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BG Group Entering New Decade of High Growth

BG Logo BG Group will today present its annual strategy update and Fourth Quarter and Full Year 2009 results.

Key points from the annual strategy update presentation:

  • BG Group expects to grow production volumes at the upper end of its compound annual growth rate target range of 6-8% to 2020, passing the one million barrels oil equivalent per day (boed) threshold around the middle of the decade. In Liquefied Natural Gas (LNG), BG Group expects contracted volumes of 20 million tonnes per annum (mtpa) by 2015.
  • Brazil: production is already underway, with net reserves and resources of more than 3 billion boe. Production is expected to ramp up strongly in the first half of the decade to reach more than 400 000 boed net to BG Group by 2020.
  • Australia: Queensland Curtis LNG (QCLNG) project is on track for sanction this year, with planned plant capacity now increased to 8.5 mtpa. QCLNG is expected onstream from 2014, underpinned by up to 8.3 mtpa of LNG agreements. QGC discovered reserves and resources now stand at 17.3 trillion cubic feet (tcf).
  • US: BG Group expects net production from its EXCO Resources, Inc. (EXCO) shale gas alliance to exceed 100 000 boed by 2015.
  • LNG segment: profit guidance of $1.8-2.0 billion per annum for 2010-12.
  • Total reserves and resources increased 10% year-on-year to 14.5 billion boe.
BG Group Chief Executive Frank Chapman said: "BG Group is entering a new decade of high growth, underpinned by a strengthened and rebalanced portfolio, with key projects being significantly and rapidly de-risked and with the reserves and resources required for our growth programme already secured."

"Our aim is to achieve rates of growth which are a multiple of the industry average, extending our track record of shareholder value creation deep into the future."

The Group's plans will be presented to analysts and investors at 1400 GMT today at an event hosted by BG Group Chairman Sir Robert Wilson, Chief Executive Frank Chapman and Chief Financial Officer Ashley Almanza. The presentation will be webcast live at www.bg-group.com, after which a recording and transcript of the event and a copy of the slide presentation will be available online.

BG Group has also published details of its Fourth Quarter and Full Year results for 2009, which have been announced separately at www.bg-group.com. This news release should be read in conjunction with the Group's Fourth Quarter and Full Year statement.

Key portfolio developments:

Brazil

  • 2009 appraisal and commercialisation programme substantially advanced the Group's understanding of the Santos Basin pre-salt, with technology tested and excellent reservoir characteristics observed across a number of locations. New information supports previous assessments and forward development plans, including reserves and resources estimates of more than 3 billion boe net, anticipated net production of more than 400 000 boed by 2020 and BG Group's view that its Santos Basin pre-salt developments achieve economic break-even at oil prices below $40/bbl.
  • Extended Well Test (EWT) on Tupi Sul has produced 3.5 mmboe gross to date, with pressure support greater than expected, indicating very good lateral reservoir continuity and quality.
  • Tupi-Iracema: pilot Floating, Production, Storage and Offloading (FPSO) module more than 65% complete, with capacity of 100 000 barrels oil per day (bopd) and 175 mmscfd of gas. First production expected end 2010. Full field development to require 200-300 wells and up to ten FPSOs.
  • Guará: gross reserves and resources estimate of 1.1-2.0 billion boe, well ahead of initial estimates. Outstanding test results in 2009, with production potential of 50 000 bopd per well. EWT will begin later this year. Letter of intent signed for construction of 120 000 bopd oil/175 mmscfd gas FPSO, with first production expected early 2013.
  • Iara: discovery well re-entered in 2009. New well to be drilled in 2010, DST in 2011, 3D seismic 2010 and 2011, EWT planned for 2013.
  • Carioca: further appraisal well planned this year followed by EWT commencing fourth quarter 2010. Santos Basin gas: joint venture agreement to conduct parallel FEED studies assessing the potential for up to 3.0 mtpa Floating LNG for domestic and export markets.
Global LNG

  • Contracted volumes expected to grow to 20 mtpa by 2015.
  • LNG segment: profit guidance of $1.8-2.0 billion per annum for 2010-12.
  • New regasification capacity onstream in Wales and Chile.
Australia

  • QCLNG sanction in 2010: now two-train 8.5 mtpa plant, expected onstream 2014, underpinned by China, Chile and Singapore LNG agreements for up to 8.3 mtpa. QGC discovered reserves and resources 17.3 tcf, anticipated net plateau production of circa 225 000 boed.
  • Upstream: acreage circa 120 000 sq kms; development to comprise circa 1 800 wells by end 2014, rising to more than 6 000 wells over the life of two trains at QCLNG.
  • Future upside: further potential in the Surat basin, together with resources in the Bowen basin and potential QCLNG expansion.
US

  • EXCO alliance: net production expected to exceed 600 mmscfd (100 000 boed) by 2015.
  • 16 rigs operating in 2010. Net shale gas reserves and resources 3.2 tcf (circa 530 mmboe), acquired at less than $0.40/mcf.
  • Excellent initial production rates across suite of shale wells: 20-30 mmscfd per well.
  • Further upside potential in Cotton Valley and Bossier shale.
Kazakhstan

  • Fourth stabilisation train onstream 2011: 10.3 mtpa oil to be treated to export specification.
  • Multi-stage Phase III expansion improves economics for investors and government.
  • Partners aligned on Phase III, in discussion with government.
UK and Norway

  • UK North Sea: 2009 net annual production of 56 mmboe.
  • Planned plateau production above 50 mmboe per annum extended to 2014.
  • Jasmine onstream 2012, Jackdaw provisional plans target 2015 for first production.
  • Norway: progressing development of Pi, Bream and Jordbær discoveries, drilling Mandarin.
Capital expenditure programme

  • Capital expenditure over the three years to 2012 will average $8 billion per annum.
  • The £4 billion ($6 billion) p.a. average capex announced in February 2009 equates to $7 billion when adjusted for BG Group's new exchange rate and reference price conditions.
  • In addition, capital committed to the EXCO alliance plus increased spending in Australia is offset by reduced spending in Kazakhstan, taking the total per annum to $8 billion.
BG Group plc (LSE: BG.L) is a world leader in natural gas, with a strategy focused on connecting competitively priced resources to specific, high-value markets. Active in 25 countries on five continents, BG Group has a broad portfolio of exploration and production, Liquefied Natural Gas (LNG), transmission and distribution and power generation business interests. It combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves.

Published 05/02/2010

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