Interim Results

24th Jul 2008 07:00

Second Quarter Highlights

Strong results driven by higher prices, E&P volumes and increased LNG margins

Group total operating profit up 92% to £1 431 million

Earnings per share up 101% to 24.1p

Significant progress in expanded exploration programme

Fifth exploration success in pre-salt Brazilian Santos Basin 

BG Group's Chief Executive, Frank Chapman said: 

"I am delighted to report that BG Group has delivered another strong business performance and continues to create material value through our exploration programme with successful results in Brazil, Algeria, Norway, Trinidad and Tobago and the UK."

Second Quarter					Half Year
2008 £m	2007 £m			Business Performance(i)(ii)	2008 £m	2007 £m
1 431	747	+92%		Total operating profit including share of pre-tax operating results from joint ventures and associates	2 833	1 570	+80%
807	409	+97%		Earnings for the period	1 596	857	+86%
24.1p	12.0p	+101%		Earnings per share	47.7p	25.2p	+89%
				Total results for the period (including disposals, re-measurements and impairments)(ii)
1 262	730	+73%		Operating profit before share of results from joint ventures and associates	2 579	1 464	+76%
1 328	793	+67%		Total operating profit including share of pre-tax operating results from joint ventures and associates	2 698	1 582	+71%
747	471	+59%		Earnings for the period	1 514	903	+68%
22.3p	13.9p	+60%		Earnings per share	45.3p	26.5p	+71%
4.68p	3.60p	+30%		Interim dividend per share	4.68p	3.60p	+30%

Business Review

Group

Second Quarter								Half Year
2008 £m		2007 £m				Business Performance		2008 £m		2007 £m
3 216		2 162		+49%		Revenue and other operating income		6 322		4 142	+53%
						Total operating profit including share of pre-tax results from joint ventures and associates
976		565		+73%		Exploration and Production		1 918		1 191	+61%
367		88		+317%		Liquefied Natural Gas		762		209	+265%
55		70		-21%		Transmission and Distribution		86		120	-28%
40		31		+29%		Power Generation		78		69	+13%
(7)		(7)		-		Other activities		(11)		(19)	-42%
1 431		747		+92%				2 833		1 570	+80%
4		(6)		-		Net finance income/(costs)		(7)		(15)	-53%
(617)		(317)		+95%		Taxation for the period		(1 215)		(673)	+81%
807		409		+97%		Earnings for the period		1 596		857	+86%
24.1p		12.0p		+101%		Earnings per share		47.7p		25.2p	+89%
950		496		+92%		Capital investment		1 597		1 365	+17%

Second quarter

Revenue and other operating income increased by 49% to £3 216 million, reflecting higher volumes in E&P and higher commodity prices.

Total operating profit increased by 92% to £1 431 million primarily due to higher commodity prices and higher E&P volumes, partially offset by higher gas costs at Comgas. 

Cash generated by operations increased by £759 million to £1 588 million primarily due to higher operating profits.

Capital investment in the quarter of £634 million, excluding acquisitions of £316 million, comprised continuing investment in Africa, Middle East and Asia (£254 million), Europe and Central Asia (£217 million) and Americas and Global LNG (£163 million).

Half year

Total operating profit increased by 80% to £2 833 million reflecting higher commodity prices and higher E&P and LNG volumes.

Net finance costs were £8 million lower due to increased cash balances.

The Group's effective tax rate (including BG Group's share of joint ventures and associates tax) was 43% for the half year.

Cash generated by operations increased by £1 239 million to £3 154 million. As at 30 June 2008, net funds were £629 million.

Capital investment in the half year of £1 281 million, excluding acquisitions of £316 million, comprised continuing investment in Africa, Middle East and Asia (£561 million), Europe and Central Asia (£396 million) and Americas and Global LNG (£324 million).

The Board has declared an interim dividend of 4.68p per share, payable on 12 September to shareholders on the register at 8 August.

Second quarter business highlights

In June, BG Group announced its offer to acquire all of the issued shares in Origin Energy Limited (Origin) at A$15.50 cash per share by way of a formal bid, valuing Origin's ordinary equity at approximately A$13.8 billion (£6.7 billion) fully diluted.

The Origin acquisition is driven by BG Group's integrated gas strategy, linking competitively-priced exploration and production resources to downstream markets and power generation assets. 

 Exploration and Production (E&P)

Second Quarter					Half Year
2008 £m	2007 £m			Business Performance	2008 £m	2007 £m
54.7	53.7	+2%		Production volumes (mmboe)	115.4	111.9	+3%
1 476	942	+57%		Revenue and other operating income	2 931	1 969	+49%
976	565	+73%		Total operating profit	1 918	1 191	+61%
828	369	+124%		Capital investment	1 410	728	+94%

Additional operating and financial data is given on page 28.

Second quarter

E&P total operating profit increased by 73% to £976 million reflecting higher commodity prices and increased production volumes.

Production volumes increased by 2%, held back by one-off outages in the UK (Grangemouth industrial action, Armada maintenance) and India (Panna outage).

The average realised gas price per produced therm in the UK rose by 8.9 pence to 32.8 pence. Guidance for the gas year remains at 34p for contracted volumes.

Unit operating expenditure increased by 50 pence to £3.24 ($6.47) per boe principally due to the impact of commodity prices on royalty costs; and tariffs.

The exploration charge of £94 million is £22 million higher than 2007, principally due to higher drilling expense.

Capital investment, including acquisitions, in the quarter of £828 million included expenditure in Australia (£320 million), Tunisia (£111 million), UK (£84 million), Egypt (£82 million), Kazakhstan (£49 million), Trinidad and Tobago (£36 million), Norway (£33 million), Brazil (£29 million), Oman (£22 million), Canada (£20 million) and India (£19 million).

Half year

E&P total operating profit increased by £727 million to £1 918 million reflecting higher commodity prices and increased production volumes, partially offset by a higher exploration charge. Production volumes have increased primarily at the Buzzard field in the UK and the Tapti field in India.

Unit operating expenditure increased by 40 pence to £3.01 ($5.99) per boe principally due to the impact of commodity prices on royalty costs.

The exploration charge of £191 million is £63 million higher than 2007 reflecting higher well write-off charges.

Capital investment, including acquisitions, in the half year of £1 410 million included expenditure in Australia (£320 million), Tunisia (£259 million), UK (£186 million), Egypt (£187 million), Kazakhstan (£96 million), Trinidad and Tobago (£89 million), Norway (£46 million), Brazil (£46 million), India (£43 million), Canada (£38 million) and Oman (£31 million).

Second quarter business highlights

In June, BG Group announced a further new oil discovery in the Santos Basin, offshore Brazil. The exploration well, known as Guará, discovered oil and gas within the BM-S-9 concession area (BG Group 30%) and is the second discovery within this concession. This well is BG Group's fifth consecutive drilling success in the deep water pre-salt Santos Basin since the Group began its drilling programme in 2005. 

In Algeria, the RM-1 exploration well on the Hassi Ba Hamou Permit (HBH Permit) (BG Group 36.75% and operator) was a gas discovery. This will be appraised as part of the work programme due under the second prospecting period of the HBH Permit.

In Norway, there have been discoveries at the Jordbær and Pi North wells in the North Sea. At the Ververis well in the Barents Sea, the Norwegian Petroleum Directorate has announced this as a discovery and BG Group is currently evaluating the results of the well.

In Thailand, the Ton Sak exploration well on Bongkot North was the seventh consecutive success on Bongkot in the last two years.

In Trinidad and Tobago on Block 5(c), the second well of a three well programme, Bounty, is a gas discovery. The well is ten kilometres from the Dolphin platform and is currently being tested.

In the UK, the recent appraisal programme undertaken at the Jasmine field (BG Group 30.5%) confirmed the presence of hydrocarbons in a separate structure to the northeast of the initial discovery well which was drilled in 2006. 

The first Jackdaw appraisal well (BG Group 43.4% and operator) was successful in identifying additional reserves in a new and higher quality reservoir section. A sidetrack well has been commenced to appraise further this discovery. 

On Block 23/21, located south of the Lomond field in the central North Sea, the Moth exploration well (BG Group 31.7%) was successful. BG Group will work together with the partners to prepare a programme for the development of this discovery.

On 11 April, BG Group completed its investment in Queensland Gas Company (QGC). BG Group has a 9.9% interest in QGC's shares and a 20% direct interest in its coal seam gas assets which together give BG Group a net interest in those assets of 27.9%. 

  Liquefied Natural Gas (LNG)

Second Quarter						Half Year
2008 £m		2007 £m			Business Performance	2008 £m		2007 £m
1 395		910	+53%		Revenue and other operating income	2 731		1 607	+70%
					Total operating profit
345		73	+373%		Shipping and marketing	728		188	+287%
37		32	+16%		Liquefaction	63		57	+11%
(15)		(17)	-12%		Business development and other	(29)		(36)	-19%
367		88	+317%			762		209	+265%
72		21	+243%		Capital investment	105		81	+30%

Additional operating and financial data is given on page 28.

Second quarter

LNG total operating profit increased by £279 million to £367 million.

Shipping and marketing produced an excellent performance with operating profit increasing by £272 million to £345 million. The favourable market conditions continued during the quarter and this, combined with the effective use of BG Group's flexible portfolio, resulted in strong margin expansion.

BG Group's share of operating profit from liquefaction activities of £37 million was up 16% primarily due to the impact of increased market prices and tariffs at Atlantic LNG.

Half year

LNG total operating profit increased by £553 million to £762 million reflecting the effective deployment of our portfolio to gain access to attractive markets.

BG Group's share of operating profit from liquefaction activities increased to £63 million, principally due to an increase in the tariff at Atlantic LNG Train 4 which entered its commercial phase during 2007.

Capital investment included £61 million in Chile and £39 million in the UK.

Second quarter business highlights

BG Group signed an agreement with Samsung Heavy Industries Co. Limited of South Korea for the delivery of two new-build dual-fuel diesel electric LNG ships. The new ships will each have a cargo capacity of 170 000 cubic metres and are scheduled to be delivered in 2010. 

In June, BG Group and Petroleo Brasileiro S.A. (Petrobras) signed two LNG agreements to supply the import terminals being built by Petrobras in Pecem (State of Ceara) and in Guanabara Bay (State of Rio de Janeiro), Brazil. The first agreement will provide the first LNG cargo ever to be delivered into Brazil and it will be used for the commissioning of the Pecem terminal in July 2008. The second agreement will enable LNG to be supplied to either the Pecem or Guanabara terminals as determined by Petrobras, depending on local gas demand. 

In June, BG Group signed a Heads of Agreement with Castle Peak Power Company (CAPCO) to supply one million tonnes per annum to CAPCO's planned LNG import terminal in Hong Kong for a period of up to 20 years. Initial deliveries are expected to begin in 2013 to coincide with the completion of the LNG terminal on South Soko Island. The LNG will be sourced from BG Group's flexible portfolio. 

The Queensland Curtis LNG project at Gladstone, a joint venture between BG Group and QGC, was granted Significant Project Status by the Government of Queensland in July. Bechtel has been appointed to commence work on the FEED study.

  Transmission and Distribution (T&D)

Second Quarter						Half Year
2008 £m		2007 £m			Business Performance	2008 £m		2007 £m
					Revenue and other operating income
282		197	+43%		Comgas	525		371	+42%
45		37	+22%		Other	91		83	+10%
327		234	+40%			616		454	+36%
					Total operating profit
41		58	-29%		Comgas	61		98	-38%
14		12	+17%		Other	25		22	+14%
55		70	-21%			86		120	-28%
33		29	+14%		Capital investment	61		45	+36%

Second quarter

T&D total operating profit for the quarter was £55 million.

At Comgas, in Brazil, total operating profit of £41 million reflected increased cost of gas purchases, partially offset by a 6% increase in volumes primarily in the power, co-generation and retail markets, and a stronger Brazilian Real exchange rate. On an underlying basis excluding the timing effect of the increased cost of gas and Brazilian Real foreign exchange movements, total operating profit would have increased by 12% to £65 million.

At the end of the quarter, the cost of gas balance to be recovered in future periods was £62 million, the majority of which is now expected to be recovered in 2009.

Half year

T&D total operating profit for the half year was £86 million. At Comgas, operating profit of £61 million reflected increased cost of gas purchases, partially offset by a 13% increase in volumes and a stronger Brazilian Real exchange rate. On an underlying basis excluding the timing effect of the increased cost of gas and Brazilian Real foreign exchange movements, total operating profit would have increased by 19% to £117 million.

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

Power Generation

Second Quarter						Half Year
2008 £m		2007 £m			Business Performance	2008 £m		2007 £m
160		142	+13%		Revenue and other operating income	299		238	+26%
					Total operating profit
44		33	+33%		Power Generation	85		76	+12%
(4)		(2)	+100%		Business development and other	(7)		(7)	-
40		31	+29%			78		69	+13%
16		76	-79%		Capital investment	20		509	-96%

Second quarter and half year

The increase in operating profit in both the second quarter and half year is primarily due to the one-off re-imbursement at BG Italia Power S.p.A. of emissions related costs. 

Presentation of Non-GAAP measures Business Performance 'Business Performance' excludes disposals, certain re-measurements and impairments (see below) as exclusion of these items provides a clear and consistent presentation of the underlying operating performance of the Group's ongoing business.  BG Group uses commodity instruments to manage price exposures associated with its marketing and optimisation activity in the UK and US. This activity enables the Group to take advantage of commodity price movements. It is considered more appropriate to include both unrealised and realised gains and losses arising from the mark-to-market of derivatives associated with this activity in 'Business Performance'. Disposals, certain re-measurements and impairments BG Group's commercial arrangements for marketing gas include the use of long-term gas sales contracts. Whilst the activity surrounding these contracts involves the physical delivery of gas, certain UK gas sales contracts are classified as derivatives under the rules of IAS 39 and are required to be measured at fair value at the balance sheet date. Unrealised gains and losses on these contracts reflect the comparison between current market gas prices and the actual prices to be realised under the gas sales contract and are disclosed separately as 'disposals, re-measurements and impairments'. BG Group also uses commodity instruments to manage certain price exposures in respect of optimising the timing and location of its physical gas and LNG sales commitments. These instruments are also required to be measured at fair value at the balance sheet date under IAS 39. However, IAS 39 does not always allow the matching of these fair values to the economically hedged value of the related commodity, resulting in unrealised movements in fair value being recorded in the income statement. These movements in fair value are disclosed separately as 'disposals, re-measurements and impairments'. BG Group also uses financial instruments, including derivatives, to manage foreign exchange and interest rate exposure. These instruments are required to be recognised at fair value or amortised cost on the balance sheet in accordance with IAS 39. Most of these instruments have been designated either as hedges of foreign exchange movements associated with the Group's net investments in foreign operations, or as hedges of interest rate risk. Where these instruments cannot be designated as hedges under IAS 39, unrealised movements in fair value are recorded in the income statement and disclosed separately as 'disposals, re-measurements and impairments'. Realised gains and losses relating to the instruments referred to above are included in Business Performance. This presentation best reflects the underlying performance of the business since it distinguishes between the temporary timing differences associated with re-measurements under IAS 39 rules and actual realised gains and losses. BG Group has also separately identified profits and losses associated with the disposal of non-current assets, and impairments of non-current assets as they require separate disclosure in order to provide a clearer understanding of the results for the period. For a reconciliation between the overall results and Business Performance and details of disposals, re-measurements and impairments, see the consolidated income statements, pages 12 and 13 and note 3, page 19. Joint ventures and associates Under IFRS the results from jointly controlled entities (joint ventures) and associates, accounted for under the equity method, are required to be presented net of finance costs and tax on the face of the income statement. Given the relevance of these businesses within BG Group, the results of joint ventures and associates are presented before interest and tax, and after tax. This approach provides additional information on the source of BG Group's operating profits. For a reconciliation between operating profit and earnings including and excluding the results of joint ventures and associates, see note 3, page 19. Exchange rates and prices BG Group also discloses certain information, as indicated, at constant US$/UK£ exchange rates and upstream prices. The presentation of results in this manner is intended to provide additional information to explain further the underlying trends in the business. Net borrowings/funds BG Group provides a reconciliation of net borrowings/funds and an analysis of the amounts included within net borrowings/funds as this is an important liquidity measure for the Group.

Legal Notice Certain statements included in these results contain forward-looking information concerning BG Group's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which BG Group operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within BG Group's control or can be predicted by BG Group. Although BG Group believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the 'Risk Factors' included in BG Group plc's Annual Report and Accounts 2007. Nothing in these results should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group undertakes no obligation to update any forward-looking statements.

Risk Factors BG Group's business, results and financial condition could be affected by a broad range of risks and uncertainties. For a full understanding of these risks see pages 42 to 45 of the BG Group 2007 Annual Report and Accounts. These risks include: Fluctuating market conditions, particularly commodity prices and exchange rates Finding and developing new reserves Political and regulatory environment  Effective organisation of human resources Treasury, credit and insurance The principal risks and uncertainties for the remaining six months of the financial year are unchanged from those stated  in the BG Group 2007 Annual Report and Accounts.

Statement of Directors' responsibilities  The Directors' confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Statements' as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8. The Directors of BG Group plc are listed in the 2007 Annual Report and Accounts, with the exception of the following change for the period: The appointment on 1 July 2008 of Sir David Manning GCMG as a Non-Executive Director of BG Group plc. By order of the Board_________________ Frank Chapman Chief Executive _________________ Ashley Almanza Chief Financial Officer

Independent review report to BG Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008, which comprises the income statement, balance sheet, consolidated statement of recognised income and expense, consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent mis-statements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS's as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP Chartered Accountants24 July 2008London

Consolidated Income Statement

Second Quarter		2008				2007
	Notes	Business Performance(i) £m	Disposals, re-measure-ments and impairments (Note 2)(i) £m	Total Result £m		Business Performance(i)£m	Disposals, re-measure-ments and impairments (Note 2)(i) £m	Total Result £m
Group revenue		3 223	-	3 223		2 155	-	2 155
Other operating income	2	(7)	(103)	(110)		7	27	34
Group revenue and other operating income	3	3 216	(103)	3 113		2 162	27	2 189
Operating costs		(1 851)	-	(1 851)		(1 478)	-	(1 478)
Profits and losses on disposal of non-current assets and impairments	2	-	-	-		-	19	19
Operating profit/(loss)(ii)	3	1 365	(103)	1 262		684	46	730
Finance income	2, 4	52	-	52		34	-	34
Finance costs	2, 4	(38)	(4)	(42)		(25)	(2)	(27)
Share of post-tax results from joint ventures and associates	3	46	-	46		38	-	38
Profit/(loss) before tax		1 425	(107)	1 318		731	44	775
Taxation	2, 5	(607)	47	(560)		(307)	18	(289)
Profit/(loss) for the period		818	(60)	758		424	62	486
Attributable to:
BG Group shareholders (earnings)		807	(60)	747		409	62	471
Minority interest		11	-	11		15	-	15
		818	(60)	758		424	62	486
Earnings per share - basic	6	24.1p	(1.8p)	22.3p		12.0p	1.9p	13.9p
Earnings per share - diluted	6	23.8p	(1.7p)	22.1p		11.9p	1.9p	13.8p
Total operating profit including share of pre-tax operating results from joint ventures and associates(iii)	3	1 431	(103)	1 328		747	46	793

The notes on pages 17 to 27 form an integral part of these condensed financial statements.

Consolidated Income Statement

Half Year			2008				2007
	Notes	Business Performance (i) £m		Disposals, re-measure-ments and impairments (Note 2)(i) £m	Total Result £m		Business Performance(i) £m	Disposals, re-measure-ments and impairments (Note 2)(i) £m	Total Result £m
Group revenue		6 312		-	6 312		4 098	-	4 098
Other operating income	2	10		(113)	(103)		44	(6)	38
Group revenue and other operating income	3	6 322		(113)	6 209		4 142	(6)	4 136
Operating costs		(3 608)		-	(3 608)		(2 690)	-	(2 690)
Profits and losses on disposal of non-current assets and impairments	2	-		(22)	(22)		-	18	18
Operating profit/(loss)(ii)	3	2 714		(135)	2 579		1 452	12	1 464
Finance income	2, 4	92		1	93		67	5	72
Finance costs	2, 4	(77)		(5)	(82)		(55)	(6)	(61)
Share of post-tax results from joint ventures and associates	3	80		-	80		82	-	82
Profit/(loss) before tax		2 809		(139)	2 670		1 546	11	1 557
Taxation	2, 5	(1 198)		55	(1 143)		(664)	35	(629)
Profit/(loss) for the period		1 611		(84)	1 527		882	46	928
Attributable to:
BG Group shareholders (earnings)		1 596		(82)	1 514		857	46	903
Minority interest		15		(2)	13		25	-	25
		1 611		(84)	1 527		882	46	928
Earnings per share - basic	6	47.7p		(2.4p)	45.3p		25.2p	1.3p	26.5p
Earnings per share - diluted	6	47.2p		(2.4p)	44.8p		25.0p	1.3p	26.3p
Total operating profit including share of pre-tax operating results from joint ventures and associates(iii)	3	2 833		(135)	2 698		1 570	12	1 582

The notes on pages 17 to 27 form an integral part of these condensed financial statements.

For information on dividends paid in the year, see note 9, page 26.

Consolidated Balance Sheet

	Notes	As at30 Jun 2008 £m	As at31 Dec 2007 £m	As at30 Jun 2007 £m
Assets
Non-current assets
Goodwill		445	385	356
Other intangible assets		1 158	823	678
Property, plant and equipment		8 047	7 426	6 764
Investments		1 487	1 157	1 079
Deferred tax assets		106	86	79
Trade and other receivables		72	70	47
Commodity contracts and other derivative financial instruments		1 147	378	340
		12 462	10 325	9 343
Current assets
Inventories		410	382	273
Trade and other receivables		2 529	2 261	1 831
Current tax receivable		100	52	-
Commodity contracts and other derivative financial instruments		2 467	489	309
Cash and cash equivalents		2 346	1 881	1 971
		7 852	5 065	4 384
Assets classified as held for sale		26	-	-
Total assets	3	20 340	15 390	13 727
Liabilities
Current liabilities
Borrowings		(142)	(275)	(311)
Trade and other payables		(2 280)	(2 251)	(1 617)
Current tax liabilities		(1 059)	(554)	(593)
Commodity contracts and other derivative financial instruments		(2 907)	(804)	(481)
		(6 388)	(3 884)	(3 002)
Non-current liabilities
Borrowings		(1 610)	(1 668)	(1 530)
Trade and other payables		(28)	(30)	(21)
Commodity contracts and other derivative financial instruments		(1 434)	(366)	(189)
Deferred income tax liabilities		(1 291)	(1 258)	(1 188)
Retirement benefit obligations		(172)	(165)	(151)
Provisions for other liabilities and charges		(678)	(662)	(568)
		(5 213)	(4 149)	(3 647)
Liabilities associated with assets classified as held for sale		(3)	-	-
Total liabilities		(11 604)	(8 033)	(6 649)
Net assets		8 736	7 357	7 078
Equity
Total shareholders' equity		8 603	7 225	6 958
Minority interest in equity		133	132	120
Total equity	8	8 736	7 357	7 078

The notes on pages 17 to 27 form an integral part of these condensed financial statements.

Consolidated Statement of Recognised Income and Expense

Second Quarter				Half Year
2008 £m	2007 £m			2008 £m	2007 £m
758	486		Profit for the period	1 527	928
(171)	11		Hedge adjustments net of tax	(166)	24
71	-		Fair value movements on 'available-for-sale' assets net of tax(i)	71	-
152	(34)		Currency translation adjustments	115	(8)
52	(23)		Net gains/(losses) recognised directly in equity	20	16
810	463		Total recognised income for the period	1 547	944
			Attributable to:
793	443		BG Group shareholders	1 527	913
17	20		Minority interest	20	31
810	463			1 547	944

The notes on pages 17 to 27 form an integral part of these condensed financial statements.

Consolidated Cash Flow Statement

Second Quarter				Half Year
2008 £m	2007 £m			2008 £m	2007 £m
			Cash flows from operating activities
1 318	775		Profit before tax	2 670	1 557
(46)	(38)		Share of post-tax results from joint ventures and associates	(80)	(82)
204	166		Depreciation and impairments of property, plant and equipment and amortisation of intangible assets	422	334
90	(27)		Fair value movements in commodity based contracts	120	45
-	(19)		(Profits) and losses on disposal of non-current assets and impairments	22	(18)
40	16		Unsuccessful exploration expenditure written off	96	26
(1)	(3)		(Decrease)/increase in provisions	(10)	(23)
(52)	(34)		Finance income	(93)	(72)
42	27		Finance costs	82	61
7	7		Share-based payments	14	14
(14)	(41)		(Increase)/decrease in working capital	(89)	73
1 588	829		Cash generated by operations	3 154	1 915
(235)	(190)		Income taxes paid	(636)	(374)
1 353	639		Net cash inflow from operating activities	2 518	1 541
			Cash flows from investing activities
43	13		Dividends received from joint ventures and associates	43	37
1	381		Proceeds from disposal of subsidiary undertakings and investments	1	461
2	-		Proceeds from disposal of property, plant and equipment and intangible assets	2	-
(833)	(406)		Purchase of property, plant and equipment and intangible assets	(1 311)	(780)
(23)	8		Loans (to)/from joint ventures and associates	(41)	(7)
(164)	(77)		Business combinations and investments	(174)	(483)
(974)	(81)		Net cash outflow from investing activities	(1 480)	(772)
			Cash flows from financing activities
2	(7)		Net interest received/(paid)(i)	(8)	(9)
(191)	(141)		Dividends paid	(191)	(141)
(19)	(13)		Dividends paid to minority	(19)	(13)
116	155		Net proceeds from issue of new borrowings	154	292
(220)	(179)		Repayment of borrowings	(327)	(195)
4	8		Issue of shares	7	15
-	(115)		Purchase of own shares	(197)	(211)
(308)	(292)		Net cash outflow from financing activities	(581)	(262)
71	266		Net increase in cash and cash equivalents	457	507
2 275	1 705		Cash and cash equivalents at beginning of period	1 881	1 463
4	-		Effect of foreign exchange rate changes	12	1
2 350(ii)	1 971		Cash and cash equivalents at end of period(iii)	2 350(ii)	1 971

The notes on pages 17 to 27 form an integral part of these condensed financial statements.

Notes 

These primary statements are the condensed financial statements ('the financial statements') of BG Group plc for the quarter ended and the half year ended 30 June 2008. The financial statements do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985, and should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2007 which have been prepared in accordance with IFRSs 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 2007 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 237(2) or 237(3) of the UK Companies Act 1985. These financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU, the requirements of the Disclosure and Transparency Rules issued by the Financial Services Authority and the accounting policies, methods of computation and presentation as applied in the 2007 Annual Report and Accounts (except as disclosed below). These financial statements have been reviewed, not audited, by PricewaterhouseCoopers LLP.

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:

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.

Under IFRS the results of joint ventures and associates are presented net of finance costs and tax  (see page 8). Given the relevance of these businesses within BG Group, the results of joint ventures  and associates are presented both before interest and tax, and after tax. The pre-interest and tax result is included in Business Performance. The tables in note 3 provide a reconciliation between the Total Result and Business Performance and operating profit including and excluding the results of joint ventures and associates.

New accounting standards and interpretations

The Group early adopted IFRS 8 'Operating Segments' from 1 January 2008. IFRS 8 sets out the requirements for disclosure about an entity's operating segments and also about an entity's products and services, the geographical areas in which it operates and its major customers. IFRS 8 requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. Segment information measured on a 'Business Performance' basis is used for internal reporting purposes. The adoption of IFRS 8 has not had a significant impact on the presentation of the Group's segmental information. The disclosures required for interim financial reporting under IFRS 8 are included in note 3.

IFRIC 12 'Service Concession Arrangements' provides guidance on the accounting by operators for public-to-private service concession arrangements. It is applicable for accounting periods beginning on or after 1 January 2008 although it has not yet been adopted by the EU; accordingly BG Group has not adopted this interpretation in these financial statements. BG Group is currently reviewing the interpretation to determine the likely impact on the Group.

  

Second Quarter				Half Year
2008 £m	2007 £m			2008 £m	2007 £m
(103)	27		Revenue and other operating income - re-measurements of commodity based contracts	(113)	(6)
-	19		Profits and losses on disposal of non-current assets and impairments	(22)	18
(4)	(2)		Net finance costs - re-measurements of financial instruments	(4)	(1)
47	18		Taxation	55	35
-	-		Minority interest	2	-
(60)	62		Impact on earnings	(82)	46

Second quarter and half year: Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a charge of £103 million for the quarter (2007 £27 million credit), of which £83 million (2007 £21 million credit) represents non-cash mark-to-market movements on certain long-term UK gas contracts. For the half year, a charge of £113 million in respect of re-measurements is included within revenue and other operating income (2007 £6 million charge), of which £105 million represents non-cash mark-to-market movements on certain long-term UK gas contracts (2007 £18 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. 

Second quarter and half year: Net finance costs

Re-measurements presented in net finance costs relate primarily to certain derivatives used to hedge foreign exchange and interest rate risk which have not been designated as hedges under IAS 39, partly offset by foreign exchange movements on certain borrowings. 

Second quarter and half year: Disposals of non-current assets

During the first quarter, BG Group committed to a plan to sell certain non-core businesses and accordingly reclassified these businesses as held for sale. As a result, these businesses were revalued to the lower of their carrying amount and fair value less costs to sell. This resulted in a pre- and post-tax charge to the income statement of £21 million. The sale of one of these businesses was completed in July 2008.

Also during the first quarter, other disposals resulted in a pre- and post-tax charge to the income statement of £1 million.

2007 second quarter and half year: Disposals of non-current assets

During the second quarter of 2007, BG Group sold its 25% equity interest in Interconnector (UK) Limited whilst retaining its throughput capacity contract with this company. The net proceeds of the equity disposal were £165 million, resulting in a pre- and post-tax gain of £157 million. No tax arose on the gain on this disposal. As part of this transaction, the Group reviewed the retained capacity contracts in the Interconnector pipeline and concluded that the obligations associated with these contracts exceed the benefit expected to be received from the Interconnector interest. Accordingly, a pre-tax provision of £156 million (post-tax £124 million) was made to reflect the present obligation under these contracts. The overall transaction generated a pre-tax gain on disposal of £1 million (post-tax £33 million).

During the second quarter of 2007, BG Group disposed of selected Canadian exploration and production assets. This resulted in a gain on disposal of £18 million. No tax arose on the disposal.

During the first quarter of 2007, BG Group disposed of its Mauritanian interests. This resulted in a loss on disposal of £1 million. No tax arose on the disposal.

 

Profit for the period

Analysed by operating segment

	Business Performance		Disposals,  re-measurements  and impairments		Total Result
Second Quarter	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m
Group revenue(i)
Exploration and Production	1 479	949	-	-	1 479	949
Liquefied Natural Gas	1 398	896	-	-	1 398	896
Transmission and Distribution	327	234	-	-	327	234
Power Generation	161	142	-	-	161	142
Other activities	1	1	-	-	1	1
Less: intra-group sales	(143)	(67)	-	-	(143)	(67)
Group revenue	3 223	2 155	-	-	3 223	2 155
Other operating income(ii)	(7)	7	(103)	27	(110)	34
Group revenue and other operating income	3 216	2 162	(103)	27	3 113	2 189
Operating profit/(loss) before share of results from joint ventures and associates
Exploration and Production	976	565	(103)	45	873	610
Liquefied Natural Gas	331	57	-	-	331	57
Transmission and Distribution	48	59	-	1	48	60
Power Generation	17	10	-	-	17	10
Other activities	(7)	(7)	-	-	(7)	(7)
	1 365	684	(103)	46	1 262	730
Pre-tax share of operating results of joint ventures and associates
Liquefied Natural Gas	36	31	-	-	36	31
Transmission and Distribution	7	11	-	-	7	11
Power Generation	23	21	-	-	23	21
	66	63	-	-	66	63
Total operating profit/(loss)
Exploration and Production	976	565	(103)	45	873	610
Liquefied Natural Gas	367	88	-	-	367	88
Transmission and Distribution	55	70	-	1	55	71
Power Generation	40	31	-	-	40	31
Other activities	(7)	(7)	-	-	(7)	(7)
	1 431	747	(103)	46	1 328	793
Net finance costs
Finance income	52	34	-	-	52	34
Finance costs	(38)	(25)	(4)	(2)	(42)	(27)
Share of joint ventures and associates	(10)	(15)	-	-	(10)	(15)
	4	(6)	(4)	(2)	-	(8)
Taxation
Taxation	(607)	(307)	47	18	(560)	(289)
Share of joint ventures and associates	(10)	(10)	-	-	(10)	(10)
	(617)	(317)	47	18	(570)	(299)
Profit for the period	818	424	(60)	62	758	486

  3. Segmental analysis (continued)

	Business Performance		Disposals,  re-measurements  and impairments		Total Result
Half Year	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m
Group revenue(i)
Exploration and Production	2 927	1 959	-	-	2 927	1 959
Liquefied Natural Gas	2 731	1 573	-	-	2 731	1 573
Transmission and Distribution	616	454	-	-	616	454
Power Generation	293	238	-	-	293	238
Other activities	3	3	-	-	3	3
Less: intra-group sales	(258)	(129)	-	-	(258)	(129)
Group revenue	6 312	4 098	-	-	6 312	4 098
Other operating income(ii)	10	44	(113)	(6)	(103)	38
Group revenue and other operating income	6 322	4 142	(113)	(6)	6 209	4 136
Operating profit/(loss) before share of results from joint ventures and associates
Exploration and Production	1 918	1 191	(113)	11	1 805	1 202
Liquefied Natural Gas	701	153	-	-	701	153
Transmission and Distribution	73	99	(1)	1	72	100
Power Generation	33	28	-	-	33	28
Other activities	(11)	(19)	(21)	-	(32)	(19)
	2 714	1 452	(135)	12	2 579	1 464
Pre-tax share of operating results of joint ventures and associates
Liquefied Natural Gas	61	56	-	-	61	56
Transmission and Distribution	13	21	-	-	13	21
Power Generation	45	41	-	-	45	41
	119	118	-	-	119	118
Total operating profit/(loss)
Exploration and Production	1 918	1 191	(113)	11	1 805	1 202
Liquefied Natural Gas	762	209	-	-	762	209
Transmission and Distribution	86	120	(1)	1	85	121
Power Generation	78	69	-	-	78	69
Other activities	(11)	(19)	(21)	-	(32)	(19)
	2 833	1 570	(135)	12	2 698	1 582
Net finance costs
Finance income	92	67	1	5	93	72
Finance costs	(77)	(55)	(5)	(6)	(82)	(61)
Share of joint ventures and associates	(22)	(27)	-	-	(22)	(27)
	(7)	(15)	(4)	(1)	(11)	(16)
Taxation
Taxation	(1 198)	(664)	55	35	(1 143)	(629)
Share of joint ventures and associates	(17)	(9)	-	-	(17)	(9)
	(1 215)	(673)	55	35	(1 160)	(638)
Profit for the period	1 611	882	(84)	46	1 527	928

 3. Segmental analysis (continued) 

Total Result	Operating profit before share of results from joint ventures and associates(i)		Share of results in joint ventures and associates(i)		Total Result
Second Quarter	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m
Exploration and Production	873	610	-	-	873	610
Liquefied Natural Gas	331	57	27	19	358	76
Transmission and Distribution	48	60	5	4	53	64
Power Generation	17	10	14	15	31	25
Other activities	(7)	(7)	-	-	(7)	(7)
	1 262	730	46	38	1 308	768
Net finance income					10	7
Profit before tax					1 318	775
Taxation					(560)	(289)
Profit for the period					758	486

Total Result	Operating profit before share of results from joint ventures and associates(i)		Share of results in joint ventures and associates(i)		Total Result
Half Year	2008 £m	2007 £m	2008 £m	2007 £m	2008 £m	2007 £m
Exploration and Production	1 805	1 202	-	-	1 805	1 202
Liquefied Natural Gas	701	153	43	35	744	188
Transmission and Distribution	72	100	9	19	81	119
Power Generation	33	28	28	28	61	56
Other activities	(32)	(19)	-	-	(32)	(19)
	2 579	1 464	80	82	2 659	1 546
Net finance income					11	11
Profit before tax					2 670	1 557
Taxation					(1 143)	(629)
Profit for the period					1 527	928

 3. Segmental analysis (continued) 

Total Assets 

Analysed by operating segment

	As at
	30 Jun 2008 £m	31 Dec 2007 £m
Exploration and Production	9 275	7 589
Liquefied Natural Gas	5 487	2 996
Transmission and Distribution	1 632	1 415
Power Generation	1 207	1 128
Other activities	62	56
Cash and cash equivalents, derivative financial instruments(i), interest and tax balances	2 677	2 206
	20 340	15 390

BG Group's total assets have increased during the period. This is principally due to fair value movements on commodity contracts and other derivative financial instruments. Liabilities associated with these instruments have also increased during the period. The reasons for the increases include:

Second Quarter				Half Year
2008 £m	2007 £m			2008 £m	2007 £m
(22)	(16)		Interest payable	(46)	(39)
(13)	(13)		Interest on obligations under finance leases	(28)	(26)
5	9		Interest capitalised	13	20
(8)	(5)		Unwinding of discount on provisions(i)	(16)	(10)
(4)	(2)		Disposals, re-measurements and impairments (Note 2)	(5)	(6)
(42)	(27)		Finance costs	(82)	(61)
52	34		Interest receivable	92	67
-	-		Disposals, re-measurements and impairments (Note 2)	1	5
52	34		Finance income	93	72
10	7		Net finance income(ii)	11	11

 

The taxation charge for the second quarter before disposals, re-measurements and impairments was £607 million (2007 £307 million) and the taxation charge including disposals, re-measurements and impairments was £560 million (2007 £289 million). 

For the half year, the taxation charge before disposals, re-measurements and impairments was £1 198 million (2007 £664 million) and the taxation charge including disposals, re-measurements and impairments was £1 143 million (2007 £629 million).

The Group share of taxation from joint ventures and associates for the second quarter was £10 million (2007 £10 million) and for the half year was £17 million (2007 £9 million).

The effective tax rate for the half year is based on the best estimate of the weighted average annual income tax rate expected for the full year.

Second Quarter						Half Year
2008		2007				2008		2007
£m	Pence  per share	£m	Pence per share			£m	Pence per share	£m	Pence per share
747	22.3	471	13.9		Earnings	1 514	45.3	903	26.5
60	1.8	(62)	(1.9)		Disposals, re-measurements and impairments (after tax and minority interest)	82	2.4	(46)	(1.3)
807	24.1	409	12.0		Earnings - excluding disposals,  re-measurements and impairments	1 596	47.7	857	25.2

Basic earnings per share calculations in 2008 are based on the weighted average number of shares in issue of 3 346 million for the quarter and 3 345 million for the half 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 3 384 million for the quarter and 3 383 million for the half year, being the weighted average number of ordinary shares in issue during the period as adjusted for dilutive equity instruments.

 

	£m
Net funds as at 31 December 2007	25
Net increase in cash and cash equivalents	457
Cash outflow from changes in borrowings	173
Foreign exchange and other re-measurements	(22)
Cash and cash equivalents classified as held for sale	(4)
Net funds as at 30 June 2008(i) (ii)	629

Net borrowings attributable to Comgas were £442 million (31 December 2007 £318 million).

As at 30 June 2008, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately £1 billion, including BG Group shareholder loans of approximately £0.7 billion. These net borrowings are included in BG Group's share of the net assets in joint ventures and associates which are consolidated in BG Group's accounts. 

	As at  30 Jun  2008 £m	As at 31 Dec  2007 £m
Amounts receivable/(due) within one year
Cash and cash equivalents	2 346	1 881
Overdrafts, loans and finance leases	(142)	(275)
Derivative financial instruments(iii)	(15)	60
	2 189	1 666
Amounts receivable/(due) after more than one year
Loans and finance leases	(1 610)	(1 668)
Derivative financial instruments(iii)	50	27
	(1 560)	(1 641)
Net funds/(borrowings)	629	25

  7. Reconciliation of net borrowings/funds - Half Year (continued)

Liquidity and Capital Resources

All the information below is as at 30 June 2008

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

BGEH had a US$1.0 billion US Commercial Paper Programme, which was unutilised, and a  billion Eurocommercial Paper Programme, of which US$971 million was unutilised. BGEH also had a US$2.0 billion Euro Medium Term Note Programme, of which US$1.55 billion was unutilised. 

BGEH had aggregate committed multicurrency revolving borrowing facilities of US$1.04 billion which expire in 2012. 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 £60 million and credit facilities of US$40 million, all of which were unutilised.

On 23 June 2008, BGEH entered into a syndicated facility agreement allowing it, subject to certain conditions, to borrow up to US$12.125 billion and A$2 billion in aggregate in connection with the proposed acquisition of Origin.

Comgas had committed borrowing facilities of Brazilian Reals (BRL) 1 756.1 million, of which BRL 267.9 million was unutilised, and uncommitted borrowing facilities of BRL 280 million, of which BRL 96.6 million were unutilised.

  

		Called up share capital £m	Share premium account £m	Hedging reserve £m	Translation reserve £m	Other reserves £m	Retained earnings £m	Total £m	Minority Interest £m	Total £m
	Equity as at 31 December 2007	358	165	(39)	(164)	1 702	5 203	7 225	132	7 357
	Profit for the financial period	-	-	-	-	-	1 514	1 514	13	1 527
	Issue of shares	-	7	-	-	-	-	7	-	7
	Adjustment in respect of employee share schemes	-	-	-	-	-	37	37	-	37
	Dividends on ordinary shares	-	-	-	-	-	(193)	(193)	-	(193)
	Dividends paid to minority interest	-	-	-	-	-	-	-	(19)	(19)
	Fair value movements on 'available-for-sale' assets net of tax(i)	-	-	-	-	-	71	71	-	71
	Currency translation adjustments  and hedge adjustments net of tax	-	-	(165)	107	-	-	(58)	7	(51)
	Equity as at 30 June 2008	358	172	(204)	(57)	1 702	6 632	8 603	133	8 736
		Called up share capital £m	Share premium account £m	Hedging reserve £m	Translation reserve £m	Other reserves £m	Retained earnings £m	Total £m	Minority Interest £m	Total £m
	Equity as at 31 December 2006	356	116	51	(256)	1 702	4 394	6 363	102	6 465
	Profit for the financial period	-	-	-	-	-	903	903	25	928
	Issue of shares	1	14	-	-	-	-	15	-	15
	Purchase of own shares	-	-	-	-	-	(216)	(216)	-	(216)
	Adjustment in respect of employee share schemes	-	-	-	-	-	26	26	-	26
	Dividends on ordinary shares	-	-	-	-	-	(143)	(143)	-	(143)
	Dividends paid to minority interest	-	-	-	-	-	-	-	(13)	(13)
	Currency translation adjustments  and hedge adjustments net of tax	-	-	19	(9)	-	-	10	6	16
	Equity as at 30 June 2007	357	130	70	(265)	1 702	4 964	6 958	120	7 078

i) BG Group's 9.9% stake in QGC is classified as an 'available-for-sale' financial asset under IAS 39.

	Half Year
	2008		2007
	£m	Pence per share	£m	Pence per share
Prior year final dividend, paid in the period	193	5.76	143	4.20

The final dividend of 5.76p (£193 million) in respect of the year ended 31 December 2007 was paid on 23 May 2008 to shareholders (2 June 2008 to ADR holders) on the register at the close of business on 11 April 2008. The interim dividend of 4.68p (£157 million) in respect of the year ended 31 December 2008 is payable on 12 September 2008 (19 September 2008 to ADR holders).

 

Second Quarter				Half Year
2008 £m	2007 £m			2008 £m	2007 £m
217	152		Europe and Central Asia	396	412
479	168		Americas and Global LNG	640	648
254	176		Africa, Middle East and Asia	561	305
950	496			1 597	1 365

 

	2008 £m	2007 £m	2008 pence	2007 pence
First quarter
including disposals, re-measurements and impairments	767	432	22.9	12.7
excluding disposals, re-measurements and impairments	789	448	23.6	13.1
Second quarter
including disposals, re-measurements and impairments	747	471	22.3	13.9
excluding disposals, re-measurements and impairments	807	409	24.1	12.0
Third quarter
including disposals, re-measurements and impairments		357		10.6
excluding disposals, re-measurements and impairments		368		10.9
Fourth quarter
including disposals, re-measurements and impairments		486		14.4
excluding disposals, re-measurements and impairments		558		16.6
Full year
including disposals, re-measurements and impairments		1 746		51.6
excluding disposals, re-measurements and impairments		1 783		52.7

 

Details of the Group's commitments and contingent liabilities as at 31 December 2007 can be found in note 27, page 112 of the 2007 Annual Report and Accounts.

There have been no material changes to the Group's commitments in respect of capital expenditure in the six month period to 30 June 2008. There have been no material changes to the Group's other commitments and contingent liabilities in the period.

The Group provides goods and services to, and receives goods and services from, its joint ventures and associates. In addition, the Group provides financing to some of these parties by way of loans. Details of related party transactions for the year ended 31 December 2007 can be found in note 28, page 114 of the 2007 Annual Report and Accounts. There have been no material changes in these relationships in the following period ending 30 June 2008. No related party transactions have taken place in the first six months of the current financial year that have materially affected the financial position or the performance of the Group during that period.

  Supplementary information: Operating and financial data

Second Quarter		First Quarter			Half Year
2008	2007	2008			2008	2007
				Production volumes (mmboe)
7.2	7.4	7.9		- oil	15.1	13.9
9.2	9.7	9.3		- liquids	18.5	18.5
38.3	36.6	43.5		- gas	81.8	79.5
54.7	53.7	60.7		- total	115.4	111.9
				Production volumes (boed in thousands)
79	81	87		- oil	83	77
101	107	102		- liquids	102	102
421	402	478		- gas	449	439
601	590	667		- total	634	618
£60.61	£34.81	£49.69		Average realised oil price per barrel	£54.92	£32.37
($120.93)	($69.07)	($98.49)			($109.21)	($63.89)
£48.97	£28.58	£41.05		Average realised liquids price per barrel	£44.98	£25.99
($97.69)	($56.72)	($81.35)			($89.45)	($51.31)
32.79p	23.88p	38.73p		Average realised UK gas price per produced therm	36.11p	31.48p
20.43p	15.11p	19.54p		Average realised International gas price per produced therm	19.97p	15.75p
22.94p	17.00p	23.87p		Average realised gas price per produced therm	23.43p	19.43p
£1.87	£1.74	£1.57		Lifting costs per boe	£1.71	£1.62
($3.72)	($3.44)	($3.11)			($3.40)	($3.20)
£3.24	£2.74	£2.80		Operating expenditure per boe	£3.01	£2.61
($6.47)	($5.41)	($5.55)			($5.99)	($5.16)
406	301	407		Development expenditure (£m)	813	592
				Gross exploration expenditure (£m)
180	46	146		- capitalised expenditure (excluding acquisitions)	326	105
54	56	41		- other expenditure	95	102
234	102	187		- gross expenditure	421	207
				Exploration expenditure charge (£m)
40	16	56		- capitalised expenditure written off	96	26
54	56	41		- other expenditure	95	102
94	72	97		- exploration charge	191	128
				LNG cargoes
17	64	6		- delivered to US	23	99
46	7	52		- delivered to global markets	98	24
63	71	58		- total	121	123
186.0	208.8	177.8		LNG managed volumes (Tbtu)	363.8	353.6

Supplementary information: Operating and financial data (continued)

BG Group's exposure to the oil price varies according to a number of factors including the mix of production and sales. Management estimates that, other factors being constant, a $1.00 rise (or fall) in the Brent price would increase (or decrease) operating profit in 2008 by approximately £40 million to £50 million.

BG Group's exposure to the US$/UK£ exchange rate varies according to a number of factors including commodity prices and the timing of US Dollar revenues and costs including capital expenditure. Management estimates that in 2008, other factors being constant, a 10 cent strengthening (or weakening) in the US Dollar would increase (or decrease) operating profit by approximately £250 million to £300 million.

Glossary In BG Group's results some or all of the following definitions are used: bcf billion cubic feet bcfd billion cubic feet per day bcmpa billion cubic metres per annum boe  barrels of oil equivalent boed barrels of oil equivalent per day bopd  barrels of oil per day CCGT  combined cycle gas turbine DCQ daily contracted quantity E&P Exploration and Production EBITDA earnings before interest, tax, depreciation and amortisation EPC engineering, procurement and construction EPIC engineering, procurement, installation and commissioning  FEED front end engineering design FERC Federal Energy Regulatory Commission Gearing ratio net borrowings as a percentage of total shareholders' funds (excluding the re-measurement of commodity financial instruments and associated deferred tax) plus net borrowings GW gigawatt IAS 39 International Accounting Standard 39 (Financial Instruments) IFRS International Financial Reporting Standards kboed thousand barrels of oil equivalent per day LNG Liquefied Natural Gas Managed volumes Comprises all LNG volumes contracted for purchase and having related revenue and other operating income recognised in the applicable period m million mmboe million barrels of oil equivalent mmbtu million british thermal units mmcfd million cubic feet per day mmcmd  million cubic metres per day mmscfd million standard cubic feet per day mmscm million standard cubic metres mmscmd million standard cubic metres per day MoU Memorandum of Understanding mtpa million tonnes per annum MW megawatt Net borrowings/funds Comprise cash, current asset investments, finance leases, currency and interest rate derivative financial instruments and short- and long-term borrowings NGL Natural gas liquids PJ Petajoules PSA production sharing agreement SEC US Securities and Exchange Commission T&D Transmission and Distribution Tbtu trillion british thermal units Total operating profit Group operating profit plus share of pre-tax operating results of joint ventures and associates UKCS United Kingdom Continental Shelf Unit operating  expenditure per boe Production costs and royalties incurred over the period divided by the net production for the period. Production costs and royalties (other operating costs) for the period are disclosed under 'results of operations' in the Supplementary information - Oil and Gas disclosures in BG Group's Annual Report & Accounts for the period. This measure does not include the impact of depreciation and amortisation costs and exploration costs as they are not considered to be costs associated with the operation of producing assets.  Unit lifting costs per boe 'Unit operating expenditure' as defined above, excluding royalty, tariff and insurance costs incurred over the period divided by the net production for the period.

Enquiries Enquiries relating to BG Group's results, business and financial position should be made to:  Investor Relations Department  BG Group plc Thames Valley Park Drive Reading Berkshire  RG6 1PT General enquiries about shareholder matters  should be made to:  Equiniti Limited Aspect House Spencer Road LancingWest Sussex BN99 6DA Tel: 0118 929 3025 Tel: 0871 384 2064 e-mail: [email protected]  e-mail: [email protected] Media Enquiries: Edel McCaffrey: 0118 929 3508 Jo Thethi: 0118 929 3110  High resolution images are available at www.vismedia.co.uk BG Group is listed on the US over-the-counter market known  as the International OTCQX. Enquiries should be made to: Pink OTC Markets Inc. 304 Hudson Street 2nd Floor New York, NY 10013 USA e-mail: [email protected] Financial Calendar Ex-dividend for 2008 interim dividend 6 August 2008 Record date for 2008 interim dividend 8 August 2008 Payment of 2008 interim dividend: Shareholders 12 September 2008 American depositary receipt holders 19 September 2008 Announcement of 2008 third quarter results 4 November 2008 BG Group plc website: www.bg-group.com Registered office 100 Thames Valley Park Drive, Reading RG6 1PT Registered in England No. 3690065

ENDIR SEWFADSASELW

---

Related Shares:

BG..L