BG raises Santos Basin net potential to 8bn boe

30 June 2011

BG Group raises Santos Basin net potential to 8 billion barrels of oil equivalent

BG Group today issued a material upgrade for its interests in the pre-salt Santos Basin, offshore Brazil. Mean Total Reserves and Resources* are now estimated to amount to some 6 billion barrels of oil equivalent (boe) net to BG Group, with an upside potential of 8 billion boe net. Existing discoveries account for 96% of the mean Total Reserves and Resources.

The mean Total Reserves and Resources represents a doubling of BG Group's previous best estimate of 3 billion boe prevailing at the time of the Group's February 2010 Strategy Presentation.

The aggregate range of Total Reserves and Resources net to BG Group is from 4 billion boe (P90) to 8 billion boe (P10)**.

These new estimates result from BG Group's internal analysis based on probabilistic modelling of its Santos Basin interests. The analysis used a wealth of drilling, appraisal and other data that BG Group has gained or developed in relation to those interests, including:

·; a total of 29 wells drilled in our existing discoveries; two wells drilled on Lula since November 2010 proving particularly important in delineating the flanks of the field. Other wells have demonstrated excellent connectivity in the reservoir;

·; a total of 19 drill stem tests on current discoveries;

·; the shooting and analysis of over 14 400 square kilometres of 3D seismic;

·; full analysis of a completed extended well test (EWT) on Lula Sul and early results from the Guará EWT indicating the very large hydrocarbon volumes connected to each of these wells;

·; production from the first permanent floating production, storage and offloading vessel on Lula which commenced in October 2010;

·; development plans that include enhanced recovery processes to improve ultimate recovery factors for these giant fields; and

·; cost optimisation, potential debottlenecking of facilities and greater well productivity enhancing the economic viability of later phases of development.

BG Group Chief Executive Sir Frank Chapman said: "The doubling of our estimated Santos Basin mean reserves and resources is clearly significant and demonstrates the continued rapid evolution of our understanding of these enormous discoveries. Robust economics and solid progress with the fast-track development programme will see gross installed production capacity rising steadily to reach more than 2.3 million boe per day by 2017. I believe this - alongside progress with major ventures in Australia, the US and across our global portfolio - will transform the scope, scale and value of BG Group."

-ends-

Notes to Editors:

* Total Reserves and Resources are defined by BG Group as the aggregate of proved and probable reserves plus discovered resources and risked exploration.

** The Total Reserves and Resources upgrade announced today is based upon probabilistic modelling by BG Group of its interests in the Santos Basin, in accordance with Society of Petroleum Engineers (SPE) guidelines. The data has been analysed, interpreted and verified by BG Group and not by the Operator or other Consortium partners.

Definitions (source: SPE)

P90 - at least a 90% probability that the quantities actually recovered will equal or exceed the low estimate.

P10 - at least a 10% probability that the quantities actually recovered will equal or exceed the high estimate. 

Pmean - the average value over the entire probability range weighted with the probability occurrence.

BG Group has interests in five blocks in the Santos Basin, offshore Brazil -

BM-S-9 (30%) containing the Guará, Carioca, Abaré and Iguaçu discoveries and prospects.

BM-S- 10 (25%) containing the Parati and Macunaima discoveries and prospects.

BM-S-11 (25%) containing the Lula, Cernambi and Iara discoveries and prospects.

BM-S-50 (20%) containing prospects including Sagittario.

BM-S-52 (40%) containing the Corcovado discovery.

BG Group plc (LSE: BG.L) is a world leader in natural gas, with a strategy focused on connecting competitively priced resources to specific, high-value markets. Active in more than 25 countries on five continents, BG Group has a broad portfolio of exploration and production, Liquefied Natural Gas (LNG) and transmission and distribution business interests. It combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves. For further information visit: www.bg-group.com

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There are matters set out within this announcement that are forward-looking statements. Such statements are only predictions, and actual events or results may differ materially. For a discussion of important factors which could cause actual results to differ from these forward-looking statements, refer toBG Group's Annual Report and Accounts for the year ended 31 December 2010. BG Group does not undertake any obligation to update publicly, or revise, forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.