development of the Queensland Curtis LNG (QCLNG) project, the Americas ($4 million) and Africa, Middle East and Asia ($2 million).

Full year

LNG total operating profit for the year increased by 5% to $2 573 million reflecting strong demand, particularly from Asia, offset by the impact of the Group's hedging programme. During the year, BG Group delivered 86% of cargoes (2010 74%) to global markets outside the USA including 109 to Asia, 44 to South America and 23 to Europe(2010 76 Asia, 45 South America and 29 Europe).

BG Group's share of operating profit from liquefaction activities was $314 million.

Capital investment of $2 280 million in the year comprised investment in Australia ($2 182 million) associated with the development of the QCLNG project, the Americas ($93 million) and Africa, Middle East and Asia ($5 million).

Transmission and Distribution (T&D)

Additional operating and financial data is given on page 26.

Fourth quarter

Revenue and other operating income increased by 1% to $838 million, principally reflecting higher volumes and prices at Gujarat Gas in India, partially offset by adverse foreign exchange movements at Comgás in Brazil.

T&D total operating profit for the quarter of $65 million was 66% lower, largely as a result of the timing effect of gas cost recovery at Comgás.

Excluding this timing effect, total operating profit at Comgás increased by 39% primarily as a result of higher margins. In the quarter, $81 million was passed back to customers compared with a $43 million net recovery of gas costs in 2010. At the end of the quarter, the cost of gas to be recovered in future periods was $74 million.

The $37 million reduction in Other T&D activities' operating profit included the impact of phasing of profits atBG Italia Power and adverse foreign exchange movements at Gujarat Gas.

Full year

Revenue and other operating income increased by 11% to $3 426 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 full year of $507 million was 29% 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 31% higher, reflecting the benefit of higher margins, a favourable sales mix and favourable foreign exchange movements. In the year, $218 million was passed back to customers compared with a $149 million net recovery of gas costs in 2010.

Other T&D activities' operating profit increased by $36 million to $193 million.

Capital investment of $325 million in the year mainly represents the development of the Comgás pipeline network.

Presentation of Non-GAAP measures

Legal Notice

Consolidated Income Statement

Fourth Quarter

a) See Presentation of Non-GAAP measures (page 9) 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 $1 336 million (2010 $905 million) and from discontinued operations of $nil (2010 $35 million).

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

Consolidated Income Statement

Full Year

a) See Presentation of Non-GAAP measures (page 9) 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 $4 236 million (2010 $3 383 million) and from discontinued operations of $(2) million (2010 $(32) million).

d) 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 $75 million credit for the quarter (2010 $30 million credit) and a $80 million credit for the full year (2010 $206 million credit).

b) Income tax relating to fair value movements on 'available-for-sale' assets is a $5 million charge for the quarter (2010 $3 million charge) and a $6 million charge for the full year (2010 $2 million charge).

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

a) Includes profit/(loss) before tax from discontinued operations for the quarter of $1 million (2010 $38 million) and for the full year of $nil (2010 $(121) million).

b) Includes capitalised interest for the quarter of $88 million (2010 $31 million) and for the full year of $206 million (2010 $79 million).

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

d) The balance at 31 December 2011 includes cash and cash equivalents of $3 601 million (31 December 2010 $2 533 million) and cash included within assets held for sale of $nil (31 December 2010 $18 million).

Notes

1. Basis of preparation

These primary statements are the unaudited preliminary consolidated financial statements ('the financial statements')of BG Group plc for the quarter and the full year ended 31 December 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 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.

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 18), 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 year ended31 December 2011.

2. Disposals, re-measurements and impairments

Fourth quarter and full year: Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a credit of $256 million for the quarter (2010 $342 million charge), of which a credit of $52 million (2010 $105 million charge) represents non-cash mark-to-market movements on certain long-term UK gas contracts. For the full year, a credit of $108 million in respect of re-measurements is included within revenue and other operating income (2010 $591 million charge), of which a credit of $55 million represents non-cash mark-to-market movements on certain long-term UK gas contracts (2010 $132 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 $204 million credit for the quarter (2010 $237 million charge) and a $53 million credit for the full year (2010 $459 million charge) representing unrealised mark-to-market movements associated with economic hedges.

Fourth quarter and full year: Disposals and impairments of non-current assets

In the fourth quarter of 2011, BG Group reviewed its operations in the Africa, Middle East and Asia region and made the decision to cease exploration activity in certain locations. As a result of this review a pre-tax charge of $393 million was recognised in the E&P segment (post-tax $314 million) comprising impairments and related provisions.

Also during the fourth quarter of 2011, the Group reviewed its power operations in the Europe and Central Asia region. As a result of this review, a pre-tax impairment charge of $66 million was recognised in the T&D segment (post-tax$41 million).

In April 2011, BG Group signed and completed a Sale and Purchase Agreement 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 the recognition of a pre and post-tax profit of $28 million in the second quarter of 2011.

Other disposals and impairments in 2011 resulted in a pre-tax charge of $41 million in the fourth quarter (post-tax$25 million) and a pre-tax charge of $51 million in the full year (post-tax $22 million).

In the second quarter of 2010, BG Group completed the disposal of its Canadian E&P assets, resulting in a pre-tax charge of $40 million (post-tax charge of $30 million) to the income statement.

In the second and third quarters of 2010, $360 million of pre-tax impairment charges (post-tax $262 million) were recognised against certain assets in the E&P segment.

Other disposals and impairments in 2010 resulted in a pre and post-tax credit of $74 million in the fourth quarter and a pre-tax credit of $64 million in the full year (post-tax credit of $68 million).

Fourth quarter and full year: Net finance income/(costs)

Re-measurements presented in net finance income includes 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.

Fourth quarter and full year: 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 $5 million), LNG $58 million (2010 $41 million) and T&D $1 million (2010 $nil).

3. Segmental analysis continued 

a) External sales are attributable to segments as follows: E&P $9 713 million (2010 $7 781 million), LNG $7 935 million (2010 $6 304 million) and T&D $3 425 million(2010 $3 081 million). Intra-group sales are attributable to segments as follows: E&P $928 million (2010 $777 million) and LNG $231million (2010 $45 million).

b) Business Performance Other operating income is attributable to segments as follows: E&P $(6) million (2010 $25 million), LNG $80 million (2010 $172 million) andT&D $1 million (2010 $nil).

3. Segmental analysis continued

4. Net finance (costs)/income

a) In 2011, interest payable includes foreign exchange gains of $14 million for the quarter and foreign exchange gains for the full year of $nil. In 2010, interest receivable includes foreign exchange gains of $18 million for the quarter and foreign exchange gains for the full year of $82 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 income/(costs) on disposals, re-measurements and impairments for the quarter of $97 million (2010 $(4) million) and for the full year of $61 million(2010 $nil) is included in note 2 (page 18) 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 the Group's share of net finance costs from joint ventures and associates for the quarter of $12 million (2010 $14 million) and for the full year of $58 million(2010 $49 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 full year, excluding prior period taxation but including share of taxation from joint ventures and associates, was $3 273 million (2010 $2 606 million).

6. Discontinued operations

The post-tax profit/(loss) of the businesses comprising discontinued operations for the quarter, including profits and losses on disposals and impairments, was $nil (2010 $35 million) and for the full year was $(2) million(2010 $(32) million).

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 393 million for the quarter and 3 389 million for the full year.

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 3 415 million for the quarter and 3 411 million for the full year, 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) - Full Year

Net borrowings attributable to Comgás as at 31 December 2011 were $963 million (31 December 2010 $798 million).

As at 31 December 2011, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately $1.7 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 29.

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

c) Excludes $5 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 $193 million (2010 $134 million) included within non-current assets on the balance sheet.

Liquidity and Capital Resources

All the information below is as at 31 December 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 $3 754 million was unutilised, and a $2.0 billion Eurocommercial Paper Programme, of which $1 711 million was unutilised. BGEH also had a $15.0 billion Euro Medium Term Note Programme, of which $8.0 billion was unutilised.

BGEH had aggregate committed multicurrency revolving borrowing facilities of $4.50 billion, of which $2.32 billion expires in 2013 and $2.18 billion expires in 2016. There are no restrictions on the application of funds under these facilities, which were undrawn as at 31 December 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) 1 712 million, of which BRL 92 million was unutilised, and uncommitted borrowing facilities of BRL 340 million, of which BRL 100 million was unutilised.

9. Dividends

The proposed final dividend for the year ended 31 December 2011 of 12.96 cents per share takes the 2011 full year dividend to 23.76 cents per share.

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 of10.80 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 at the close of business on 5 August 2011. The proposed final dividend of 12.96 cents per share ($440 million) in respect of the year ended 31 December 2011 is payable on 25 May 2012 to shareholders on the register at the close of business on 13 April 2012.

10. Quarterly information: earnings and earnings per share