Profits up, production down for BG

The former British Gas firm said earnings increased by 13 per cent to £655.2m in the final quarter of 2010, whereas the City had expected £573.3m.

The company said higher selling prices, including an 18 per cent increase in the price of gas it sold in the UK, had helped boost its profits. Production of oil and gas dropped by 2 per cent in the final quarter, whereas the City had expected levels to remain flat.

But the company said it expects to increase production by 7 per cent a year until 2020 from existing discoveries alone.

The company also upped its production targets for the Santos Basin in Brazil, which it said will increase output by 38 per cent to 550,000 barrels of oil equivalent per day by 2020, while it expects volumes of US shale gas to nearly double to 190,000 barrels of oil equivalent per day.

The strong fourth quarter results helped BG Group to record an 18 per cent increase in earnings to £2.5bn in the full-year.

Stuart Joyner, an analyst at Investec, described BG’s results as a solid performance.

He said: “They will get continuing assistance from commodity price rises in the first quarter of 2011, as oil is still more expensive than forecast.”

The Reading-based firm expects to increase its output above its 7 per cent target from 2012 as it ramps up production from new sites in Brazil, Australia and US.

The company said its total reserves increased by 12 per cent to 16.2 billion barrels of oil equivalent in the year.