27th Jul 2007 07:01
BG GROUP plc27 July 2007 BG GROUP PLC2007 SECOND QUARTERAND HALF YEAR RESULTS-------------------------------------------------------------------------------- • Total operating profit(i) for the quarter was £747 million • At constant US$/UK£ exchange rates and upstream prices, total operating profit increased 14% • Planned maintenance and disposals resulted in E&P volumes down 3% • Damage to CATS pipeline will impact UK production in the third quarter • Strong volume growth (up 61%), drove LNG total operating profit growth of 159% • Major advance in growth programme with agreement on Karachaganak Phase III gas sales BG Group's Chief Executive, Frank Chapman said: "In a quarter with a high level of scheduled maintenance, operating performanceremained strong, with underlying operating profit up 14% and excellent resultsin LNG. We continue to advance our future growth programme, with progress onKarachaganak Phase III and with drilling in Brazil." Second Quarter Half Year 2007 2006 Business Performance(i) 2007 2006 £m £m £m £m 747 752 -1% Total operating profit including 1 570 1 710 -8% share of pre-tax operating results from joint ventures and associates 409 325 +26% Earnings for the period 857 888 -3% 12.0p 9.3p +29% Earnings per share 25.2p 25.3p - Total results for the period (including disposals, re-measurements and impairments) 730 773 -6% Operating profit before share of 1 464 1 685 -13% results from joint ventures and associates 793 829 -4% Total operating profit including 1 582 1 811 -13% share of pre-tax operating results from joint ventures and associates 471 418 +13% Earnings for the period 903 996 -9% 13.9p 12.0p +16% Earnings per share 26.5p 28.4p -7% 3.60p 3.00p +20% Interim dividend per share 3.60p 3.00p +20% i) '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 explanation of Business Performance and the presentation of results from joint ventures and associates, see Presentation of Non-GAAP measures, page 10 and Results Presentation, page 2. Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance. RESULTS PRESENTATION The presentation of BG Group's results under IFRS separately identifies theeffect of: • The re-measurement of certain financial instruments. • Profits and losses on the disposal and impairment of non-current assets and businesses. These items are excluded from Business Performance in order to provide readerswith a clear and consistent presentation of the underlying operating performanceof the Group's ongoing businesses. Under IFRS the results of joint ventures and associates are presented net offinance costs and tax (see pages 12 and 13). Given the relevance of thesebusinesses within BG Group, the results of joint ventures and associates arepresented both before interest and tax, and after tax. The pre-interest and taxresult is disclosed in Business Performance discussed on pages 3 to 9. The tablebelow sets out the amounts related to joint ventures and associates, certainre-measurements under IAS 39 and profits on disposal and impairment ofnon-current assets and businesses. Second Quarter Business Disposals, re- Total Performance measurements and Result impairments(i) 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m Operating profit before disposal of non-current assets 684 696 27 85 711 781 Profits and losses on disposal of non-current assets and impairments - - 19 (8) 19 (8) Operating profit before share of results from joint ventures and associates 684 696 46 77 730 773 Pre-tax share of operating results of joint ventures and associates 63 56 - - 63 56 Total operating profit 747 752 46 77 793 829 Net finance costs Finance income 34 21 - 4 34 25Finance costs (25) (17) (2) (5) (27) (22)Share of joint ventures and associates (15) (18) - - (15) (18) (6) (14) (2) (1) (8) (15) Taxation Taxation (307) (392) 18 17 (289) (375)Share of joint ventures and associates (10) (9) - - (10) (9) (317) (401) 18 17 (299) (384) Profit for the period 424 337 62 93 486 430 Profit attributable to: Shareholders (earnings) 409 325 62 93 471 418Minority interest 15 12 - - 15 12 424 337 62 93 486 430 i) Re-measurements excluded from Business Performance The IAS 39 re-measurements reflect movements in external market prices andexchange rates. Financial Instruments include certain long-term UK gas contractswhich are classified as derivatives under IAS 39 due to the nature of thecontract terms and are therefore required to be marked-to-market. This treatmenthas no impact on the ongoing cashflows of the business and these unrealisedmark-to-market movements are best presented separately from underlying businessperformance. For an explanation of Non-GAAP measures see page 10. BUSINESS REVIEW The results discussed in this Business Review (pages 3 to 9) relate to BGGroup's performance excluding disposals, re-measurements and impairments. Forthe impact and a description of these items, see the consolidated incomestatements (pages 12 and 13) and note 2 of the accounts (page 20). Results atconstant US$/UK£ exchange rates and upstream prices are also quoted. SeePresentation of Non-GAAP measures (page 10) for an explanation of these metrics. GROUP Second Quarter Business Performance Half Year 2007 2006 2007 2006 £m £m £m £m 2 162 1 754 +23% Revenue and other operating 4 142 3 726 +11% income Total operating profit including share of pre-tax results from joint ventures and associates 565 647 -13% Exploration and Production 1 191 1 373 -13% 88 34 +159% Liquefied Natural Gas 209 172 +22% 70 57 +23% Transmission and Distribution 120 122 -2% 31 23 +35% Power Generation 69 62 +11% (7) (9) -22% Other activities (19) (19) - 747 752 -1% 1 570 1 710 -8% (6) (14) -57% Net finance costs (15) (13) +15% (317) (325) -2% Taxation for the period (673) (747) -10% 409 401 +2% Earnings before prior period 857 926 -7% taxation - (76) - Prior period taxation - (38) - 409 325 +26% Earnings for the period after 857 888 -3% prior period taxation 12.0p 9.3p +29% Earnings per share 25.2p 25.3p - 496 401 +24% Capital investment 1 365 787 +73% Second quarter Revenue and other operating income increased by 23% to £2 162 million,reflecting a 61% increase in LNG managed volumes and the impact of recent poweracquisitions, partially offset by lower prices and the weaker US$/UK£ exchangerate. Total operating profit of £747 million was broadly in line with the prior year,despite a weaker US$/UK£ exchange rate and lower UK gas prices. The impact ofstrong volume growth in the LNG segment was offset by an increased explorationcharge and lower E&P production volumes. At constant US$/UK£ exchange rates andupstream prices, underlying total operating profit would have increased by 14%. Cash flow remained strong with cash generated by operations of £829 million andproceeds from asset disposals of £381 million. Capital investment in the quarter of £496 million included the acquisition ofMasspower (£74 million) in the USA, and continuing investment in Europe andCentral Asia (£152 million), Mediterranean Basin and Africa (£143 million),North America and the Caribbean (£52 million), South America (£42 million) andAsia Pacific (£33 million). At 30 June 2007, the Group had returned £219 million to shareholders as part ofthe share repurchase programme announced on 8 February 2007. Net funds were £213million. Half year Revenue and other operating income increased by 11% reflecting a 44% increase inLNG managed volumes and the impact of recent power acquisitions, partiallyoffset by lower prices and the weaker US$/UK£ exchange rate. Total operating profit of £1 570 million reflected a 44% increase in LNG managedvolumes offset by an increased exploration charge, lower prices and a weaker US$/UK£ exchange rate. At constant US$/UK£ exchange rates and upstream prices,underlying total operating profit would have increased by 8%. The Group's effective tax rate (including BG Group's share of joint ventures andassociates tax) was 43.3% for the half year. Cash generated by operations increased by 5% to £1 915 million and proceeds fromdisposals were £461 million. Capital investment of £1 365 million included power plant acquisitions of £505million and investment in Europe and Central Asia (£332 million), MediterraneanBasin and Africa (£236 million), North America and the Caribbean (£162 million),Asia Pacific (£69 million) and South America (£61 million). The Board has declared an interim dividend of 3.6p per share, payable on 14September to shareholders on the register at 10 August. EXPLORATION AND PRODUCTION Second Quarter Business Performance Half Year 2007 2006 2007 2006 £m £m £m £m 53.7 55.6 -3% Production volumes (mmboe) 111.9 111.4 - 942 984 -4% Revenue and other 1 969 2 057 -4% operating income 565 647 -13% Total operating profit 1 191 1 373 -13% 369 229 +61% Capital investment 728 500 +46% Additional operating and financial data is given on page 30. Second quarter E&P total operating profit of £565 million reflected lower UK gas prices, anincreased exploration charge, lower production volumes and a weaker US$/UK£exchange rate. At constant US$/UK£ exchange rates and upstream prices,underlying total operating profit would have increased by 3%. Production volumes were 3% lower, principally due to annual maintenance in theUK and Egypt and the impact of asset disposals, partially offset by newproduction from Buzzard and Atlantic/Cromarty in the UK and Dolphin Deep inTrinidad and Tobago. The exploration charge of £72 million is £17 million higher than 2006,reflecting the increased exploration activities across the Group. Unit operating expenditure was up 67 pence to £2.74 per boe, reflectingmaintenance activity in the quarter and the effect of industry cost inflation. The Group's average realised international gas price was 15.1 pence (2006 17.1pence) per produced therm. The average realised price per produced therm in theUK was 23.9 pence (2006 26.2 pence), reflecting a reduction in spot marketprices. Capital investment of £369 million included expenditure in Tunisia (£90million), the UK (£89 million), Egypt (£49 million), Trinidad and Tobago (£34million), Kazakhstan (£32 million) and India (£25 million). Half year E&P total operating profit of £1 191 million reflected lower prices and a weakerUS$/UK£ exchange rate. At constant US$/UK£ exchange rates and upstream prices,underlying total operating profit would have increased by 4%. Production volumeswere in line with the prior year as the impact of maintenance and assetdisposals have been offset by Buzzard and Atlantic/Cromarty in the UK andDolphin Deep in Trinidad and Tobago. The Group's average realised international gas price was 15.8 pence (2006 17.7pence) per produced therm. In the UK, the average realised price per producedtherm was 31.5 pence (2006 33.0 pence). The exploration charge has increased £29 million to £128 million principally dueto increased exploration activity. Capital investment of £728 million included expenditure in the UK (£230million), Tunisia (£153 million), Egypt (£77 million), India (£56 million), Trinidad and Tobago (£55 million) and Kazakhstan (£51 million). Second quarter business highlights On 1 June, BG Group and partners agreed the terms of the Phase III KarachaganakGas Sales Agreement, Kazakhstan with KazRosGaz, a joint venture between Gazpromand KazMunaiGaz. The agreement, which is subject to final approvals, sets outthe commercial terms governing the sale of gas over a 15 year period, expectedto commence during the fourth quarter 2007. Volumes under the agreement willdouble to 16 bcma following completion of the Karachaganak Phase III expansion,which is expected onstream in 2012. This agreement is a significant milestone inthe continued development of the Karachaganak field; it represents thecommercialisation of more than 7 tcf of gas and will also facilitate sales of upto 16.5 mtpa of liquids. During the quarter, BG Group and partners signed major contracts for a total ofUS$459 million for the Poinsettia field project, part of the planned phaseddevelopment of the North Coast Marine Area in Trinidad and Tobago. The projectcomprises a new drilling and production platform in 160 metres of water, thedrilling of four wells from the platform, a 20" gas export line and a singlesub-sea well tie-back. Construction of the platform is expected to be completedin the fourth quarter 2008 and the drilling campaign will commence immediatelythereafter. On 1 July, the Central Area Transmission System (CATS) gas pipeline was safelysuspended following damage caused by the anchor of a third party vessel. A moredetailed inspection of the pipeline is underway to determine the scope ofnecessary repairs. In the year to date, seven exploration and appraisal wells have been completedof which three were successful and one is under evaluation. A further eightwells are currently operating. In Brazil, the Tupi Sul appraisal well andCarioca exploration well are currently drilling. LIQUEFIED NATURAL GAS Second Quarter Business Performance Half Year 2007 2006 2007 2006 £m £m £m £m 910 548 +66% Revenue and other operating 1 607 1 201 +34% income Total operating profit 73 29 +152% Shipping and marketing 188 155 +21% 32 24 +33% Liquefaction 57 54 +6% (17) (19) -11% Business development and (36) (37) -3% other costs 88 34 +159% 209 172 +22% 21 139 -85% Capital investment 81 227 -64% Supplementary operating and financial data are given on page 30. Second quarter LNG total operating profit increased by £54 million to £88 million reflectinghigher volumes and prices, partially offset by the weaker US$/UK£ exchange rate. In shipping and marketing, total operating profit increased by £44 million to£73 million, primarily due to a 61% increase in volumes and the higher Henry Hubprice, partially offset by the weaker US$/UK£ exchange rate. Softer marketconditions in Europe and Asia placed a higher premium on access to the USmarket. This enabled BG Group to secure an additional 27 spot cargoes fordelivery into the US, more than offsetting reduced diversion opportunities. BG Group's share of operating profit from liquefaction activities of £32 millionwas up 33% as Atlantic LNG Train 4 entered its commercial phase. Half year LNG total operating profit increased by £37 million to £209 million reflecting a44% increase in managed volumes, partially offset by the weaker US$/UK£ exchangerate. BG Group's share of operating profit from liquefaction activitiesincreased by 6% to £57 million. Capital investment includes £49 million relating to LNG vessels and £21 millionrelating to regasification development projects. Second quarter business highlights On 1 May, the Cypress pipeline went into service on schedule, giving BG Groupdirect access from the Elba Island regasification terminal to thesupply-constrained Florida market. The pipeline extension expands Elba Island'sdownstream take-away capacity by approximately 1.6 mtpa (220 000 mmbtud),increasing downstream capacity by more than 30%. Cypress has the potential tosupply approximately 8% of Florida's current demand for natural gas. On 4 June, BG Group announced it had signed an agreement to build and supplyChile's first LNG import terminal - GNL Quintero (BG Group 40%). The 2.5 mtpaterminal will have the capacity to meet up to approximately 40% of the country'scurrent demand for natural gas and is targeted to commence early operations inthe second quarter 2009, with full operations targeted for second quarter 2010. BG Group also executed a 21 year LNG sale and purchase agreement to supply Chilewith 1.7 mtpa of LNG through the terminal, to be supplied from its global LNGportfolio. In June, the first LNG cargo under BG Group's 3.4 mtpa supply contract fromEquatorial Guinea LNG was delivered to the Group's capacity at the Lake Charlesimport terminal, Louisiana, USA. TRANSMISSION AND DISTRIBUTION Second Quarter Business Performance Half Year 2007 2006 2007 2006 £m £m £m £m Revenue and other operating income 197 191 +3% Comgas 371 359 +3% 37 33 +12% Other 83 68 +22% 234 224 +4% 454 427 +6% Total operating profit 58 48 +21% Comgas 98 98 - 12 9 +33% Other 22 24 -8% 70 57 +23% 120 122 -2% 29 28 - Capital investment 45 53 -15% Second quarter T&D total operating profit for the quarter increased by £13 million to £70million. At Comgas, in Brazil, total operating profit increased by £10 million to £58million, reflecting a 4% increase in volumes and movements in the regulatorycurrent account, partially offset by higher costs. Operating profit in thequarter includes £10 million to be passed back to customers in future periods.At the end of the quarter, the total to be passed back to customers in futureperiods was £19 million. Capital investment mainly represents the development of the Comgas pipelinenetwork. Half year T&D total operating profit decreased by £2 million to £120 million. At Comgas,operating profit was in line with 2006 at £98 million, reflecting a 6% increasein volumes and movements in the regulatory current account, offset by theadverse exchange rate and higher costs. Second quarter business highlights In June, BG Group sold its 25% equity stake in Interconnector (UK) Limited toCaisse de depot et placement du Quebec, Canada for £165 million resulting in apost-tax gain of £33 million. BG Group retains its capacity in both forwardexport and reverse import direction. POWER GENERATION Second Quarter Business Performance Half Year 2007 2006 2007 2006 £m £m £m £m 142 50 +184% Revenue and other operating 238 142 +68% income 31 23 +35% Total operating profit 69 62 +11% 76 2 - Capital investment 509 3 - Second quarter and half year The increase in revenue and total operating profit in the quarter is principallydue to the contribution from recently acquired assets in the USA and Italy. Total operating profit for the half year also includes a one-off contributionfrom the settlement of a contractual dispute at Premier Power, and lower profitsat Seabank where one-off insurance proceeds arose in 2006. Capital investment in the quarter primarily relates to the acquisition of theMasspower power plant in the USA. In the half year, it also includes theacquisitions of the Lake Road power plant in the USA and the remaining equity(66.3%) of Serene S.p.A. in Italy. 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. BG Group also uses commodity instruments to manage certain price exposures in respect of optimising the timing of its gas sales associated with contracted UK storage and pipeline capacity. These instruments are also required to be measured at fair value at the balance sheet date under IAS 39. However, IAS 39 does not allow the matching of these fair values to the economically hedged value of the related gas in storage (taking account of gas prices based on the forward curve or expected delivery destination and the associated storage and capacity costs). 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. Unrealised gains and losses in respect of long-term gas sales contracts and derivatives associated with gas in UK storage and pipeline facilities and interest rate and foreign exchange exposure in respect of financial instruments which cannot be designated as hedges under IAS 39 are disclosed separately as 'disposals, re-measurements and impairments'. Realised gains and losses relating to these instruments 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, closures and impairments, as they are items which 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 statement, page 12 and note 2 to the interim accounts, page 20. 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 to the accounts, page 20. 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 These results include "forward-looking information" within the meaning ofSection 27A of the US Securities Act of 1933, as amended and Section 21E of theUS Securities Exchange Act of 1934, as amended. Certain statements included inthese results, including without limitation, those concerning (i) strategies,outlook and growth opportunities, (ii) positioning to deliver future plans andto realise potential for growth, (iii) delivery of the performance required toachieve BG Group's growth programme, (iv) development of new markets, (v) thedevelopment and commencement of commercial operations of new projects, (vi)liquidity and capital resources, (vii) plans for capital and investmentexpenditure and (viii) statements preceded by "expected", "scheduled","targeted", "planned", "proposed", "intended" or similar statements, containcertain forward-looking statements concerning operations, economic performanceand financial condition. Although the Company believes that the expectationsreflected in such forward-looking statements are reasonable, no assurance can begiven that such expectations will prove to have been correct. Accordingly,results could differ materially from those set out in the forward-lookingstatements as a result of, among other factors, (i) changes in economic, marketand competitive conditions, including oil and gas prices, (ii) success inimplementing business and operating initiatives, (iii) changes in the regulatoryenvironment and other government actions, including UK and internationalcorporation tax rates, (iv) a major recession or significant upheaval in themajor markets in which BG Group operates, (v) the failure to ensure the safeoperation of assets worldwide, (vi) implementation risk, being the challengesassociated with delivering capital intensive projects on time and on budget,including the need to retain and motivate staff, (vii) commodity risk, being therisk of a significant fluctuation in oil and/or gas prices from those assumed,(viii) fluctuations in exchange rates, in particular the US$/UK£ exchange ratebeing significantly different to that assumed, (ix) risks encountered in the gasand oil exploration and production sector in general, (x) business riskmanagement and (xi) the Risk Factors included in BG Group's Annual Report andAccounts 2006. BG Group undertakes no obligation to update any forward-lookingstatements. No part of these results constitutes or shall be taken to constitute aninvitation or inducement to invest in BG Group plc or any other entity and mustnot be relied upon in any way in connection with any investment decision. CONSOLIDATED INCOME STATEMENT SECOND QUARTER 2006 2007 Disposals, re- Disposals, re- measuremments Total measurements and Result Business and impairments Total Business impairments Performance(i) (Note 2)(i) Result Performance(i) (Note 2)(i) Notes £m £m £m £m £m £m Group revenue 2 155 - 2 155 1 753 - 1 753Other operating income 2 7 27 34 1 85 86 Group revenue and otheroperating income 3 2 162 27 2 189 1 754 85 1 839 Operating costs (1 478) - (1 478) (1 058) - (1 058) Profits and losses ondisposal of non-currentassets and impairments 2 - 19 19 - (8) (8) Operating profit(ii) 3 684 46 730 696 77 773 Finance income 2, 4 34 - 34 21 4 25 Finance costs 2, 4 (25) (2) (27) (17) (5) (22) Share of post-taxresults from jointventures and associates 3 38 - 38 29 - 29 Profit before tax 731 44 775 729 76 805 Taxation 2, 5 (307) 18 (289) (392) 17 (375) Profit for the period 424 62 486 337 93 430 Attributable to: BG Group shareholders(earnings) 409 62 471 325 93 418 Minority interest 15 - 15 12 - 12 424 62 486 337 93 430 Earnings per share - basic 6 12.0p 1.9p 13.9p 9.3p 2.7p 12.0p Earnings per share - diluted 6 11.9p 1.9p 13.8p 9.2p 2.7p 11.9p Total operating profitincluding share of pre-taxoperating results fromjoint ventures andassociates 3 747 46 793 752 77 829 i) See Presentation of Non-GAAP measures, page 10, for an explanation of results excluding disposals, re-measurements and impairments and presentation of the results of joint ventures and associates. ii) Operating profit is before share of results from joint ventures and associates. iii) 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 HALF YEAR 2006 2007 Disposals, re- Disposals, re- measuremments Total measurements and Result Business and impairments Total Business impairments Performance(i) (Note 2)(i) Result Performance(i) (Note 2)(i) Notes £m £m £m £m £m £m Group revenue 4 098 - 4 098 3 684 - 3 684 Other operating income 2 44 (6) 38 42 109 151 Group revenue and otheroperating income 3 4 142 (6) 4 136 3 726 109 3 835 Operating costs (2 690) - (2 690) (2 142) - (2 142) Profits and losses ondisposal of non-currentassets and impairments 2 - 18 18 - (8) (8) Operating profit(ii) 3 1 452 12 1 464 1 584 101 1 685Finance income 2, 4 67 5 72 57 7 64Finance costs 2, 4 (55) (6) (61) (36) (8) (44)Share of post-taxresults from joint ventures and associates 3 82 - 82 67 - 67 Profit before tax 1 546 11 1 557 1 672 100 1 772 Taxation 2, 5 (664) 35 (629) (760) 7 (753) Profit for the period 882 46 928 912 107 1 019 Attributable to: BG Group shareholders(earnings) 857 46 903 888 108 996 Minority interest 25 - 25 24 (1) 23 882 46 928 912 107 1 019 Earnings per share - basic 6 25.2p 1.3p 26.5p 25.3p 3.1p 28.4p Earnings per share - diluted 6 25.0p 1.3p 26.3p 25.1p 3.1p 28.2p Total operating profitincluding share of pre-taxoperating results fromjoint ventures andassociates (iii) 3 1 570 12 1 582 1 710 101 1 811 i) See Presentation of Non-GAAP measures, page 10 for an explanation of results excluding disposals, re-measurements and impairments and presentation of the results of joint ventures and associates. ii) Operating profit is before share of results from joint ventures and associates. iii) This measurement is shown by BG Group as it is used as a means of measuring the underlying performance of the business. CONSOLIDATED BALANCE SHEET HALF YEAR As at 30 Jun 31 Dec 30 Jun 2007 2006(i) 2006 £m £m £mAssetsNon-current assetsGoodwill 356 328 337Other intangible assets 678 694 812Property, plant and equipment 6 764 5 960 5 850Investments 1 079 1 086 1 090Deferred tax assets 79 74 102Trade and other receivables 47 49 47Commodity contracts and otherderivative financial 340 273 111instruments 9 343 8 464 8 349Current assetsInventories 273 247 197Trade and other receivables 1 831 1 854 1 588Commodity contracts and otherderivative financial 309 575 29instrumentsCash and cash equivalents 1 971 1 463 1 567 4 384 4 139 3 381Assets classified as held for sale - 85 -Total assets 13 727 12 688 11 730 LiabilitiesCurrent liabilitiesBorrowings (311) (103) (57)Trade and other payables (1 617) (1 618) (1 255)Current tax liabilities (593) (357) (533)Commodity contracts and otherderivative financial (481) (741) (539)instruments (3 002) (2 819) (2 384)Non-current liabilitiesBorrowings (1 530) (1 559) (1 579)Trade and other payables (21) (21) (21)Commodity contracts and otherderivative financial (189) (90) (2)instrumentsDeferred income tax liabilities (1 188) (1 146) (835)Retirement benefit obligations (151) (167) (166)Provisions for other liabilities andcharges (3 647) (3 370) (2 978) Liabilities associated with assetsclassified as held for sale - (34) - Total liabilities (6 649) (6 223) (5 362) Net assets 7 078 6 465 6 368 Attributable to: BG Group equity shareholders 6 958 6 363 6 266Minority interest 120 102 102Total equity 7 078 6 465 6 368 i) Restated as a result of post balance sheet events as detailed in the 2006Annual Report and Accounts. CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Second Quarter Half Year 2007 2006 2007 2006 £m £m £m £m 486 430 Profit for the period 928 1 019 11 23 Hedge adjustments net of tax 24 45 (34) (211) Currency translation adjustments (8) (240) (23) (188) Net gains/(losses) recognised directly in 16 (195) equity 463 242 Total recognised income for the period 944 824 Attributable to: 20 5 Minority interests 31 20 443 237 Shareholders 913 804 463 242 944 824 CONSOLIDATED CASH FLOW STATEMENT Second Quarter Half Year 2007 2006 2007 2006 £m £m £m £m Cash flows from operating activities 775 805 Profit before tax 1 557 1 772 (38) (29) Share of post-tax results from joint (82) (67) ventures and associates 166 149 Depreciation of property, plant and 334 298 equipment and amortisation of intangible assets (27) (92) Fair value movements in commodity contracts 45 (133) (19) 8 Profits and losses on disposal of (18) 8 non-current assets and impairments 16 18 Unsuccessful exploration expenditure 26 29 written off (3) 3 (Decrease)/increase in provisions (23) 7 (34) (25) Finance income (72) (64) 27 22 Finance costs 61 44 7 5 Share-based payments 14 11 (41) (25) (Increase)/decrease in working capital 73 (79) 829 839 Cash generated by operations 1 915 1 826 (190) (198) Income taxes paid (374) (483) 639 641 Net cash inflow from operating activities 1 541 1 343 Cash flows from investing activities 13 82 Dividends received from joint ventures and 37 93 associates 381 1 Proceeds from disposal of subsidiary 461 5 undertakings and investments (406) (250) Purchase of property, plant and equipment (780) (599) and intangible assets 8 12 Loans from/(to) joint ventures and (7) (4) associates (77) - Business combinations and investments (483) (2) (81) (155) Net cash outflow from investing activities (772) (507) Cash flows from financing activities (7) (6) Net interest received/(paid)(i) (9) 2 (141) (143) Dividends paid (141) (143) (13) (17) Dividends paid to minority (13) (17) 155 42 Net proceeds from issue of new borrowings 292 58 (179) (33) Repayment of borrowings (195) (81) 8 2 Issue of shares 15 8 - 1 Issue of shares to minority shareholder - 1 (115) (446) Purchase of own shares (211) (593) (292) (600) Net cash outflow from financing activities (262) (765) 266 (114) Net increase/(decrease) in cash and cash 507 71 equivalents 1 705 1 697 Cash and cash equivalents at beginning of 1 463 1 516 period - (16) Effect of foreign exchange rate changes 1 (20)1 971 1 567 Cash and cash equivalents at end of period 1 971 1 567 (ii) i) Includes capitalised interest for the second quarter of £9 million (2006 £17 million), and for the half year of £20 million (2006 £31 million). ii) Cash and cash equivalents comprise cash and short-term liquid investments that are readily convertible to cash. RECONCILIATION OF NET BORROWINGS/FUNDS(i) - HALF YEAR £mNet borrowings as at 31 December 2006(i) (ii) (103) Net increase in cash and cash equivalents 507Cash inflow from changes in gross borrowings (97)Inception of finance leases (53)Effect of acquisitions (40)Foreign exchange and other re-measurements (1)Net funds as at 30 June 2007(i) (ii) 213 Net borrowings attributable to Comgas were £285 million (31 December 2006 £242million). As at 30 June 2007, BG Group's share of the net borrowings in joint ventures andassociates amounted to approximately £0.9 billion, including BG Groupshareholder loans of approximately £0.6 billion. These net borrowings are included in BG Group's share of the netassets in joint ventures and associates which are consolidated in BG Group'saccounts. i) Net borrowings/funds are defined on page 32ii) Net borrowings/funds comprise: As at 30 Jun 2007 31 Dec 2006 £m £mAmounts receivable/(due) within one yearCash and cash equivalents 1 971 1 463Overdrafts, loans and finance leases (311) (103)Derivative financial instruments(iii) 49 - 1 709 1 360 Amounts receivable/(due) after more than one yearLoans and finance leases (1 530) (1 559)Derivative financial instruments(iii) 34 96 (1 496) (1 463) Net funds/(borrowings) 213 (103) iii) These items are included within commodity contracts and other derivativefinancial instrument balances on the balance sheet. RECONCILIATION OF NET BORROWINGS - HALF YEAR (Continued) LIQUIDITY AND CAPITAL RESOURCES All information below is as at 30 June 2007. The Group's principal borrowing entities are: BG Energy Holdings Limited (BGEH),including wholly-owned subsidiary undertakings, the majority of whose borrowingsare guaranteed by BG Energy Holdings Limited (collectively BGEH), Comgas andGujarat Gas, both of which conduct their borrowing activities on a stand-alonebasis. BGEH had aggregate committed multicurrency revolving borrowing facilities of$1.04 billion, of which $520 million expires in 2007 and $520 million expires in2009. In addition, BGEH had a note purchase facility of $65 million expiring inOctober 2007. There are no restrictions on the application of funds under thesefacilities, which were undrawn. BGEH had a $1.0 billion US Commercial Paper Programme, which was unutilised, anda $1.0 billion Eurocommercial Paper Programme, of which $970.1 million wasunutilised. BGEH also had a $2.0 billion Euro Medium Term Note Programme, ofwhich $1.477 billion was unutilised. In addition, BGEH had the following uncommitted borrowing facilities -multicurrency facilities of £580 million, overdraft facilities of £60 millionand credit facilities of $40 million, all of which were unutilised. Comgas had committed borrowing facilities of Brazilian Reals (BRL) 1,948.6million, of which BRL 605.0 million was unutilised, and uncommitted borrowingfacilities of BRL 577.6 million, all of which were unutilised. Independent review report to BG Group plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated interimbalance sheet as at 30 June 2007 and the related consolidated interim statementsof income, cash flows and recognised income and expense for the six months thenended and related notes. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. PricewaterhouseCoopers LLPChartered AccountantsLondon27 July 2007 Notes 1. Basis of preparation These primary statements are the unaudited interim consolidated financialstatements of BG Group plc for the quarter ended and the half year ended 30 June2007. The financial information does not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985, and should be read inconjunction with the Annual Report and Accounts for the year ended 31 December2006, as they provide an update of previously reported information. Thesefinancial statements have been prepared in accordance with the requirements ofthe UK Listing Rules and the accounting policies set out in the 2006 AnnualReport and Accounts. The preparation of the interim financial statements requires management to makeestimates and assumptions that affect the reported amount of revenues, expenses,assets and liabilities at the date of the interim financial statements. If inthe future such estimates and assumptions, which are based on management's bestjudgment at the date of the interim financial statements, deviate from theactual circumstances, the original estimates and assumptions will be modified asappropriate in the year in which the circumstances change. 2. Disposals, re-measurements and impairments Second Quarter Half Year 2007 2006 2007 2006 £m £m £m £m 27 85 Revenue and other operating income - (6) 109 re-measurements of commodity contracts 19 (8) Profits and losses on disposal of non-current 18 (8) assets and impairments (2) (1) Net finance income/(costs) - re-measurements of (1) (1) financial instruments 18 17 Taxation 35 7 - - Minority interest - 1 62 93 Impact on earnings 46 108 Second quarter and half year: Revenue and other operating income Re-measurements included within revenue and other operating income amount to acredit of £27 million for the quarter (2006 £85 million credit), of which a £21million credit (2006 £82 million credit) represents non-cash mark-to-marketmovements on certain long-term UK gas contracts. For the half year, a charge of£6 million in respect of re-measurements is included within revenue and otheroperating income (2006 £109 million credit), included in which is a £18 millioncredit, representing non-cash mark-to-market movements on certain long-term UKgas contracts (2006 £101 million credit). Whilst the activity surrounding thesecontracts involves the physical delivery of gas, the contracts fall within thescope of IAS 39 and meet the definition of a derivative instrument. Net finance costs Re-measurements presented in net finance costs relate primarily to certainderivatives used to hedge foreign exchange and interest rate risk which have notbeen designated as hedges under IAS 39, partly offset by foreign exchangemovements on certain borrowings. 2007 second quarter: Disposal of non-current assets During the second quarter, BG Group sold its 25% equity interest inInterconnector (UK) Limited whilst retaining throughput capacity contracts withthis company. The net proceeds of the equity disposal were £165 million,resulting in a pre- and post-tax gain of £157 million. No tax arises on the gainon this disposal. As part of this transaction, the Group has reviewed theretained capacity contracts in the Interconnector pipeline and has concludedthat the obligations associated with these contracts now exceed the benefitexpected to be received from the Interconnector interest. Accordingly, a pre-taxprovision of £156 million (post-tax £124 million) has been made to reflect thepresent obligation under these contracts. The overall transaction has generateda pre-tax gain on disposal of £1 million (post-tax £33 million). During the second quarter, BG Group disposed of selected Canadian explorationand production assets. This resulted in a gain on disposal of £18 million. Notax arose on the disposal. 2007 first quarter: Disposal of non-current assets During the first quarter, BG Group disposed of its Mauritanian interests. Thisresulted in a loss on disposal of £1 million. No tax arose on the disposal. 2006 second quarter: Disposal of non-current assets During the second quarter 2006, BG Group disposed of its telecoms businesses.This resulted in a loss on disposal of £8 million. No tax arose on the disposal. 3. Segmental analysis Group revenue and Business Disposals, Total Business Disposals, Totalother operating income Perfor- re-measurements Result Performance re-measurements Result mance and impairments and impairments (i) (ii) Second Quarter 2007 2007 2007 2006 2006 2006 £m £m £m £m £m £m Exploration and 942 27 969 984 85 1 069Production Liquefied Natural Gas 910 - 910 548 - 548Transmission and 234 - 234 224 - 224Distribution Power Generation 142 - 142 50 - 50Other activities 1 - 1 2 - 2Less: intra-group (67) - (67) (54) - (54)sales 2 162 27 2 189 1 754 85 1 839 Group revenue and Business Disposals, Total Business Disposals, Totalother operating income Performance re-measurements Result Performance re-measurements Result and impairments and impairments Half Year 2007 2007 2007 2006 2006 2006 £m £m £m £m £m £m Exploration and 1 969 (6) 1 963 2 057 109 2 166Production Liquefied Natural Gas 1 607 - 1 607 1 201 - 1 201Transmission and 454 - 454 427 - 427Distribution Power Generation 238 - 238 142 - 142Other activities 3 - 3 5 - 5Less: intra-group (129) - (129) (106) - (106)sales 4 142 (6) 4 136 3 726 109 3 835 3. Segmental analysis (continued) Business Performance Disposals, Total Result (i) re-measurements and impairments(i) Second Quarter 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £mTotal operating profit before share of results from joint ventures and associates Exploration and Production 565 647 45 85 610 732Liquefied Natural Gas 57 10 - - 57 10Transmission and Distribution 59 46 1 - 60 46Power Generation 10 2 - - 10 2Other activities (7) (9) - (8) (7) (17) 684 696 46 77 730 773Pre-tax share of operating results of joint ventures and associates(ii) Liquefied Natural Gas 31 24 - - 31 24Transmission and Distribution 11 11 - - 11 11Power Generation 21 21 - - 21 21 63 56 - - 63 56Total operating profit including share of results from joint ventures and associates Exploration and Production 565 647 45 85 610 732Liquefied Natural Gas 88 34 - - 88 34Transmission and Distribution 70 57 1 - 71 57Power Generation 31 23 - - 31 23Other activities (7) (9) - (8) (7) (17) 747 752 46 77 793 829 For notes i) to ii) see footnotes on page 24. 3. Segmental analysis (continued) Business Performance Disposals, Total Result (i) re-measurements and impairments(i) Half Year 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £mTotal operating profit before share of results from joint ventures and associates Exploration and Production 1 191 1 373 11 109 1 202 1 482Liquefied Natural Gas 153 118 - - 153 118Transmission and Distribution 99 100 1 - 100 100Power Generation 28 12 - - 28 12Other activities (19) (19) - (8) (19) (27) 1 452 1 584 12 101 1 464 1 685 Pre-tax share of operating results of joint ventures and associates(ii) Liquefied Natural Gas 56 54 - - 56 54Transmission and Distribution 21 22 - - 21 22Power Generation 41 50 - - 41 50 118 126 - - 118 126Total operating profit including share of results from joint ventures and associates Exploration and Production 1 191 1 373 11 109 1 202 1 482Liquefied Natural Gas 209 172 - - 209 172Transmission and Distribution 120 122 1 - 121 122Power Generation 69 62 - - 69 62Other activities (19) (19) - (8) (19) (27) 1 570 1 710 12 101 1 582 1 811 i) See note 2, page 20 and Presentation of Non-GAAP measures, page 10for an explanation of results excluding disposals, re-measurements andimpairments and presentation of the results of joint ventures and associates. ii) Share of results in joint ventures and associates in the tableabove are before finance costs and taxation. The share of results after financecosts and taxation for the quarter is £38 million (2006 £29 million), and forthe half year is £82 million (2006 £67 million). 3. Segmental analysis (continued) Total Result Operating Share of Total profit before results in share of joint Result results from ventures and joint associates ventures and associates Second Quarter 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m Exploration and Production 610 732 - - 610 732Liquefied Natural Gas 57 10 19 10 76 20Transmission and Distribution 60 46 4 7 64 53Power Generation 10 2 15 12 25 14Other activities (7) (17) - - (7) (17) 730 773 38 29 768 802 Net finance income/(costs) 7 3Taxation (289) (375) Profit for the period 486 430 Total Result Operating Share of Total profit before results in Result share of joint results from ventures and joint associates ventures and associates Half Year 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m Exploration and Production 1 202 1 482 - - 1 202 1 482Liquefied Natural Gas 153 118 35 22 188 140Transmission and Distribution 100 100 19 13 119 113Power Generation 28 12 28 32 56 44Other activities (19) (27) - - (19) (27) 1 464 1 685 82 67 1 546 1 752 Net finance income/(costs) 11 20Taxation (629) (753) Profit for the period 928 1 019 4. Net finance costs Second Quarter Half Year 2007 2006 2007 2006 £m £m £m £m (16) (13)Interest payable (39) (31) (13) (18)Interest on obligations under (26) (30) finance leases 9 17 Interest capitalised 20 31 (5) (3)Unwinding of discount on provisions(i) (10) (6) (2) (5)Disposals, re-measurements and (6) (8) impairments (Note 2) (27) (22)Finance costs (61) (44) 34 21 Interest receivable 67 57 - 4 Disposals, re-measurements and 5 7 impairments (Note 2) 34 25 Finance income 72 64 7 3 Net finance income(ii) 11 20 i) Relates to the unwinding of the discount on provisions and amounts inrespect of pension obligations which represent the unwinding of discount on theplans' liabilities offset by the expected return on the plans' assets. ii) Excludes Group share of net finance costs from joint ventures andassociates for the quarter of £15 million (2006 £18 million), and for the half year of £27 million (2006 £34 million). 5. Taxation The taxation charge for the second quarter before disposals, re-measurements andimpairments was £307 million (2006 £392 million) and the taxation chargeincluding disposals, re-measurements and impairments was £289 million (2006 £375million). For the half year, the taxation charge before disposals, re-measurements andimpairments was £664 million (2006 £760 million) and the taxation chargeincluding disposals, re-measurements and impairments was £629 million (2006 £753million). The Group share of taxation from joint ventures and associates for the secondquarter was £10 million (2006 £9 million) and for the half year was £9 million(2006 £25 million). 6. Earnings per ordinary share Second Quarter Half Year 2007 2006 2007 2006 £m Pence £m Pence £m Pence per £m Pence per per share per share share share 471 13.9 418 12.0 Earnings 903 26.5 996 28.4 (43) (1.3) (101) (2.9)Re-measurements (28) (0.8) (116) (3.3) (after tax and minority interest) (19) (0.6) 8 0.2 Profits and losses (18) (0.5) 8 0.2 on disposals (after tax) 409 12.0 325 9.3 Earnings - 857 25.2 888 25.3 excluding disposals, re-measurements and impairments Basic earnings per share calculations in 2007 are based on shares in issue of 3395 million for the quarter and 3 401 million for the half year. The earnings figure used to calculate diluted earnings per ordinary share is thesame as that used to calculate earnings per ordinary share given above, dividedby 3 426 million for the quarter and 3 433 million for the half year, being theweighted average number of ordinary shares in issue during the period asadjusted for share options. 7. Results Presentation Half year Business Disposals, Total Performance re-measurements Result and impairments (i) 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m Operating profit 1 452 1 584 (6) 109 1 446 1 693 before disposal of non-current assets Profits and losses on - - 18 (8) 18 (8) disposal of non-current assets and impairments Operating profit 1 452 1 584 12 101 1 464 1 685 before share of results from joint ventures and associates Pre-tax share of 118 126 - - 118 126 operating results of joint ventures and associates Total operating 1 570 1 710 12 101 1 582 1 811 profit Net finance costs Finance income 67 57 5 7 72 64 Finance costs (55) (36) (6) (8) (61) (44) Share of joint (27) (34) - - (27) (34) ventures and associates (15) (13) (1) (1) (16) (14) Taxation Taxation (664) (760) 35 7 (629) (753) Share of joint (9) (25) - - (9) (25) ventures and associates (673) (785) 35 7 (638) (778) Profit for the period 882 912 46 107 928 1 019 Profit attributable to: Shareholders 857 888 46 108 903 996 (earnings) Minority interest 25 24 - (1) 25 23 882 912 46 107 928 1 019 i) Re-measurements excluded from Business Performance The IAS 39 re-measurements reflect movements in external market prices andexchange rates. Financial instruments include certain long-term UK gas contractswhich are classified as derivatives under IAS 39 due to the nature of thecontract terms and are therefore required to be marked-to-market. This treatmenthas no impact on the ongoing cashflows of the business and these unrealisedmark-to-market movements are best presented separately from underlying businessperformance. For an explanation of Non-GAAP measures see page 10. 8. Capital investment: geographical analysis Second Quarter Half Year 2007 2006 2007 2006 £m £m £m £m 152 109 Europe and Central Asia 412 213 42 40 South America 61 113 33 30 Asia Pacific 69 53 126 172 North America and the 587 281 Caribbean 143 50 Mediterranean Basin and 236 127 Africa 496 401 1 365 787 9. Quarterly information: earnings and earnings per share 2007 2006 2007 2006 £m £m pence pence First quarter - including disposals, 432 578 12.7 16.4re-measurements and impairments - excluding disposals, 448 563 13.1 16.0re-measurements and impairments Second quarter - including disposals, 471 418 13.9 12.0re-measurements and impairments - excluding disposals, 409 325 12.0 9.3re-measurements and impairments Third quarter - including disposals, 394 11.5re-measurements and impairments - excluding disposals, 342 10.0re-measurements and impairments Fourth quarter - including disposals, 389(i) 11.4(i)re-measurements and impairments - excluding disposals, 410 12.0re-measurements and impairments Full year - including disposals, 1 779(i) 51.4(i)re-measurements and impairments - excluding disposals, 1 640 47.4re-measurements and impairments i) Restated as a result of post balance sheet events as detailed in the 2006Annual Report and Accounts. Supplementary information: Operating and financial data Second Quarter First Quarter Half Year 2007 2006 2007 2007 2006 Production volumes (mmboe) 7.4 5.3 6.5 - oil 13.9 10.9 9.7 7.6 8.8 - liquids 18.5 15.0 36.6 42.7 42.9 - gas 79.5 85.5 53.7 55.6 58.2 - total 111.9 111.4 Production volumes (boed in thousands) 81 58 72 - oil 77 60 107 84 98 - liquids 102 83 402 468 477 - gas 439 472 590 610 647 - total 618 615 LNG cargoes 46 22 18 - Lake Charles, USA 64 24 17 14 15 - Elba Island, USA 32 23 8 13 19 - Europe, Asia and other USA 27 42 71 49 52 - total 123 89 208 814 129 493 144 752 LNG managed volumes (thousand 353 566 245 305 mmbtu) £34.81 £38.71 £29.60 Average realised oil price per £32.37 £37.18 barrel ($69.07) ($69.76) ($58.13) ($63.89) ($66.03) £28.58 £31.51 £23.21 Average realised liquids price £25.99 £30.14 per barrel ($56.72) ($56.79) ($45.57) ($51.31) ($53.51) 23.88p 26.20p 37.03p Average realised UK gas price 31.48p 32.96p per produced therm 15.11p 17.05p 16.31p Average realised International 15.75p 17.71p gas price per produced therm 17.00p 19.09p 21.50p Average realised gas price per 19.43p 21.38p produced therm £1.74 £1.21 £1.51 Lifting costs per boe £1.62 £1.20 ($3.44) ($2.18) ($2.97) ($3.20) ($2.13) £2.74 £2.07 £2.51 Operating expenditure per boe £2.61 £2.13 ($5.41) ($3.72) ($4.92) ($5.16) ($3.77) 301 160 291 Development expenditure (£m) 592 291 Gross exploration expenditure (£m) 46 66 59 - capitalised expenditure 105 202 56 37 46 - other expenditure 102 70 102 103 105 - gross expenditure 207 272 Supplementary information: Operating and financial data (continued) BG Group's exposure to the oil price varies according to a number of factorsincluding the mix of production and sales. Management estimates that, otherfactors being constant, a $1.00 rise (or fall) in the Brent price would increase(or decrease) operating profit in 2007 by approximately £40 million to £50 million. BG Group's exposure to the US$/UK£ exchange rate varies according to a number offactors including commodity prices and the timing of US Dollar revenues andcosts including capital expenditure. Management estimates that in 2007, otherfactors being constant, a 10 cent strengthening (or weakening) in the US Dollarwould increase (or decrease) operating profit by approximately £140 million to£160 million. Glossary In BG Group's results some or all of the following definitions are used: bcf billion cubic feetbcfd billion cubic feet per daybcmpa billion cubic metres per annumboe barrels of oil equivalentboed barrels of oil equivalent per daybopd barrels of oil per dayCCGT combined cycle gas turbineDCQ daily contracted quantityE&P Exploration and ProductionEPC engineering, procurement and constructionEPIC engineering, procurement, installation and commissioningFEED front end engineering designFERC Federal Energy Regulatory CommissionGearing net borrowings as a percentage of total shareholders' fundsratio (excluding the re-measurement of commodity financial instruments and associated deferred tax) plus net borrowingsGW gigawattIAS 39 International Accounting Standard 39 (Financial Instruments)IFRS International Financial Reporting Standardskboed thousand barrels of oil equivalent per dayLNG Liquefied Natural GasManaged Comprises all LNG volumes contracted for purchase and having relatedvolumes revenue and other operating income recognised in the applicable periodm millionmmboe million barrels of oil equivalentmmbtu million british thermal unitsmmbtud million british thermal units per daymmcfd million cubic feet per daymmcmd million cubic metres per daymmscfd million standard cubic feet per daymmscm million standard cubic metresmmscmd million standard cubic metres per dayMoU Memorandum of understandingmtpa million tonnes per annumMW megawattNet Comprise cash, current asset investments, finance leases, currencyborrowings/ and interest rate derivative financial instruments and short- andfunds long-term borrowingsNGL Natural gas liquidsPSA production sharing agreementT&D Transmission and Distributiontcf trillion cubic feetTotal Group operating profit plus share of pre-tax operating results ofoperating joint ventures and associatesprofitUKCS United Kingdom Continental ShelfUKCNS United Kingdom central North SeaUnit Production costs and royalties incurred over the period divided byoperating the net production for the period. Production costs and royaltiesexpenditure (other operating costs) for the period are disclosed under "resultsper boe 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 Unit operating expenditure as defined above, excluding royalty,lifting tariff and insurance costs incurred over the period divided by thecosts per net production for the period. Unit lifting costs as used in thisboe ratio do not represent "Production (Lifting) Costs" as defined by FAS 19 and FAS 69. Enquiries Enquiries relating to BG Group's General enquiries about shareholderresults, business and financial position matters should be made to:should be made to: Investor Relations Department Lloyds TSB RegistrarsBG Group plc The CausewayThames Valley Park Drive WorthingReading West SussexBerkshire BN99 6DARG6 1PTTel: 0118 929 3025 Tel: 0870 600 3951e-mail: [email protected] e-mail: [email protected] Financial Calendar Ex-dividend date for 2007 interim dividend 8 August 2007Record date for 2007 interim dividend 10 August 2007Payment of 2007 interim dividend:Shareholders 14 September 2007American depositary receipt holders 21 September 2007Announcement of 2007 third quarter results 1 November 2007 BG Group plc website: www.bg-group.com Registered office Thames Valley Park Drive, Reading RG6 1PT Registered in England No. 3690065 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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