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BG Group BG. Half Yearly Report


Attachment:

  BG Group (BG.) - Half Yearly Report

RNS Number : 5325I
BG GROUP plc
26 July 2012
 

                          Second Quarter Key Points

· Cash flow from operations up 21% to $3 121 million, earnings down 4% to $1
073 million

· E&P production up 4% to 61.3 mmboe

· Interim dividend per share increased 10% to 11.88 cents (7.64 pence)

· $1.3 billion non-cash post-tax impairment on US shale gas assets, based on
lower price premise^(a)

· 2012 production exit rate lowered from 750 to 720 kboed, driven by Elgin,
Jasmine and USA

· 2012 LNG total operating profit now expected at the upper end of $2.6
billion to $2.8 billion range

· Continuing good progress in execution of the funding plan; gearing reduced
to 24.9%

· $4.5 billion FPSO topside contracts approved in Brazil; tenders for
additional FPSO announced

· Latest contract awards and drilling improvements affirm BG Group's capex
estimates for Brazil

· Fifth successive gas discovery in Tanzania

Second Quarter                                              Half Year
   2012   2011                                             2012      2011
     $m    $m         Business Performance^(b)               $m       $m      
                      Total operating profit including
                      share of pre-tax

                      operating results from joint
  1 976  2 152  -8%   ventures and associates             4 349     4 117  +6%
  1 073  1 120  -4%   Earnings for the period             2 340 1 939^(c) +21%
  31.6c  33.1c  -5%   Earnings per share                  68.9c     57.2c +20%
 11.88c 10.80c +10%   Interim dividend per share         11.88c    10.80c +10%
                      Total results for the period
                      (including disposals,
                      re-measurements and impairments)                        
                      Operating profit before share of
                      results from joint ventures and
    550  2 245 -76%   associates                          2 736     3 671 -25%
                      Total operating profit including
                      share of pre-tax

                      operating results from joint
    668  2 365 -72%   ventures and associates             2 985     3 917 -24%
                      Earnings for the period continuing
     31  1 245 -98%   operations                          1 250 1 840^(c) -32%
                      Earnings per share continuing
   0.9c  36.8c -98%   operations                          36.8c     54.3c -32%

a)    BG Group reference conditions changed for US Henry Hub real from $5.00
per mmbtu to $4.25 per mmbtu from 2015.

b)    '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. Total results include a post-tax charge of $1 042 million (2011 $123
million gain) in respect of disposals, re-measurements and impairments for the
second quarter, and a post-tax charge of $1 086 million for the half year
(2011 $100 million). This includes a
non-cash post-tax charge of $1.3 billion recognised in the second quarter as a
result of the impairment of certain assets associated with the shale gas
business in the USA following the weaker outlook for US natural gas prices.
For further information see Presentation of Non-GAAP measures (page 23) and
notes 1 to 3 (pages 34 to 36). Unless otherwise stated, the results discussed
in this release relate to BG Group's Business Performance.

 

c)    Includes a charge in respect of prior period taxation (Business
Performance $195 million, Total results $148 million) arising on the revision
of deferred tax balances at
1 January 2011 due to changes in UK taxation rates.

             BG Group's Chief Executive, Sir Frank Chapman said:

"Cash flow from operations grew by 21% to $3.1 billion, in a quarter where
higher E&P costs, including an exploration charge of $203 million, resulted in
an 8% fall in total operating profit to $2 billion.

"For the half year, cash flow from operations was up 32%, operating profit was
6% higher, and earnings grew by 21%, on the back of a 4% production increase
and a 25% growth in LNG profits. The interim dividend was increased by 10% to
11.88 cents per share."

Sir Frank noted that: "During the quarter, BG Group reached key project
delivery milestones and delivered further exploration success across the
portfolio.

"In Brazil, Petrobras, the operator of the 'big five' discoveries where we
have very material interests, presented its latest business plan, which
confirmed its commitment to the fast-track development of the first-phase of
our joint interests in the pre-salt Santos Basin, in line with BG Group's own
plans.

"The second FPSO, destined for Sapinhoá in 2013, is 92% complete and the third
FPSO, also to be installed in 2013 at Lula NE, is 85% complete and has arrived
in Brazil for topsides integration. FPSOs 4 and 5 are on schedule at some 25%
complete. Earlier this month, the BM-S-9 and 11 partners approved contracts
worth $4.5 billion for the first six topside modules and integration packages
for the Brazilian constructed FPSOs. The BM-S-11 partners have also issued
tenders for an additional chartered FPSO, expected onstream in 2015.

"A substantial proportion of our first-phase facilities is now under contract
and this, alongside continuing improvements to drilling durations, affirms our
capital cost estimates for Brazil and our expectation of more than 600 000 boe
per day (boed) production net to BG Group by 2020.

"In Australia, we continue to make progress towards first LNG in 2014. We
drilled around 80 wells in the quarter and continued to build an extensive
inventory of drilling locations, supporting the acceleration of upstream
execution in the second half of this year. Further, the Argyle field
compression station is undergoing final commissioning. At the LNG plant on
Curtis Island, tank and jetty construction progressed and the first shipment
of production modules has departed from Thailand.

"In the US, as a result of a lower long-term Henry Hub price premise, BG Group
recorded a $1.3 billion non-cash post-tax impairment charge against our shale
gas business. In keeping with our new US gas price premise, we have further
reduced our rig count to six. Our efforts in the US business are now focused
on progressing our significant opportunities for the export of LNG from North
America to BG Group's global customers.

"In Egypt, Phase 8b of the West Delta Deep Marine development started gas
production, and new facilities at the Margarita and Bongkot South fields in
Bolivia and Thailand continued their ramp-up. In Kazakhstan, completion of the
comprehensive agreement paves the way to unlock the substantial remaining
potential of the giant Karachaganak field.

"Offshore Tanzania, we made a fifth consecutive gas discovery with the Mzia-1
well, and our first in the deeper Cretaceous section of the basin, opening an
extensive new play fairway in our acreage. Meanwhile, a new gas discovery was
made in the Egypt El Burg concession and the fourth Bowen tight gas sands well
reached total depth in Australia and is under evaluation. Alongside this, we
saw further successful appraisal in Brazil."

Sir Frank continued: "Although upstream production continued to grow this
year, the long-term shut down at the Elgin/Franklin field, the deferral of the
Jasmine field start-up to 2013, and the scaling back of drilling operations in
the US, are expected in aggregate to reduce the year-end production rate by
some 50 000 boed. Opportunities elsewhere in the portfolio are expected to
offset some 40% of this impact. The net result is that we expect production at
year-end to be some 720 000 boed. The full resumption of Elgin/Franklin
production and the start-up of Jasmine are expected during 2013.

"In LNG, the quarter's performance was consistent with our expectations, and
we now believe that total operating profit for the full year will be at the
upper end of our $2.6 billion to $2.8 billion guidance."

Concluding his comments, Sir Frank said: "I am pleased that during the quarter
we have continued to generate strong cash flow; bring new resources onstream;
and make material progress with our major growth projects in Brazil and
Australia; alongside delivering further exploration success."  

                           Business Review - Group

Second Quarter                                          Half Year           
  2012    2011                                       2012          2011
    $m      $m        Business Performance             $m            $m       
                      Revenue and other operating
 5 594   5 115    +9% income                       11 370         9 918   +15%
                                                                              
                                                                              
 1 261   1 420   -11% Exploration and Production    2 710         2 678    +1%
   594     553    +7% Liquefied Natural Gas         1 406         1 123   +25%
                      Transmission and
   109     167   -35% Distribution                    227           312   -27%
    12      12      - Other activities                  6             4   +50%
                      Total operating profit
                      including share of pre-tax
                      results from joint ventures
 1 976   2 152    -8% and associates                4 349         4 117    +6%
                                                                              
  (38)    (59)   -36% Net finance costs              (79)         (138)   -43%
 (851)   (942)   -10% Taxation for the period     (1 900)   (1 986)^(b)    -4%
 1 073   1 120    -4% Earnings for the period       2 340         1 939   +21%
                                                                              
 31.6c   33.1c    -5% Earnings per share (cents)    68.9c         57.2c   +20%
                                                                              
                      Cash generated by
 3 121   2 581   +21% operations                    5 766         4 380   +32%
                                                                              
                      Capital investment on a
 2 385   2 751   -13% cash basis^(a)                4 890         5 157    -5%

a) For a definition of capital investment on a cash basis see Glossary (page
48). For a reconciliation between capital investment on a cash basis and total
capital investment see Supplementary Information (page 45).

b)  Includes a charge of $195 million in respect of prior period taxation
arising on the revision of deferred tax balances at 1 January 2011 due to
changes in UK taxation rates.

Second quarter

Revenue and other operating income increased by 9% to $5 594 million,
reflecting a 4% increase in E&P production volumes and strong demand for the
Group's LNG cargoes.

Total operating profit decreased by 8% to $1 976 million as the increase in
revenue and other operating income was more than offset by higher costs in the
E&P segment.

Cash generated by operations increased by 21% to $3 121 million, primarily as
a result of a higher working capital cash inflow.

As at 30 June 2012, the Group's net debt was $10 240 million. The gearing
ratio decreased from 26.6% to 24.9% over the quarter resulting from progress
on the Group's portfolio rationalisation programme. The average maturity of
the Group's gross borrowings increased to around 17 years following the
successful issuance of $2.07 billion of hybrid bonds maturing in 2072.

Net finance costs of $38 million included foreign exchange gains of $18
million (2011 net finance costs of $59 million including foreign exchange
gains of $7 million).

Capital investment (excluding acquisitions and on a cash basis) of $2 385
million comprised investment in E&P ($1 589 million), LNG ($720 million) and
T&D ($76 million). This investment was focused primarily on the Group's major
projects in Australia, Brazil and the UK. Further details on project
developments are provided in the second quarter business highlights section.

 

 

Half year

Revenue and other operating income increased by 15% to $11 370 million,
reflecting the benefit of higher realised prices, continued strong demand for
the Group's LNG cargoes, particularly from Asia, and a 4% increase in E&P
production volumes compared to the same period in 2011.

Total operating profit increased by 6% to $4 349 million, as the increase in
revenue and other operating income was partly offset by higher operating costs
and depreciation in the E&P segment. Cash generated by operations increased
sharply by 32% to $5 766 million, reflecting the combined result of the strong
business performance and the continued reversal of prior period margin calls
on the Group's hedged LNG contracts.

The Group's effective tax rate (including BG Group's share of joint venture
and associates' tax) for the full year is expected to be 44.5%, slightly lower
than the underlying rate of 45% for 2011, excluding the $195 million prior
period charge in 2011, primarily resulting from the increase in UK North Sea
taxation.

Net finance costs of $79 million included $21 million of interest received on
tax refunds and foreign exchange gains of $9 million (2011 net finance costs
of $138 million including foreign exchange losses of $15 million).

Capital investment (excluding acquisitions and on a cash basis) of $4 890
million comprised investment in E&P ($3 395 million), LNG ($1 333 million) and
T&D ($162 million), and represented a 3% increase compared with 2011. This is
consistent with the Group's 2012 guidance of $11.5 billion at reference
conditions.

The Board has approved the payment of an interim dividend of 11.88 cents per
share. This is half of the 2011 total dividend, in accordance with the Board's
established policy. The interim dividend has been converted to Sterling at the
average of the daily spot rates for the three business days prior to the
business day before this announcement and will be paid on 7 September 2012 as
7.64 pence per share to shareholders on the register as at 3 August 2012.

Disposals, re-measurements and impairments

Total results included a post-tax charge of $1 042 million (2011 $123 million
gain) for the second quarter in respect of disposals, re-measurements and
impairments, and a post-tax charge of $1 086 million for the half year (2011
$100 million). The second quarter included a non-cash, post-tax charge of $1
295 million in respect of the impairment of certain assets associated with the
shale gas business in the USA resulting primarily from a change to the Group's
long-term US natural gas price premise; a post-tax gain of $152 million
associated with the disposal of various assets in the E&P and LNG segments;
and a post-tax gain of $135 million (2011 $121 million gain) in relation to
mark-to-market movements on long-term commodity contracts and economic hedges.
For further information see Presentation of Non-GAAP measures (page 23) and
notes 1 to 3 (pages 34 to 36).

 

 

 

 

Second quarter business highlights

  Australia

The Queensland Curtis LNG (QCLNG) project continues to make good progress. A
further $1.3 billion was invested during the second quarter, bringing total
capital expenditure for the first half of 2012 to $2.4 billion.

In the upstream, around 80 wells were drilled in the quarter. BG Group
continued to build an extensive inventory of drilling locations ahead of the
planned acceleration of upstream execution in the second half of this year.
Drilling activities will continue to ramp up as the rig count increases from
the current 8 to 12 by year end. Exploration activity also continues in
Australia where the Group completed its fourth Bowen Basin tight gas sands
well and results are now under evaluation.

Good progress has been made on key water treatment plants, the Argyle field
compressor station, the 340-kilometre export pipeline to Curtis Island and the
200-kilometre gas collection header. The entire gas collection header has been
welded and trenching is ongoing. Clearance and grading along the export
pipeline's right of way is approximately 40% complete and the pipe-joints are
being laid down along the route.

Tank and jetty construction continues at the LNG plant on Curtis Island, and
the first shipment of six production modules has departed from the fabrication
yard in Thailand, where 80 modules in total are being constructed for the two
LNG trains.

  Brazil

The development of the 'big five' Santos Basin discoveries is progressing
according to plan. Floating production, storage and offloading vessel (FPSO) 1
has been producing at a rate of 115 000 boed from just four wells. Also on
FPSO 1, work on the first water alternating gas (WAG) well has started. 

An extended well test (EWT) in the Iracema area of BM-S-11 is producing at a
steady rate of 11 500 bopd, constrained by facilities. It is planned that the
EWT will be extended until October 2012.

During the quarter, a development well on Sapinhoá was drilled in just 43
days. This represents the best performance to total depth so far in the
pre-salt Santos Basin. This development well will be connected to FPSO 2 next
year.

Good progress continues with work on the FPSO fleet. FPSO 2 is now 92%
complete and start-up in Sapinhoá is expected early in 2013. FPSO 3 is 85%
complete and the vessel has arrived in Brazil for the integration of topsides
ahead of deployment on Lula NE in 2013. Hull conversion is ongoing in China
for FPSOs 4 and 5, which are both around 25% complete. In addition, the
BM-S-11 partners have decided to tender for an additional chartered FPSO as
part of the first-phase development, expected onstream in 2015. 

BG Group, together with its Santos Basin partners, approved contracts
totalling $4.5 billion for the construction of the first six topside modules
and integration packages of the eight FPSOs which are being constructed in
Brazil for blocks BM-S-9 and BM-S-11. The next two topside modules and
integration package contracts for the eight FPSOs are expected to be awarded
within the next 18 months.

BG Group has approved the investment (25%) in the Cabiúnas gas pipeline. The
pipeline will be approximately 380 kilometres long and will connect the Lula
field to the Cabiúnas terminal, 180 kilometres north-east of Rio de Janeiro.
The pipeline represents the next major phase of gas export infrastructure
providing capacity for up to four FPSOs.

  Egypt

In June, gas production from the Phase 8b deepwater development project began
in the West Delta Deep Marine Concession. Phase 8b is an extension of the
existing deep water sub-sea infrastructure and will tie-in eight new sub-sea
wells. This latest development is located approximately 90 kilometres offshore
the Nile Delta.

In July, BG Group drilled a successful well in the El Burg Offshore concession
(BG Group 70% and operator). The Harmattan Deep discovery is located in
shallow water, 2 kilometres from the coast.

 

 

Second quarter business highlights continued

  Kazakhstan

In June, BG Group and the other contracting companies in the Karachaganak gas
condensate field completed an agreement with the Republic of Kazakhstan (the
Republic) that allows all parties to move forward with the development of this
important resource.

Under the terms of the agreement, the Republic has acquired a 10% interest in
the Karachaganak Final Production Sharing Agreement (FPSA) from the consortium
for $2.0 billion cash and $1.0 billion non-cash consideration (pre-tax)
including the final and irrevocable settlement of all cost recovery claims.
Tax of $1.0 billion is payable on the gain arising on the disposal. BG Group's
interest in the project is now 29.25% (previously 32.5%). The Republic's
interest in the Karachaganak FPSA is now held by a subsidiary of the national
oil company, KazMunaiGas.

The consideration under the agreement also includes the allocation of an
additional 2 million tonnes per year capacity in the Caspian Pipeline
Consortium export pipeline over the remaining life of the FPSA with an initial
capacity of 0.5 million tonnes rising to 2 million tonnes over the next three
years. Completion of the agreement also provides for exemption from export
custom duties for the Karachaganak project until 2038 and final agreement on
all tax and customs matters up to the end of 2009.

  Nigeria

BG Group notified the Nigeria National Petroleum Corporation and its partners
of its intention to relinquish its interests in blocks OPL 286-DO and OPL
284-DO. Also, the Group has given notice of its withdrawal from the Olokola
LNG project, while earlier this year it withdrew from the OPL 332-DO
production sharing contract. 

  Norway

Following the oil discovery in December 2011 of Jordbær West in production
license PL373S, BG Group sanctioned the Knarr West project in June. This will
form part of the Knarr Integrated Project (Central and West combined) with
initial production expected in 2014. 

  Tanzania

In May, BG Group announced its fifth consecutive Tanzania gas discovery with
the Mzia-1 exploration well located in Block 1, offshore southern Tanzania.
Mzia-1 is BG Group's first discovery within the deeper Cretaceous section and
opens an extensive new play fairway by de-risking a number of Cretaceous
prospects within the Group's offshore acreage in Blocks 1, 3 and 4 to
complement the now proven Tertiary fairway. 

  Thailand

In June, BG Group completed a performance test on Bongkot South marking the
end of the commissioning period and the commencement of firm sales under the
Bongkot South Gas Sales Agreement. During this test, the Bongkot concession
passed the significant milestone of producing more than 1 billion cubic feet
of sales gas per day from the Bongkot North and Bongkot South fields combined.

  USA

A post-tax charge of $1.3 billion was recognised in the second quarter as a
result of the non-cash impairment of certain assets associated with the shale
gas business, following a change to the Group's long-term US natural gas price
premise to $4.25 per mmbtu. The Group will continue to monitor long-term US
gas prices to reassess the carrying value of its E&P assets in the USA in
future periods.

In line with BG Group's plan to reduce drilling activity due to low natural
gas prices, the Group has further reduced the rig count to five operating in
the Haynesville and one in the Marcellus.

 

 

Second quarter business highlights continued

  Portfolio rationalisation and funding plan

In May, BG Group announced that it had signed a definitive binding agreement
with Cosan S.A. Indústria e Comércio (Cosan) for the sale of the Group's
entire 60.1% holding in Comgás for Brazilian Reais 3.4 billion in cash, or
approximately $1.7 billion at prevailing exchange rates. The transaction,
which is subject to regulatory approval, is expected to complete by the end of
2012. As such, the Group's interest in Comgás is now disclosed within 'Assets
classified as held for sale', which has reduced net debt by approximately $1.0
billion.

In light of the agreement to sell Comgás and the ongoing portfolio
rationalisation programme, BG Group plans to review the structure and
constituent parts of its operating business segments.

In May, BG Group announced it had reached agreement to sell its 40% equity
interest in two gas-fired power plants in the Philippines to its partner in
the facilities, First Gen Corporation, for net cash proceeds of $360 million.
The sale and purchase agreement was completed on signing and covers the 1 000
megawatt Santa Rita power plant and the 500 megawatt San Lorenzo power plant,
both on the Island of Luzon.

In June, BG Group issued three tranches of hybrid bonds totalling $2.07
billion, maturing in 2072, another step in the execution of the Group's
funding plan to support its investment programme. All three issues were well
supported by investors and demonstrate BG Group's ability to diversify its
types of capital. Details of the terms and conditions of each issue can be
found in the relevant prospectus as published and filed with the UK Listing
Authority. 

In June, all three major credit rating agencies reaffirmed their mid-single A
credit rating and stable outlook for BG Energy Holdings Ltd. The ratings are
Standard & Poor's A, Moody's A2 and Fitch A.

 

                       Exploration and Production (E&P)

Second Quarter                                               Half Year       
  2012    2011                                              2012    2011
    $m      $m        Business Performance                    $m      $m      
  61.3    58.9    +4% Production volumes (mmboe)           122.2   117.1   +4%
                                                                              
 2 963   2 787    +6% Revenue and other operating income   5 789   5 297   +9%
                                                                            
                      Total operating profit before
 1 464   1 540    -5% exploration charge                   3 025   2 982   +1%
 (203)   (120)   +69% Exploration charge                   (315)   (304)   +4%
 1 261   1 420   -11% Total operating profit               2 710   2 678   +1%
                                                                              
 1 589   1 901   -16% Capital investment on a cash basis   3 395   3 634   -7%

Additional operating and financial data is given on page 45.

Second quarter

Revenue and other operating income increased by 6% to $2 963 million,
reflecting a 4% increase in production volumes and favourable changes in the
production mix. The 4% production increase came from improved performance in
the UK, the continued ramp-up of production in Brazil and Australia, and from
new developments in Bolivia, Norway and Thailand. However, primarily as a
result of the loss of non-operated production resulting from the long-term
shutdown at Elgin/Franklin and the deferral of the Jasmine field start-up to
2013, combined with the scaling back of drilling operations in the US, BG
Group's 2012 production exit rate is now expected to be around 720 kboed.

The Group's average realised gas price per produced therm increased by 4% to
44.25 cents, International gas price realisations were 5% higher at 41.08
cents per produced therm, and the average UK realised gas price was in line
with 2011 at 44.61 pence per produced therm.

Total operating profit was 11% lower as the increase in revenue and other
operating income was more than offset by higher costs.

The exploration charge of $203 million was $83 million higher than the second
quarter of 2011 as a result of the $164 million write-off for the Corcovado-1
well in Brazil following expiry of the BM-S-52 licence. Gross exploration
expenditure of $224 million included spend in Tanzania ($73 million), Egypt
($42 million), the UK ($40 million), Australia ($33 million) and Brazil ($17
million).

Unit operating expenditure increased to $9.71 per barrel of oil equivalent,
principally reflecting the impact of higher lagged commodity prices on royalty
costs, changes in the production mix and higher tariff and maintenance costs.
The unit depreciation charge of $9.18 per barrel of oil equivalent was higher
as new producing assets came onstream, and as a result of changes in the
production mix.

Capital investment on a cash basis of $1 589 million included investment in
Australia ($558 million), Brazil ($292 million), the UK ($259 million) and
Egypt ($118 million).

Half year

Revenue and other operating income increased by 9% to $5 789 million,
reflecting higher realised gas and liquids prices and a 4% increase in
production volumes. Total operating profit was 1% higher as the increase in
revenue and other operating income was largely offset by higher operating
costs and depreciation charges.

The Group's average realised gas price per produced therm increased by 4% to
42.70 cents, reflecting generally higher market prices and changes in the
production mix.

Unit operating expenditure increased to $9.63 per barrel of oil equivalent,
principally reflecting the impact of higher commodity prices on royalty costs,
and higher maintenance and tariff costs. The unit depreciation charge
increased to $8.86 per barrel of oil equivalent as a combined result of
changes in the production mix and the impact of new assets coming on-stream.

Capital investment on a cash basis of $3 395 million included investment in
Australia ($1 049 million), Brazil ($605 million), the UK ($557 million),
Egypt ($291 million) and the USA ($242 million).

                         Liquefied Natural Gas (LNG)

Second Quarter                                             Half Year       
  2012    2011                                            2012    2011
    $m      $m        Business Performance                  $m      $m       
 1 906   1 808    +5% Revenue and other operating income 4 206   3 541   +19%
                                                                             
   556     494   +13% Shipping and marketing             1 304     995   +31%
    78      81    -4% Liquefaction                         171     168    +2%
  (40)    (22)   +82% Business development and other      (69)    (40)   +73%
   594     553    +7% Total operating profit             1 406   1 123   +25%
                                                                             
   720     766    -6% Capital investment on a cash basis 1 333   1 365    -2%

Additional operating and financial data is given on page 45.

Second quarter

LNG total operating profit increased by 7% to $594 million due to a 13%
increase in Shipping and marketing operating profit, reflecting continuing
favourable market conditions and strong demand for cargo deliveries,
particularly from Japan.  

These results reflected seven fewer cargo deliveries than the first quarter of
2012, mainly as a result of scheduled maintenance at EGLNG, but were in line
with the expected seasonal phasing. The Group now expects total operating
profit to be at the upper end of its $2.6 billion to $2.8 billion guidance for
2012.

BG Group delivered 91% of cargoes (2011 84%) to global markets outside the USA
including 27 to Asia, 14 to South America and one to Europe (2011 20 Asia, 13
South America and 8 Europe). Deliveries to Japan increased from 7 to 16 as LNG
imports remained at record high levels.

BG Group's share of operating profit from liquefaction activities reduced by
4% to $78 million.

Capital investment on a cash basis of $720 million was primarily associated
with the development of the QCLNG project.

Half year

LNG total operating profit of $1 406 million was 25% higher than last year as
a result of favourable market conditions, with continuing strong demand for
cargo deliveries outside of the USA, particularly from Asia.

BG Group delivered 91% of cargoes (2011 84%) to global markets outside the USA
including 61 to Asia, 26 to South America and 3 to Europe (2011 41 Asia, 23
South America and 19 Europe). Deliveries to Japan increased from 11 to 32,
reflecting record demand as a result of the combined effects of further
nuclear units going offline and stronger economic performance. As a
consequence of these additional deliveries to Japan, fewer cargoes were
delivered to Europe.

BG Group's share of total operating profit from liquefaction activities
increased by 2% to $171 million.

Capital investment on a cash basis of $1 333 million was primarily associated
with the development of the QCLNG project.

 

 

                     Transmission and Distribution (T&D)

Second Quarter                                             Half Year       
  2012    2011                                            2012    2011
    $m      $m        Business Performance                  $m      $m       
                                                                             
   663     625    +6% Comgás                             1 296   1 172   +11%
   272     243   +12% Other                                542     481   +13%
   935     868    +8% Revenue and other operating income 1 838   1 653   +11%
                                                                             
   143     150    -5% Comgás before gas cost recovery      252     251      -
  (80)    (44)   +82% Comgás gas cost recovery           (114)    (65)   +75%
    63     106   -41% Comgás                               138     186   -26%
    46      61   -25% Other                                 89     126   -29%
   109     167   -35% Total operating profit               227     312   -27%
                                                                             
    76      84   -10% Capital investment on a cash basis   162     158    +3%

Additional operating and financial data is given on page 45.

Second quarter

Revenue and other operating income increased by 8% to $935 million,
principally reflecting an 11% increase in volumes at Comgás in Brazil and
higher prices at Gujarat Gas in India.

T&D total operating profit of $109 million was 35% lower, primarily as a
result of the timing effect of gas cost recovery at Comgás. In the quarter,
$80 million was passed back to customers compared with $44 million in 2011. At
the end of the quarter, the cost of gas to be recovered from customers in
future periods was $180 million.

Excluding the timing effect of gas cost recovery, total operating profit at
Comgás was 5% lower, with higher volumes offset primarily by adverse foreign
exchange movements and sales mix. The increase in volumes at Comgás was driven
by higher demand from power customers following a temporary reduction in
hydro-electric power generation capacity in Brazil.

Other T&D activities' operating profit decreased by $15 million principally as
a result of higher gas costs at Gujarat Gas.

Half year

Revenue and other operating income increased by 11% to $1 838 million,
principally as a result of higher prices and volumes at Comgás in Brazil and
higher prices at Gujarat Gas in India.

T&D total operating profit decreased by 27% to $227 million. Total operating
profit at Comgás of $138 million was 26% lower as a result of the timing
effect of gas cost recovery. In the first half of the year, $114 million was
passed back to customers compared with $65 million passed back to customers in
2011. Excluding this timing effect, total operating profit at Comgás was in
line with 2011.

The $37 million reduction in Other T&D activities' operating profit included
the impact of adverse foreign exchange movements and higher gas costs at
Gujarat Gas.

Capital investment on a cash basis of $162 million mainly represents the
development of the Comgás pipeline network.

                                       

                          Interim Management Report

This results announcement also represents BG Group's half-yearly financial
report for the purposes of the Disclosure and Transparency Rules (DTR) made by
the UK Financial Services Authority. In order to comply with the requirements
of the DTR, this announcement must contain an interim management report which
must include (a) an indication of the important events that have occurred
during the first six months of the financial year, and their impact on the
condensed set of financial statements, and (b) a description of the principal
risks and uncertainties for the remaining six months of the financial year.
The principal risks and uncertainties for the remaining six months of the
financial year are set out on pages 15 to 18. The important events that
occurred during the first six months of the year are set out on pages 1 to 10
and should be read in conjunction with the important events that occurred
during the first quarter of the year as set out in BG Group's First Quarter
Results released on 3 May 2012. The relevant sections of the Group's First
Quarter Results are repeated below without amendment. Where necessary, further
updates have been provided in the Second Quarter Business Highlights on pages
5 to 7. Together with the Principal Risks and Uncertainties on pages 15 to 18
they form BG Group's interim management report for the purposes of the DTRs.

 

                      First Quarter Business Highlights

  Australia

The Queensland Curtis LNG (QCLNG) project progressed well as some $1.1 billion
was invested during the first quarter in the parallel projects of upstream
development of gas and water treatment facilities, the 540 kilometre pipeline
network, and the first phase two-train LNG plant.

In the upstream, three further petroleum leases were granted in the quarter
taking the total number of leases held to
22 in the core Surat Basin acreage. The remaining seven petroleum leases
required for first LNG in 2014 are expected to be granted during the remainder
of 2012, in line with BG Group's plan.

Over 70 wells were delivered in the quarter (31 in March), as drilling
capacity increased in line with plans. Drilling activities will continue to
ramp up as the rig count increases from the current six to 11 rigs in the
second half of the year. Some 800 wells have been drilled to date.

The first water treatment plant, at Windibri, was commissioned and treated
water is being provided to the Condamine power station. The Windibri plant has
a capacity of some six million litres per day.

Field compressor station (FCS) construction activities progressed at Argyle
and Bellevue and a significant contract was awarded for six further FCSs and
one central processing plant (CPP). Further, the award of an additional
13 FCSs and 3 CPPs is currently being evaluated.

All of the 42" gas collection header, totalling almost 200 kilometres, has now
been strung out along the pipeline route, welding is advancing and pipeline
trenching and laying has commenced. Way-leave clearance continued for the 340
kilometre main trunkline to Curtis Island.

Construction of the LNG plant is moving ahead well, with work continuing in
both Thailand and on Curtis Island.

In Thailand, construction of 47 modules progressed well with piping,
mechanical and cable ladder construction underway. The first module is on
schedule for delivery in the second half of 2012. On Curtis Island, notable
achievements included completion of dredging in and around the jetty berth,
delivery of the first shipment of the LNG tank roof plates and completion of
pile driving on the heavy lift dock. The first quarter also saw ongoing
construction of the two LNG storage tanks and the completion of the QCLNG site
offices on Curtis Island and subsequent construction team relocation.

QCLNG is therefore making good progress towards first LNG in 2014, in a busy
Australian construction environment. Increasing costs for local goods and
services, although mitigated through early implementation and contracting
strategies, are clearly evident from ongoing upstream tendering. BG Group now
estimates that the QCLNG sanctioned investment of $15 billion^1 will increase
by 19% due to local market effects, increased costs of compliance with
regulatory processes and some scope change. This underlying cost increase,
combined with the 20% appreciation of the Australian dollar, yields a revised
QCLNG investment of $20.4 billion^2 and an upstream unit capex of $9 per
boe^3.

1.     2011 to 2014 capex at the 2011 BG Group reference exchange rate of
US$1:A$1.2 as announced on 8 February 2011.

2.     At the 2012 BG Group reference exchange rate of US$1:A$1.

3.     Reference $8 per boe presented in QCLNG economics summary in 9 February
2012 Strategy Presentation.
                 First Quarter Business Highlights continued

  Bolivia

In May, BG Group announced the start-up of production from Margarita Phase I.
This development phase represents a key milestone in the continued development
of the Caipipendi block. Margarita is expected to produce some 40 000 barrels
of oil equivalent per day (boed) net to BG Group by the end of 2014, following
completion of the Phase II project sanctioned in July 2011.

  Brazil

In Brazil, all aspects of developing the 'big five' Santos Basin fields are
progressing according to plans. This progress, as well as strategic objectives
and future outlook, was presented during a February analyst/investor visit to
Rio de Janeiro hosted by BG Group. The visit also included third-party
supplier site visits and presentations from partners. Key messages included:
the stable business environment in Brazil; fast track developments with
production already underway; field development plans in place, with
substantial opportunities for enhancement as experience is gained; improved
drilling performance and significant economies of scale; gas evacuation
optimisation to enhance oil recovery; local content requirements being
exceeded with quality and depth from local suppliers; very strong partner
alignment; and BNDES support for BG Group's Santos Basin investments.

Strong progress continues with the floating production, storage and offloading
vessels (FPSOs).  A fourth producing well has been connected to FPSO 1. FPSOs
2 to 5 are on schedule with the latest FPSOs exhibiting lower unit costs than
previous vessels.  FPSO 2 is now over 85% complete, in line with plans and
expected to start up in the first half of 2013. The hull conversion for FPSO 3
has been completed in Singapore; this vessel is now 75% complete and is due to
sail to Brazil for integration of topsides in the second quarter, in line with
plans to bring the unit onstream in 2013. Hull conversion is ongoing in China
for FPSOs 4 and 5, which are both around 15% complete, and integration
activities will take place in Brazil ahead of planned start-up in 2014. The
fabrication of hulls for FPSOs 6 to 13 continues in the Rio Grande de Sul
shipyard in Brazil.

In March, BG Group announced the start of a new extended well test (EWT) in
the Iracema area of the BM-S-11
(BG Group 25%) concession. The EWT is expected to span approximately a six
month period, gathering technical information on reservoir behaviour and
production performance. The well has been producing around
12 000 barrels of oil per day (bopd), constrained by facilities. The
information gathered will support the development of the permanent 150 000
bopd capacity FPSO Cidade de Mangaratiba, planned to be in operation in 2014.

In April, BG Group announced the completion of drilling at the Iara West
appraisal well in the BM-S-11 concession. Good quality oil samples were
encountered and the results confirmed the westerly extension of the Iara
accumulation in the pre-salt Santos Basin and demonstrate the high potential
of the reservoirs within that area. Iara West is the third well drilled in the
Iara area and is part of the fast-track programme to develop the Santos Basin
discoveries. BG Group and its partners will continue to appraise the area,
including production tests to evaluate reservoir performance.

  Norway

In April, BG Group announced the start-up of production from the Gaupe field
(BG Group 60% and operator) located in the Norwegian North Sea. Gaupe marks BG
Group's first production from the Norwegian Continental Shelf and the project
has been delivered on budget and just four years after the declaration of
commerciality. The Gaupe field is a cross-border sub-sea tie-back to the BG
Group-operated Armada infrastructure located in the UK central North Sea.
Production from Gaupe is expected to reach a plateau rate of around 15 000
boed gross during the third quarter of 2012.

  Tanzania

In March, BG Group announced its fourth Tanzanian gas discovery with the
Jodari-1 (BG Group 60% and operator) exploration well located in Block 1, 39
kilometres offshore southern Tanzania. Preliminary evaluation of the well
results indicates gross recoverable resources are in the range of 2.5 to 4.4
trillion cubic feet (tcf) of gas. This is the fourth consecutive successful
well drilled in Tanzania, resulting in mean total gross recoverable resources
estimated to be approaching some 7 tcf of gas. The Jodari-1 well is the first
of a three-to-four well exploration programme, which also includes the
acquisition of 2 500 square kilometres of 3D seismic data in Block 1. The next
target, currently drilling, is the Mzia-1 location in Block 1, 23 kilometres
to the north of Jodari-1.

   

   

   

                 First Quarter Business Highlights continued

  Thailand

In April, BG Group announced the start of production from the Greater Bongkot
South field (BG Group 22.22%) in the Gulf of Thailand, 70 kilometres south of
the existing Bongkot North development. Greater Bongkot South has new
standalone facilities with processing capacity of 350 million cubic feet of
gas and 15 000 barrels of condensate per day. Once plateau production is
achieved, Greater Bongkot South will deliver some 14 000 boed net to
BG Group. Production is expected to reach plateau in the second quarter of
2012. This development represents a key milestone in the continued development
of the Greater Bongkot area.

  UK

On 25 March, production at Elgin/Franklin (BG Group 14.11%, non-operated) was
shut-in due to a well control issue on the Elgin platform. BG Group production
up to 25 March had reached 1.3 mmboe. In the Group's business plan for 2012,
the total expected production was 6.4 mmboe. In April, the operator of the
Jasmine field (BG Group 30.5%, non-operated) advised that production start-up
is not now expected until 2013.

  Uruguay

In April, BG Group successfully bid for three offshore blocks (8, 9 and 13) in
the licensing round held by the Republic of Uruguay. The bid commits BG Group
to a seismic work programme of 13 000 square kilometres intended to evaluate
the awarded blocks in the first three year exploration phase.

  USA

In April, a proposal for a LNG liquefaction project at Lake Charles in
Louisiana was filed with the Federal Energy Regulatory Commission (FERC). The
project is at a design and permitting stage and is planned to export up to
15 million tonnes per annum (mtpa) of LNG. BG Group has previously received US
Department of Energy (DOE) authorisation for LNG export from the Lake Charles
terminal to countries with which the USA has a free trade agreement (FTA). BG
Group is also awaiting authorisation from the DOE on an application for LNG
export from Lake Charles to non-FTA countries.

In April, FERC granted the operator approval to construct and operate
facilities for the liquefaction and export of LNG from the Sabine Pass
liquefaction terminal in the USA. Significantly, the Sabine Pass terminal,
from which
BG Group has an agreement to purchase 5.5 mtpa of LNG, now has the key
approvals required from the DOE and FERC which will allow the project to
proceed. LNG exports from the Sabine Pass facility are expected to commence in
2015.

As planned, given the weak pricing environment in the USA, the Group continues
to reduce its rig count and had
11 rigs in operation as at the end of April.

  Capital expenditure and funding plan

Following the update on costs for the QCLNG project (page 5) and refinements
to the Group's portfolio rationalisation programme, BG Group now expects its
capital expenditure to increase from $10.6 billion to
$11.5 billion in 2012, and from $11.4 billion to $12.0 billion in 2013 on a
cash basis. In aggregate, this equates to a 7% increase in the Group's capital
expenditure programme for the 2012 to 2013 period.

During the first few months of 2012, BG Group made significant progress in the
execution of its funding plan. In May, and as part of its portfolio
rationalisation programme, BG Group signed a Memorandum of Understanding with
Cosan S.A. Indústria e Comércio for the sale of BG Group's 60.1% interest in
Comgás, Brazil's largest gas distribution company, for Brazilian Reais 3.4
billion (some $1.8 billion at the current exchange rate). In addition, net
borrowings attributable to Comgás as at 31 March 2012 were $1.1 billion; this
transaction therefore would lead to some $2.9 billion reduction in the Group's
net debt.

In April, BG Group announced that subject to certain consents and regulatory
approvals, it had entered into an agreement to sell the Group's 40% share in
GNL Quintero S.A. (GNLQ) for up to $352 million.

In May, BG Group sold its entire shareholding of 73.9 million shares (8%) in
Senex Energy Limited in Australia for a total of A$75 million ($78 million).

BG Group has also further advanced negotiations on the sale of the Group's
interests in two gas-fired power generation plants in the Philippines, Santa
Rita and San Lorenzo, with expected completion in 2012.

In March, BG Group announced it had received initial approval from BNDES for
up to $1.8 billion of long-term finance to fund part of the Group's interests
in the pre-salt Santos Basin, offshore Brazil. The funding will be allocated
to BG Group's share of local procurement and construction costs for the eight
FPSOs that will be owned

                 First Quarter Business Highlights continued

  Capital expenditure and funding plan continued

 

by BG Group and its partners, as part of the wider first phase Santos Basin
development programme that is expected to deliver 2.3 mmboe capacity by 2017.

In April, BG Group announced that it had signed a $500 million credit
agreement with Export Development Canada. These agreements are in line with
the Group's objective of further diversifying BG Group's international funding
sources and help underpin the delivery of the Group's global growth programme.

The progress made so far in the implementation of the Group's funding plan is
consistent with the target to release around $5 billion in 2012 and 2013 and
the objective to achieve further diversification of long-term funding options.

 

 

 

 

 

 

                                       

                      Principal Risks and Uncertainties

This section forms part of the interim management review for the purposes of
the Disclosure and Transparency rules made by the UK Financial Services
Authority.

BG Group's business, results and financial condition could be affected by a
broad range of risks and uncertainties. BG Group's risk profile continually
evolves over time as a result of changes in both the external environment and
the continued growth and development of the Group's portfolio.  The principal
risks and uncertainties for the remaining six months of the financial year are
unchanged from those stated on pages 46 to 51 of the BG Group 2011 Annual
Report and Accounts (ARA). These are summarised below. This summary is not
intended, and should not be used, as a substitute for reading the appropriate
pages of the ARA which include further commentary on the risks and the Group's
management of them.

The risks shown below are in alphabetical order and no order of relative
magnitude of the risks, or current level of Group exposure to them, is
implied.

Asset Integrity, Safety, Health and Security

Oil and gas exploration and production activities carry significant inherent
risks, especially deep-water drilling and operations in high pressure/high
temperature wells. Major accidents or incidents and/or the failure to manage
these risks could result in injury or loss of life, damage to the environment,
and/or loss of certain facilities, with an associated loss or deferment of
exploration, production and revenues, as well as costs associated with
mitigation, recovery and compensation.

BG Group is also subject to health and safety laws in numerous jurisdictions
around the world. Failure to comply with such laws could significantly impact
the Group's reputation, which could have a subsequent effect upon the
willingness of stakeholders to work with the Group. Any new laws and
regulations may result in BG Group having to curtail or cease certain
operations or implement temporary shutdowns of facilities, which could
diminish its productivity and materially and adversely impact the results of
operations, including the Group's profits.

BG Group also faces security threats. Acts of terrorism, piracy or civil
unrest which may affect BG Group's plants and offices, pipelines,
transportation or computer systems could severely disrupt its business and
could cause harm to people.  Information security breaches may also result in
the loss of BG Group's commercially sensitive data.

Capital requirements, liquidity and interest rates

BG Group has substantial capital expenditure requirements in its business and
operations. The Group's capital requirements depend on a broad range of
factors (including, for example, commodity prices, currency exchange rates,
acquisitions and proceeds realised from disposals), some of which are outside
the Group's control and may cause capital requirements to vary materially from
planned levels. Increases in BG Group's capital requirements could adversely
affect the Group's business and financial performance, and BG Group's ability
to access finance on attractive terms may be limited. A credit crisis
affecting banks, financial markets and/or the economy more generally could
affect the Group's ability to raise capital.

BG Group is also exposed to liquidity risks, including risks associated with
refinancing borrowings as they mature and the risk that financial assets
cannot readily be converted to cash without loss of value. BG Group's
financing costs may be significantly affected by interest rate volatility.

Climate change

Policies and initiatives at national and international level to address
climate change are likely to affect business conditions and demand for various
types of energy sources in the medium to long term. Worldwide policy and
regulatory actions are driving targeted reductions in greenhouse gas emissions
which will in turn influence the future of the energy industry. Policy
approaches that promote the use of alternative energy sources (such as
renewable and nuclear power) may affect the Group's ability to maintain its
position in key markets. New regulatory regimes intended to establish
emissions trading schemes could alter hydrocarbon production economics.

 

 

 

 

                 Principal Risks and Uncertainties continued

Commodity prices

BG Group's cash flows and profitability are sensitive to commodity prices for
natural gas, crude oil, liquefied natural gas (LNG) and other hydrocarbons.
The Group's exposure to commodity prices varies according to a number of
factors, including the mix of production and sales. While industry costs tend
to rise or fall with commodity prices in the long term, there is no guarantee
that movements in sales prices and costs would align in any year. This can put
pressure on investment and project economics, which depend in part upon the
degree and timing of commitments to particular cost structures.

The Group does not as a matter of course hedge all commodity prices, but may
hedge certain LNG contracts and other revenue streams from time to time. In
marketing its energy portfolio, BG Group undertakes commodity hedging and
trading activities, including the use of futures contracts, financial and
physical, forward-based contracts and swap contracts. The stand-alone value of
hedges can move significantly, potentially increasing the volatility of cash
required for margin calls and the accounting profit recognised within a
particular quarter.

Demand for LNG, both domestic and international, is dependent upon a number of
macro-economic factors, and LNG prices can vary significantly depending upon
the supply and demand balance in the market.

Credit

BG Group's exposure to credit risk takes the form of a loss that would be
recognised if counterparties (including sovereign entities) failed, or were
unable, to meet their payment or performance obligations. These risks may
arise in all forms of commercial agreements and in certain agreements relating
to amounts owed for physical product sales, the use of derivative instruments,
and the investment of surplus cash balances. The Group is also exposed to
political and economic risk events that exacerbate country risk and which may
cause non-payment of foreign currency obligations to BG Group by governments
or government-owned entities, or which may otherwise impact successful project
delivery and implementation. The impact of credit issues could also lead to
the failure of companies in the sector, potentially including partners,
contractors and suppliers.

Delivery of projects

Delivery of projects (including in the pre-sanction phase) may be subject to:
sub-surface uncertainties; cost and time overruns; HSSE risks; technical
(mechanical and engineering), commercial, legal or regulatory compliance
failures; equipment shortages; insufficient availability or capability of
employees or contractors; unscheduled outages; stakeholder risks; a
deterioration of macro-economic conditions; and gas pipeline system
constraints.

Drilling and completing or operating wells is often uncertain and may be
subject to delays, curtailment or cancellation due to a variety of factors
including unexpected drilling conditions, pressure or irregularities in
geological formations; equipment failures; accidents; adverse weather
conditions; and compliance with governmental or regulatory requirements. 
These events could result in a failure to successfully deliver sanctioned
projects in line with final investment decisions.

Failure to select the most suitable development concept based on
full-lifecycle understanding of the project can expose projects to additional
cost and risks and may contribute to lower than estimated production in
future.

In some cases, the cause of delay or cost overrun in project implementation
can be the misalignment of partner objectives. BG Group has a number of
partner-operated joint ventures in which it participates. The Group's ability
to influence the operations of those joint ventures may be limited.  The Group
faces the risk that actions or omissions on the part of the operators of those
joint ventures expose the Group to reputational or legal risk, as well as
liabilities. 

Political factors can also often be a significant risk to project delivery.
Unconventional gas, operating in deep water carbonate reservoirs and the
inherent complexity of some projects, given their scale and the number and
range of stakeholders, all present further challenges to successful project
delivery.

Environment

BG Group's activities may affect the environment. The potential environmental
consequences of the Group's activities include the impact of wells, pipelines
and other infrastructure on onshore or marine ecological habitats, with a
resulting effect on biodiversity. Measures undertaken to tackle loss of
biodiversity, together with policies intended to protect local habitats, may
limit access to gas and oil in areas deemed to be biologically sensitive.

 

                 Principal Risks and Uncertainties continued

Environment continued

Following BG Group's investments in the USA and Australia, water-related
issues are more prominent for the Group. In particular, the Group is required
to manage numerous issues related to both the disposal of water produced from
coal seam gas production and securing and disposing of water related to the
hydraulic fracturing  process required in the extraction of shale gas.

There is a range of stakeholder concerns related to the production of
unconventional gas. These include the potential for contamination or depletion
of local water sources, the long-term impact upon the environment and the
possibility that unconventional operations may cause minor seismic events. In
addition, local communities may raise concerns in relation to the impact on
their land and property rights.

There is a risk that the Group may be subject to new laws or regulations in
this area which may be costly to the business, attract adverse publicity and
ultimately restrict or prohibit the successful delivery of those projects
reliant upon hydraulic fracturing.

Other potential environmental consequences of BG Group's operations include,
for example, the release of hydrocarbons or chemicals onto land or into water;
noise pollution; the visual impact of gas and oil infrastructure; and the
emission of pollutants that affect air quality.

Exchange rates

The Group reports its financial results in US Dollars. Although a large
percentage of the Group's business activity is conducted in US Dollars, a
significant portion of the Group's operating cashflows, capital expenditure,
operating expenses and income taxes accrue in (and asset and liability
positions are held in) other currencies, including the Australian Dollar,
Brazilian Real and Pound Sterling. Consequently, the Group's results and
financial position may be significantly affected by exchange rate
fluctuations.

Insurance

Risks associated with the energy industry include: exposure to personal injury
and loss of life; asset failures; loss of containment of hydrocarbons;
environmental issues; and natural disasters together with associated
consequential losses, any of which may have an adverse effect on business
performance.

The transfer of risks to the insurance market may be affected and influenced
by constraints on the availability of cover, market appetite and capacity,
pricing and the decisions of regulatory authorities. Some of the major risks
associated with BG Group's activities cannot or may not be reasonably or
economically insured. BG Group may incur losses from different types of risks
that are not covered by insurance.

Operational Performance 

BG Group's production volumes (and therefore revenues) are dependent on the
continued operational performance of its producing assets. The Group's
producing assets are subject to a number of operational risks including:
reduced availability of those assets due to planned activities such as
maintenance or shutdowns; unplanned outages which may, for example, be due to
equipment or human failure; asset integrity and HSSE incidents; adverse
reserves recovery; the performance of joint venture partners; the performance
of the Group's contractors; and exposure to natural hazards, such as extreme
weather events. Each of these factors could adversely affect the Group's
ability to deliver operational business and financial performance.

Organisational capacity

BG Group's performance, operating results and future growth depend to a large
extent on its continued ability to attract, retain, motivate and organise
appropriately qualified personnel with the level of expertise and knowledge
necessary to conduct BG Group's operations. Competition for talented, suitably
experienced and qualified management and employees is intense for specialists
in oil and gas.

 

 

 

 

 

                 Principal Risks and Uncertainties continued

Political context and stakeholder relationships

BG Group faces a range of political risks. For instance, governments may alter
fiscal or other terms governing oil and gas industry operations, especially
where they face financial pressures, or may act (or fail to act) in a way
which delays project schedules or increases costs, thus eroding value. In
addition, BG Group needs to work with governments and national oil companies
in order to secure access to new resources and ensure the successful
monetisation of existing resources. In such cases, political considerations
can influence decision making. In recent years, some governments and
state-owned enterprises have exercised greater authority and imposed more
stringent conditions on companies pursuing exploration and production
activities in host countries, thereby increasing the costs and uncertainties
of business operations. This trend may continue.

Previously disenfranchised or disengaged populations have also become more
active and are able, using new channels like social media, to mobilise to
pressurise governments in a way that was impossible in the past. These
developments have increased the possibility of unforeseen regime, as well as
legal and regulatory, changes as governments and authorities respond to public
pressure.

BG Group also faces increased risk if it does not recognise, and take account
of, the interests of the communities in the areas where it operates, or if it
operates in an unethical manner in its relationships with those communities.
BG Group's operations will only be sustainable and successful over the
long-term if its local stakeholders see benefit from them and support the
Group's presence.

Regulation and legislation

BG Group's business activities are conducted in many different countries and
are therefore subject to a broad range of legislation and regulations. Any
non-compliance by the Group with applicable laws and/or regulations could lead
to legal or regulatory sanctions, as well as reputational damage. The need to
comply with any new or revised laws or regulations (or new or changed
interpretations or enforcement of existing laws or regulations) may have a
material impact on the Group's business and financial position. Compliance
with such laws and regulations may impose additional costs on the Group's
business and could potentially prohibit its business practices and/or
operations. In addition, in some countries Governments are facing greater
pressure on public finances, leading to a risk of increased taxation.

If BG Group employees, or anyone working on its behalf, violate laws and
regulations in jurisdictions in which the Group operates (including US or UK
laws and regulations with extraterritorial application), the Group may face
reputational damage and be subject to significant penalties, including fines
or loss of operating licences.

Resources discovery, estimation and development 

Delivery of production growth depends upon a number of factors, including:
successful discovery and development of hydrocarbon resources; the acquisition
of sufficient new resource opportunities; sufficient field appraisal;
reservoir quality and performance; accurate interpretation of received data;
drilling conditions or costs; rig availability; and the availability of
adequate human or technical resources.

Competition for exploration and development rights, and accessing gas and oil
resources, is intense. A failure to secure appropriate new resources could
impact upon the Group's production growth prospects beyond the next decade.

Gas and oil reserves and resources cannot be measured exactly since estimation
of reserves and resources involves subjective judgments, may not align with
the estimates of total reserves and resources of BG Group's joint venture
partners (including operators), and may be subject to downward revision.

Factors which may lead to such revisions include: a decline in the price of
oil or gas which may make reserves and/or resources uneconomic to develop and
therefore not classifiable under current reporting requirements; changes in
gas and oil prices in fields subject to Production Sharing Contracts which may
result in changes to entitlements, and therefore reserves; the quality and
quantity of the Group's geological, technical and economic data may prove to
be inaccurate; and the Group's ability to interpret that data appropriately
may be limited. In addition actual production performance from reservoirs may
be lower than estimated. Changes in tax rules and other government regulations
may result in reserves or resources becoming uneconomic.

                   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  2011 Annual  Report  and 
Accounts.  Since the publication of the  2011 Annual Report and Accounts on  4 
April 2012 the following changes have taken place:

Sir Robert Wilson stood down as Chairman and from the Board of BG Group plc at
the conclusion of the Annual General Meeting held on 16 May 2012.

Andrew Gould was appointed as Chairman of BG Group plc on 16 May 2012.

By order of the Board

 

Sir Frank Chapman
Chief Executive

 

Fabio Barbosa

Chief Financial Officer

 

                                 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 and opinions reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations and opinions will
prove to have been correct. Actual results and market conditions 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 'Principal
risks and uncertainties' included in BG Group plc's Annual Report and Accounts
2011. 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,
whether as a result of new information, future events or otherwise, except to
the extent legally required.

 

                                Going Concern

The Directors are satisfied that the Group's activities are sustainable for
the foreseeable future, and that the business is a going concern and the
financial statements have therefore been prepared on this basis.

                                       

                               Related Parties

Information on related party transactions is provided in note 12, page 44.

 

                      Presentation of Non-GAAP measures

  Business Performance

'Business Performance' excludes discontinued operations and 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. 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 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 and where practical have
been designated as formal hedges. However, IAS 39 does not always allow the
matching of 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, together with any
unrealised gains and losses associated with discontinued hedge accounting
relationships that continue to represent economic hedges, 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 represent economic hedges but cannot be designated as hedges
under IAS 39, unrealised movements in fair value, together with foreign
exchange movements associated with the underlying borrowings, 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, impairments of non-current assets and certain
other exceptional items, 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 statement (page
26), note 2 (page 35) and note 3 (page 36).

  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 36).

  Net borrowings

BG Group provides a reconciliation of net borrowings and an analysis of the
amounts included within net borrowings as this is an important liquidity
measure for the Group.

 

                  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 2012, which comprises the consolidated income statement, consolidated
statement of comprehensive income, consolidated balance sheet, consolidated
statement of changes in equity, 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 misstatements
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 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 2012 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 Accountants
26 July 2012
London

 

a)   The maintenance and integrity of the BG Group website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website. 

 

b)   Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.

                        Consolidated Income Statement

Second Quarter

                                          2012                               2011              
                                            Disposals,                     Disposals,
                                           re-measure-                    re-measure-
                                             ments and                      ments and
                                           impairments           Business impairments
                                  Business       (Note   Total   Perform-       (Note   Total
                          Perform-ance^(a)      2)^(a)  Result   ance^(a)      2)^(a)  Result
                    Notes               $m          $m      $m         $m          $m      $m  
  Group revenue                      5 567           -   5 567      5 116           -   5 116  
  Other operating
  income                2               27         203     230        (1)         189     188  
  Group revenue and
  other operating
  income                3            5 594         203   5 797      5 115         189   5 304  
  Operating costs                  (3 736)           - (3 736)    (3 083)           - (3 083)  
  Profits and
  losses on
  disposal of
  non-current
  assets and
  impairments           2                -     (1 511) (1 511)          -          24      24  
  Operating
  profit/(loss)^(b)     3            1 858     (1 308)     550      2 032         213   2 245  
  Finance income     2, 4               29         131     160         20         (4)      16  
  Finance costs      2, 4             (58)       (123)   (181)       (63)        (26)    (89)  
  Share of post-tax
  results from
  joint ventures
  and associates        3               80           -      80         75           -      75  
  Profit/(loss)
  before tax                         1 909     (1 300)     609      2 064         183   2 247  
  Taxation           2, 5            (822)         258   (564)      (913)        (60)   (973)  
  Profit/(loss) for
  the period from
  continuing
  operations            3            1 087     (1 042)      45      1 151         123   1 274  
  Profit/(loss) for
  the period from
  discontinued
  operations            6                -         252     252          -         (2)     (2)  
  Profit/(loss) for
  the period                         1 087       (790)     297      1 151         121   1 272  
  Attributable to:                                                                             
  BG Group
  shareholders                                                                              1
  (earnings)                         1 073       (790) 283^(c)      1 120         123 243^(c)  
  Non-controlling
  interest                              14           -      14         31         (2)      29  
                                     1 087       (790)     297      1 151         121   1 272  
  Earnings per
  share continuing
  operations -
  basic                 7            31.6c     (30.7c)    0.9c      33.1c        3.7c   36.8c  
  Earnings per
  share
  discontinued
  operations -
  basic                                  -        7.4c    7.4c          -      (0.1c)  (0.1c)  
  Earnings per
  share continuing
  operations -
  diluted               7            31.4c     (30.5)c    0.9c      32.8c        3.7c   36.5c  
  Earnings per
  share
  discontinued
  operations -
  diluted                                -        7.4c    7.4c          -      (0.1c)  (0.1c)  
  Total operating
  profit/(loss)
  including share
  of pre-tax
  operating results
  from joint
  ventures and
  associates^(d)        3            1 976     (1 308)     668      2 152         213   2 365  

a)  See Presentation of Non-GAAP measures (page 23) for an explanation of
results excluding disposals, certain re-measurements and impairments and
presentation of the results of joint ventures and associates.

b) Operating profit/(loss) is before share of results from joint ventures and
associates.

c)  Comprises earnings from continuing operations of $31 million (2011 $1 245
million) and from discontinued operations of $252 million (2011 $(2) million).

d) This measurement is shown by BG Group as it is used as a means of measuring
the underlying performance of the business.

The notes on pages 34 to 44 form an integral part of these condensed financial
statements.

                        Consolidated Income Statement

Half Year

                                          2012                               2011              
                                            Disposals,                     Disposals,
                                           re-measure-                    re-measure-
                                             ments and                      ments and
                                           impairments           Business impairments
                                  Business       (Note   Total   Perform-       (Note   Total
                          Perform-ance^(a)      2)^(a)  Result   ance^(a)      2)^(a)  Result
                    Notes               $m          $m      $m         $m          $m      $m  
  Group revenue                     11 347           -  11 347      9 909           -   9 909  
  Other operating
  income                2               23         150     173          9       (219)   (210)  
  Group revenue and
  other operating
  income                3           11 370         150  11 520      9 918       (219)   9 699  
  Operating costs                  (7 270)           - (7 270)    (6 047)           - (6 047)  
  Profits and
  losses on
  disposal of
  non-current
  assets and
  impairments           2                -     (1 514) (1 514)          -          19      19  
  Operating
  profit/(loss)^(b)     3            4 100     (1 364)   2 736      3 871       (200)   3 671  
  Finance income     2, 4               78         149     227         39          70     109  
  Finance costs      2, 4            (133)       (146)   (279)      (147)        (95)   (242)  
  Share of post-tax
  results from
  joint ventures
  and associates        3              161           -     161        154           -     154  
  Profit/(loss)
  before tax                         4 206     (1 361)   2 845      3 917       (225)   3 692  
  Taxation           2, 5          (1 836)         275 (1 561)    (1 924)         125 (1 799)  
  Profit/(loss) for
  the period from
  continuing
  operations            3            2 370     (1 086)   1 284      1 993       (100)   1 893  
  Profit/(loss) for
  the period from
  discontinued
  operations            6                -         254     254          -           -       -  
  Profit/(loss) for
  the period                         2 370       (832)   1 538      1 993       (100)   1 893  
  Attributable to:                                                                             
  BG Group
  shareholders                                               1                              1
  (earnings)                         2 340       (836) 504^(c)      1 939        (99) 840^(c)  
  Non-controlling
  interest                              30           4      34         54         (1)      53  
                                     2 370       (832)   1 538      1 993       (100)   1 893  
  Earnings per
  share continuing
  operations -
  basic                 7            68.9c     (32.1c)   36.8c      57.2c      (2.9c)   54.3c  
  Earnings per
  share
  discontinued
  operations -
  basic                                  -        7.5c    7.5c          -           -       -  
  Earnings per
  share continuing
  operations -
  diluted               7            68.5c     (31.9c)   36.6c      56.9c      (2.9c)   54.0c  
  Earnings per
  share
  discontinued
  operations -
  diluted                                -        7.4c    7.4c          -           -       -  
  Total operating
  profit/(loss)
  including share
  of pre-tax
  operating results
  from joint
  ventures and
  associates^(d)        3            4 349     (1 364)   2 985      4 117       (200)   3 917  

a) See Presentation of Non-GAAP measures (page 23) for an explanation of
results excluding disposals, certain re-measurements and impairments and
presentation
of the results of joint ventures and associates.

b) Operating profit/(loss) is before share of results from joint ventures and
associates.

c)  Comprises earnings from continuing operations of $1 250 million (2011 $1
840 million) and from discontinued operations of $254 million (2011 $nil).

d) This measurement is shown by BG Group as it is used as a means of measuring
the underlying performance of the business.

The notes on pages 34 to 44 form an integral part of these condensed financial
statements.

For information on dividends paid in the period, see note 9 (page 43).

                Consolidated Statement of Comprehensive Income

Second Quarter                                                      Half Year
   2012   2011                                                      2012  2011
     $m     $m                                                        $m    $m
    297  1 272   Profit for the period                             1 538 1 893
                                                                              
   (19)     96   Hedge adjustments net of tax^(a)                    108 (248)
                 Fair value movements on 'available-for-sale'
   (54)    (2)   assets net of tax^(b)                               (9)   (3)
  (543)    308   Currency translation adjustments                  (585)   269
  (616)    402   Other comprehensive income/(expense), net of tax  (486)    18
                                                                              
                 Total comprehensive income/(expense) for the
  (319)  1 674   period                                            1 052 1 911
                                                                              
                 Attributable to:                                             
  (308)  1 637   BG Group shareholders                             1 037 1 849
   (11)     37   Non-controlling interest                             15    62
  (319)  1 674                                                     1 052 1 911

a)  Income tax relating to hedge adjustments is a $7 million credit for the
quarter (2011 $36 million charge) and a $50 million charge for the half year
(2011 $77 million credit).

b) Income tax relating to fair value movements on 'available-for-sale' assets
is a $24 million credit for the quarter (2011 $1 million credit) and a $4
million credit for the half year (2011 $2 million credit).

The notes on pages 34 to 44 form an integral part of these condensed financial
statements.

                          Consolidated Balance Sheet

                                                       As at
                                                                As at   As at 
                                                      30 Jun   31 Dec   30 Jun
                                                        2012   2011       2011
                                                          $m       $m      $m 
                                             Assets                           
Non-current assets                                                            
Goodwill                                                  26      752      879
Other intangible assets                                4 545    6 159    7 934
Property, plant and equipment                         38 974   37 316   31 269
Investments                                            2 335    3 044    2 914
Deferred tax assets                                    1 040      589      612
Trade and other receivables                              894      695      254
Commodity contracts and other derivative financial
instruments                                              379      366      401
                                                      48 193   48 921   44 263
Current assets                                              
Inventories                                              722      768      724
Trade and other receivables                            6 656    7 375    8 136
Current tax receivable                                   140      141      296
Commodity contracts and other derivative financial
instruments                                              223      331      441
Cash and cash equivalents                              5 332    3 601    2 203
                                                      13 073   12 216   11 800
Assets classified as held for sale^(a)                 3 097      245      193
Total assets                                          64 363   61 382   56 256
                                                            
Liabilities                                                 
Current liabilities                                         
Borrowings                                             (600)  (1 160)  (3 247)
Trade and other payables                             (5 330)  (5 342)  (5 605)
Current tax liabilities                              (1 483)  (1 238)  (1 848)
Commodity contracts and other derivative financial
instruments                                            (889)  (1 345)  (1 671)
                                                     (8 302)  (9 085) (12 371)
Non-current liabilities                                     
Borrowings                                          (15 031) (13 977)  (8 805)
Trade and other payables                               (181)     (72)     (80)
Commodity contracts and other derivative financial
instruments                                            (754)    (696)    (924)
Deferred income tax liabilities                      (4 309)  (3 961)  (3 645)
Retirement benefit obligations                         (135)    (214)    (278)
Provisions for other liabilities and charges         (3 624)  (3 603)  (1 876)
                                                    (24 034) (22 523) (15 608)
Liabilities associated with assets classified as
held for sale^(a)                                    (1 702)     (99)    (101)
Total liabilities                                   (34 038) (31 707) (28 080)
Net assets                                            30 325   29 675   28 176
Equity                                                      
Total shareholders' equity                            30 031   29 384   27 855
Non-controlling interest in equity                       294      291      321
Total equity                                          30 325   29 675   28 176

a)  As at 30 June 2012 assets classified as held for sale include Comgás in
Brazil and GNL Quintero S.A. in Chile.

The notes on pages 34 to 44 form an integral part of these condensed financial
statements.

                 Consolidated Statement of Changes in Equity

                   Called   Share
                       up premium
                    share account Hedging Translation    Other Retained       Non-con-trolling
                  capital         reserve     reserve reserves earnings Total         interest Total
                       $m      $m      $m          $m       $m       $m    $m               $m    $m
  Equity as at 31                                                          29                     29
  December 2011       577     584   (642)       2 508    2 710   23 647   384              291   675
  Total
  comprehensive
  income for the
  period                -       -     161       (619)        -    1 495 1 037               15 1 052
  Issue of shares       -      19       -           -        -        -    19                -    19
  Purchase of own
  shares                -       -       -           -        -     (16)  (16)                -  (16)
  Adjustment in
  respect of
  employee share
  schemes               -       -       -           -        -       50    50                -    50
  Dividends on
  ordinary shares       -       -       -           -        -    (443) (443)                - (443)
  Dividends to
  non-controlling
  interest              -       -       -           -        -        -     -             (12)  (12)
  Equity as at 30                                                          30                     30
  June 2012           577     603   (481)       1 889    2 710   24 733   031              294   325
                                                                                                    
                   Called   Share
                       up premium
                    share account Hedging Translation    Other Retained       Non-con-trolling
                  capital         reserve     reserve reserves earnings Total         interest Total
                       $m      $m      $m          $m       $m       $m    $m               $m    $m
  Equity as at 31                                                          26                     26
  December 2010       576     537   (457)       2 877    2 710   20 085   328              356   684
  Total
  comprehensive
  income for the
  period                -       -   (312)         324        -    1 837 1 849               62 1 911
  Issue of shares       1      26       -           -        -        -    27                -    27
  Purchase of own
  shares                -       -       -           -        -     (25)  (25)                -  (25)
  Adjustment in
  respect of
  employee share
  schemes               -       -       -           -        -       77    77                -    77
  Dividends on
  ordinary shares       -       -       -           -        -    (401) (401)                - (401)
  Dividends to
  non-controlling
  interest              -       -       -           -        -        -     -             (97)  (97)
  Equity as at 30                                                          27                     28
  June 2011           577     563   (769)       3 201    2 710   21 573   855              321   176

The notes on pages 34 to 44 form an integral part of these condensed financial
statements.

                       Consolidated Cash Flow Statement

Second Quarter                                                    Half Year
   2012  2011                                                     2012  2011  
     $m    $m                                                       $m    $m  
                  Cash flows from operating activities                        
    861   2 245   Profit before tax^(a)                          3 100   3 693
                  Share of post-tax results from joint
   (80)    (75)   ventures and associates                        (161)   (154)
                  Depreciation of property, plant and
                  equipment and amortisation of intangible
    673     593   assets                                         1 314   1 133
                  Fair value movements in commodity based
  (181)   (141)   contracts                                      (176)     253
                  Profits and losses on disposal of
  1 257    (23)   non-current assets and impairments^(b)         1 259    (19)
                  Unsuccessful exploration expenditure written
    163      40   off                                              203     123
   (33)    (28)   Decrease in provisions                         (110)    (66)
  (158)    (15)   Finance income                                 (227)   (110)
    181      89   Finance costs                                    279     242
     20      19   Share-based payments                              40      40
    418   (123)   Decrease/(increase) in working capital           245   (755)
  3 121   2 581   Cash generated by operations                   5 766   4 380
  (729)   (550)   Income taxes paid                            (1 322) (1 367)
  2 392   2 031   Net cash inflow from operating activities      4 444   3 013
                  Cash flows from investing activities                        
                  Dividends received from joint ventures and
     35      84   associates                                        52      95
                  Proceeds from disposal of property, plant
                  and equipment, intangible assets and
  1 089      97   investments                                    1 089     195
                  Purchase of property, plant and equipment
(2 305) (2 696)   and intangible assets                        (4 734) (4 956)
   (10)    (38)   Loans to joint ventures and associates          (11)    (88)
                  Repayments from joint ventures and
     55       7   associates                                       354      50
                  Investments in subsidiaries, joint ventures
   (70)    (17)   and associates                                 (145)   (113)
  (325)       -   Other loan advances                            (325)       -
(1 531) (2 563)   Net cash outflow from investing activities   (3 720) (4 817)
                  Cash flows from financing activities                        
  (179)    (72)   Net interest paid^(c)                          (229)   (128)
  (447)   (405)   Dividends paid                                 (448)   (406)
   (12)    (35)   Dividends paid to non-controlling interest      (13)    (37)
                  Net proceeds from issue and repayment of
  1 688   2 044   borrowings                                     1 787   2 052
      8       9   Issue of shares                                   19      27
      -       1   Purchase of own shares                          (16)    (25)
  1 058   1 542   Net cash inflow from financing activities      1 100   1 483
                  Net increase/(decrease) in cash and cash
  1 919   1 010   equivalents^(d)                                1 824   (321)
                  Cash and cash equivalents at beginning of
  3 496   1 159   period^(e)                                     3 601   2 551
   (35)      35   Effect of foreign exchange rate changes         (45)    (26)
                  Cash and cash equivalents at end of
  5 380   2 204   period^(e)                                     5 380   2 204

a)  Includes profit/(loss) before tax from discontinued operations for the
quarter of $252 million (2011 $(2) million) and for the half year of $255
million (2011 $1 million).

b)   Includes profit on disposal of discontinued operations for the quarter of
$254 million (2011 $(1) million) and for the half year of $255 million (2011
$nil).

c)  Includes capitalised interest for the quarter of $106 million (2011 $38
million) and for the half year of $205 million (2011 $67 million).

d)  Cash and cash equivalents comprise cash and short-term liquid investments
that are readily convertible to cash.

e)  The balance at 30 June 2012 includes cash and cash equivalents of $5 332
million (31 December 2011 $3 601 million; 30 June 2011 $2 203 million) and
cash included within assets held for sale of $48 million (31 December 2011
$nil; 30 June 2011 $1 million).

The notes on pages 34to 44form an integral part of these condensed financial
statements.

                                    Notes

1. Basis of preparation

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 2012. The financial statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006, and
should be read in conjunction with the Annual Report and Accounts for the year
ended 31 December 2011 which have been prepared in accordance with IFRS 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 2011 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 Sections 498(2) or 498(3) of
the UK Companies Act 2006. 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 set out in the 2011 Annual Report and Accounts. 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:

· The re-measurement of certain financial instruments; and

· Profits and losses on the disposal and impairment of non-current assets and
businesses and certain other exceptional items.

These items, which are detailed in note 2 to the financial statements (page
35), 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.

New accounting standards and interpretations

A number of amendments to accounting standards issued by the IASB are
applicable from 1 January 2012. They have not had a material impact on the
Group's financial statements for the half year ended 30 June 2012.

2. Disposals, re-measurements and impairments

Second Quarter                                                     Half Year
    2012  2011                                                      2012  2011
      $m    $m                                                        $m    $m
                 Revenue and other operating income -
     203   189   re-measurements of commodity based contracts        150 (219)
                 Profits and losses on disposal of non-current
 (1 511)    24   assets and impairments                          (1 514)    19
                 Net finance income/(costs) - re-measurements of
       8  (30)   financial instruments                                 3  (25)
     258  (60)   Taxation                                            275   125
 (1 042)   123                                                   (1 086) (100)
       -     2   Non-controlling interest                            (4)     1
 (1 042)   125   Impact on earnings - continuing operations      (1 090)  (99)

Second quarter and half year: Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a
credit of $203 million for the quarter (2011 $189 million credit), of which a
credit of $95 million (2011 $48 million credit) represents non-cash
mark-to-market movements on certain long-term gas contracts. For the half
year, a credit of $150 million in respect of re-measurements is included
within revenue and other operating income (2011 $219 million charge), of which
a credit of $72 million represents non-cash mark-to-market movements on
certain long-term gas contracts   (2011 $3 million charge). 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. In addition, re-measurements include a $108 million
credit for the quarter (2011 $141 million credit) and a $78 million credit for
the half year (2011 $216 million charge) representing unrealised
mark-to-market movements associated with economic hedges.

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

The second quarter included a pre-tax charge of $1 800 million (post-tax $1
295 million charge) in respect of the impairment of certain assets associated
with the shale gas business in the USA, as a result of the weaker outlook for
US natural gas prices.

In June 2012, the Group disposed of 10% of its interest in the Karachaganak
gas-condensate project for $651 million in cash, additional capacity in the
CPC pipeline, and the final settlement of cost recovery and other claims. This
resulted in the recognition of a pre-tax profit on disposal of $391 million
(post-tax $155 million). 

Other disposals and impairments in 2012 resulted in a pre-tax charge to the
income statement of $102 million in the second quarter (post-tax $43 million
charge) and a pre-tax charge of $105 million in the half year (post-tax $45
million charge).

In April 2011, BG Group signed and completed a Sale and Purchase Agreement
(SPA) with its partners in Genting Sanyen Power in Malaysia for them to
acquire the Group's 20% interest in the power plant. This resulted in a pre
and post-tax profit of $28 million in the second quarter of 2011. Other
disposals and write-offs resulted in a pre and post-tax charge of $4 million
in the second quarter of 2011 and a pre-tax charge of $9 million in the first
half of 2011 (post-tax  $4 million credit).

Second quarter and half year: Net finance costs

Re-measurements presented in net finance costs include foreign exchange
movements on certain borrowings, partly offset by certain derivatives used to
hedge foreign exchange and interest rate risk.

Second quarter and half year: Taxation

During the first half of 2011, taxation included a $47 million credit which
primarily relates to the impact of the increase in UK North Sea taxation on
re-measurement balances.

 

3. Segmental analysis

Profit for the period                            Disposals,
                                 Business    re-measurements and
Analysed by operating segment   Performance      impairments     Total Result
                                2012  2011         2012     2011  2012  2011  
Second Quarter                    $m    $m           $m       $m    $m    $m  
Group revenue                                                                 
Exploration and Production     2 951   2 785          -        - 2 951   2 785
Liquefied Natural Gas          1 900   1 811          -        - 1 900   1 811
Transmission and Distribution    926     868          -        -   926     868
Less: intra-group sales        (210)   (348)          -        - (210)   (348)
Group revenue                  5 567   5 116          -        - 5 567   5 116
Other operating income^(a)        27     (1)        203      189   230     188
Group revenue and other
operating income               5 594   5 115        203      189 5 797   5 304
Operating profit/(loss) before share of results from joint
ventures and associates
Exploration and Production     1 258   1 413    (1 402)       68 (144)   1 481
Liquefied Natural Gas            498     458         96      117   594     575
Transmission and Distribution     90     149        (2)       28    88     177
Other activities                  12      12          -        -    12      12
                               1 858   2 032    (1 308)      213   550   2 245
Share of pre-tax operating results from joint ventures and
associates
Exploration and Production         3       7          -        -     3       7
Liquefied Natural Gas             96      95          -        -    96      95
Transmission and Distribution     19      18          -        -    19      18
                                 118     120          -        -   118     120
Total operating profit/(loss)                                                 
Exploration and Production     1 261   1 420    (1 402)       68 (141)   1 488
Liquefied Natural Gas            594     553         96      117   690     670
Transmission and Distribution    109     167        (2)       28   107     195
Other activities                  12      12          -        -    12      12
                               1 976   2 152    (1 308)      213   668   2 365
Net finance (costs)/income                                                    
Finance income                    29      20        131      (4)   160      16
Finance costs                   (58)    (63)      (123)     (26) (181)    (89)
Share of joint ventures and
associates                       (9)    (16)          -        -   (9)    (16)
                                (38)    (59)          8     (30)  (30)    (89)
Taxation                                                                      
Taxation                       (822)   (913)        258     (60) (564)   (973)
Share of joint ventures and
associates                      (29)    (29)          -        -  (29)    (29)
                               (851)   (942)        258     (60) (593) (1 002)
Profit/(loss) for the period
from continuing operations     1 087   1 151    (1 042)      123    45   1 274
Attributable to:                                                              
BG Group shareholders
(earnings)                     1 073   1 120    (1 042)      125    31   1 245
Non-controlling interest          14      31          -      (2)    14      29
                               1 087   1 151    (1 042)      123    45   1 274

a) Business Performance Other operating income is attributable to segments as
follows: E&P $12 million (2011 $2 million), LNG $6 million (2011 $(3) million)
and T&D
$9 million (2011 $nil).

 

3. Segmental analysis continued

                                               Disposals,
                              Business     re-measurements and
                            Performance        impairments      Total Result
                             2012  2011          2012     2011    2012  2011  
Half Year                      $m     $m           $m       $m      $m    $m  
Group revenue^(a)                                                             
Exploration and
Production                  5 781    5 303          -        -   5 781   5 303
Liquefied Natural Gas       4 201    3 526          -        -   4 201   3 526
Transmission and
Distribution                1 828    1 653          -        -   1 828   1 653
Less: intra-group sales     (463)    (573)          -        -   (463)   (573)
Group revenue              11 347    9 909          -        -  11 347   9 909
Other operating
income^(b)                     23        9        150    (219)     173   (210)
Group revenue and other
operating income           11 370    9 918        150    (219)  11 520   9 699
Operating profit/(loss) before share of results from joint
ventures and associates
Exploration and
Production                  2 695    2 664    (1 429)      (2)   1 266   2 662
Liquefied Natural Gas       1 201      926         69    (226)   1 270     700
Transmission and
Distribution                  198      277        (4)       28     194     305
Other activities                6        4          -        -       6       4
                            4 100    3 871    (1 364)    (200)   2 736   3 671
Share of pre-tax operating results from joint ventures and
associates
Exploration and
Production                     15       14          -        -      15      14
Liquefied Natural Gas         205      197          -        -     205     197
Transmission and
Distribution                   29       35          -        -      29      35
                              249      246          -        -     249     246
Total operating
profit/(loss)                                                                 
Exploration and
Production                  2 710    2 678    (1 429)      (2)   1 281   2 676
Liquefied Natural Gas       1 406    1 123         69    (226)   1 475     897
Transmission and
Distribution                  227      312        (4)       28     223     340
Other activities                6        4          -        -       6       4
                            4 349    4 117    (1 364)    (200)   2 985   3 917
Net finance
(costs)/income                                                                
Finance income                 78       39        149       70     227     109
Finance costs               (133)    (147)      (146)     (95)   (279)   (242)
Share of joint ventures
and associates               (24)     (30)          -        -    (24)    (30)
                             (79)    (138)          3     (25)    (76)   (163)
Taxation                                                                      
Taxation                  (1 836)  (1 924)        275      125 (1 561) (1 799)
Share of joint ventures
and associates               (64)     (62)          -        -    (64)    (62)
                          (1 900)  (1 986)        275      125 (1 625) (1 861)
Profit/(loss) for the
period from continuing
operations                  2 370    1 993    (1 086)    (100)   1 284   1 893
Attributable to:                                                              
BG Group shareholders
(earnings)                  2 340    1 939    (1 090)     (99)   1 250   1 840
Non-controlling interest       30       54          4      (1)      34      53
                            2 370    1 993    (1 086)    (100)   1 284   1 893

a)  External sales are attributable to segments as follows: E&P $5 464 million
(2011 $4 730 million), LNG $4 055 million (2011 $3 526 million) and T&D $1 828
million
(2011 $1 653 million). Intra-group sales are attributable to segments as
follows: E&P $317 million (2011 $573 million) and LNG $146 million (2011
$nil).

b)  Business Performance Other operating income is attributable to segments as
follows: E&P $8 million (2011 $(6) million), LNG $5 million (2011 $15 million)
and T&D
$10 million (2011 $nil).

3. Segmental analysis continued

                                                  Disposals,
                                   Business   re-measurements and
                                  Performance     impairments     Total Result
                                   2012  2011       2012     2011   2012  2011
Second Quarter                       $m    $m         $m       $m     $m    $m
Total operating profit/(loss)                                                 
Exploration and Production        1 261 1 420    (1 402)       68  (141) 1 488
Liquefied Natural Gas               594   553         96      117    690   670
Transmission and Distribution       109   167        (2)       28    107   195
                                  1 964 2 140    (1 308)      213    656 2 353
Other activities                     12    12          -        -     12    12
                                  1 976 2 152    (1 308)      213    668 2 365
Less: Share of pre-tax operating
results
from joint ventures and
associates                                                         (118) (120)
Add: Share of post-tax results
from
joint ventures and associates                                         80    75
Net finance costs                                                   (21)  (73)
Profit before tax                                                    609 2 247
Taxation                                                           (564) (973)
Profit for the period from
continuing operations                                                 45 1 274

 

                                               Disposals,
                                Business   re-measurements and
                               Performance     impairments      Total Result
                                2012  2011       2012     2011    2012    2011
Half Year                         $m    $m         $m       $m      $m      $m
Total operating profit/(loss)                                                 
Exploration and Production     2 710 2 678    (1 429)      (2)   1 281   2 676
Liquefied Natural Gas          1 406 1 123         69    (226)   1 475     897
Transmission and Distribution    227   312        (4)       28     223     340
                               4 343 4 113    (1 364)    (200)   2 979   3 913
Other activities                   6     4          -        -       6       4
                               4 349 4 117    (1 364)    (200)   2 985   3 917
Less: Share of pre-tax
operating results
from joint ventures and
associates                                                       (249)   (246)
Add: Share of post-tax results
from
joint ventures and associates                                      161     154
Net finance costs                                                 (52)   (133)
Profit before tax                                                2 845   3 692
Taxation                                                       (1 561) (1 799)
Profit for the period from
continuing operations                                            1 284   1 893

 

 

4. Net finance (costs)/income

Second Quarter                                                   Half Year
   2012   2011                                                   2012  2011
     $m     $m                                                     $m    $m
  (113)   (55)   Interest payable^(a)                           (236) (128)
   (26)   (27)   Interest on obligations under finance leases    (52)  (53)
    106     38   Interest capitalised                             205    67
   (25)   (19)   Unwinding of discount on provisions^(b)         (50)  (33)
  (123)   (26)   Disposals, re-measurements and impairments^(c) (146)  (95)
  (181)   (89)   Finance costs                                  (279) (242)
     29     20   Interest receivable^(a)                           78    39
    131    (4)   Disposals, re-measurements and impairments^(c)   149    70
    160     16   Finance income                                   227   109
   (21)   (73)   Net finance (costs)/income^(d)                  (52) (133)

a)  In 2012, interest receivable includes foreign exchange gains of $18
million for the quarter and foreign exchange gains of $9 million for the half
year. In 2011, interest payable includes foreign exchange gains of $7 million
for the quarter and foreign exchange losses of $15 million for the half year.

b)  Relates to the unwinding of the discount on provisions and amounts in
respect of pension obligations which represent the unwinding of discount on
the plans' liabilities offset by the expected return on the plans' assets.

c)  Net finance (costs)/income in disposals, re-measurements and impairments
for the quarter of $8 million (2011 $(30) million) and for the half year of $3
million
(2011 $(25) million) is included in note 2 (page 35) and principally reflects
foreign exchange movements on certain borrowings, partly offset by
mark-to-market movements on certain derivatives used to hedge foreign exchange
and interest rate risk.

d)  Excludes Group share of net finance costs from joint ventures and
associates for the quarter of $9 million (2011 $16 million) and for the half
year of $24 million
(2011 $30 million).

5. Taxation

The tax charge for the second                     Disposals,
quarter was as follows:            Business   re-measurements and
                                  Performance     impairments     Total Result
                                   2012  2011      2012      2011   2012  2011
Second Quarter                       $m    $m        $m        $m     $m    $m
Tax charge/(credit) for the         822   913     (258)        60    564   973
period excluding share of
taxation from joint ventures and
associates
Share of taxation from joint
ventures and associates              29    29         -         -     29    29
Total including share of taxation
from joint ventures and
associates                          851   942     (258)        60    593 1 002

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Taxation continued

The tax charge for the half year                  Disposals,
was as follows:                    Business   re-measurements and
                                  Performance     impairments     Total Result
                                   2012  2011      2012      2011   2012  2011
Half Year                            $m    $m        $m        $m     $m    $m
Tax charge/(credit) for the
period                            1 836 1 729     (275)      (78)  1 561 1 651
Prior period taxation^(a)             -   195         -      (47)      -   148
Total excluding share of taxation
from joint ventures and
associates                        1 836 1 924     (275)     (125)  1 561 1 799
Share of taxation from joint
ventures and associates              64    62         -         -     64    62
Total including share of taxation
from joint ventures and
associates                        1 900 1 986     (275)     (125)  1 625 1 861

a)  Prior period taxation relates to the revision of deferred tax balances at
1 January 2011, primarily as a result of the increase in UK North Sea taxation
announced in
March 2011.

Business Performance taxation for the half year, excluding prior period
taxation but including share of taxation from joint ventures and associates,
was $1 900 million (2011 $1 791 million).The effective tax rate of 44.5% for
the half year is based on the best estimate of the weighted average annual
income tax rate expected for the full year.

6. Discontinued operations

The post-tax profit/loss of the businesses comprising discontinued operations,
including profits and losses on disposals and impairments, was a $252 million
gain for the second quarter (2011 $2 million loss) and a $254 million gain for
the half year (2011 $nil).

In May 2012, the Group disposed of its 40% equity interest in two gas-fired
power generation plants in the Philippines to its partner, First Gen
Corporation, for net cash proceeds of $360 million. The sale and purchase
agreement, completed on signing, covers the 1 000 megawatt Santa Rita power
plant and the 500 megawatt San Lorenzo power plant, both on the island of
Luzon. This resulted in a pre and post-tax profit of $252 million in the
second quarter of 2012.

7. Earnings per ordinary share - continuing operations

     Second Quarter                                          Half Year
    2012        2011                                      2012        2011
       cents       cents                                     cents       cents
         per         per                                       per         per
   $m  share    $m share                                 $m  share    $m share
                           Earnings - continuing
                           operations excluding
                           disposals, re-measurements
1 073   31.6 1 120  33.1   and impairments            2 340   68.9 1 939  57.2
                           Disposals, re-measurements
                           and impairments (after tax
   (1                      and non-controlling           (1
 042) (30.7)   125   3.7   interest)                   090) (32.1)  (99) (2.9)
                           Earnings - continuing
   31    0.9 1 245  36.8   operations                 1 250   36.8 1 840  54.3

Basic earnings per share calculations in 2012 are based on the weighted
average number of shares in issue of 3 395 million for the quarter and 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 3 415 million for the quarter and half year, being the weighted
average number of ordinary shares in issue during the period as adjusted for
dilutive equity instruments.

8. Reconciliation of net borrowings^(a) - Half Year

                                                    $m
Net borrowings as at 31 December 2011         (11 336)
Net increase in cash and cash equivalents        1 824
Cash inflow from changes in borrowings         (1 787)
Inception of finance lease liabilities/assets        2
Foreign exchange and other re-measurements          69
Net borrowings classified as held for sale         988
Net borrowings as at 30 June 2012             (10 240)

Net borrowings attributable to Comgás as at 30 June 2012 were $nil (31
December 2011 $963 million) with
$998 million included in assets and liabilities classified as held for sale.

As at 30 June 2012, BG Group's share of the net borrowings in joint ventures
and associates amounted to approximately $1.5 billion, including BG Group
shareholder loans of approximately $1.1 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.

a)  Net borrowings are defined on page 48.

 

Net borrowings comprise:

                                                     As at    As at
                                                    30 Jun   31 Dec
                                                      2012     2011

                                                        $m       $m
Amounts receivable/(due) within one year                           
Cash and cash equivalents                            5 332    3 601
Overdrafts, loans and finance leases                 (600)  (1 160)
Derivative financial instruments^(a)                     3     (45)
                                                     4 735    2 396
Amounts receivable/(due) after more than one year                  
Loans and finance leases^(b)                      (14 836) (13 784)
Derivative financial instruments^(a)                 (139)       52
                                                  (14 975) (13 732)
Net borrowings                                    (10 240) (11 336)

a)  These items are included within commodity contracts and other derivative
financial instrument balances on the balance sheet.

b)  Includes finance lease receivable of $195 million (2011 $193 million)
included within non-current assets on the balance sheet.

8. Reconciliation of net borrowings - Half Year continued

Liquidity and Capital Resources

  All the information below is as at 30 June 2012

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

BGEH had a $4.0 billion US Commercial Paper Programme, of which $3.92 billion
was unutilised, and a $2.0 billion Eurocommercial Paper Programme, which was
unutilised. BGEH also had a $15.0 billion Euro Medium Term Note Programme, of
which $7.98 billion was unutilised.

BGEH had aggregate committed revolving borrowing facilities of $5.0 billion,
of which $2.32 billion expires in 2013, $2.18 billion in 2016 and $0.5 billion
in 2017. 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 £45 million and credit facilities of $20
million, all of which were unutilised.

Comgás had committed borrowing facilities of Brazilian Real (BRL) 1 755
million, of which BRL 5 million was unutilised.

9. Dividends

 

                                                       Half Year
                                                  2012          2011
                                                      cents         cents
                                               $m per share  $m per share
Prior year final dividend, paid in the period 443     12.96 401     11.78

The final dividend of 12.96 cents per ordinary share ($443 million) in respect
of the year ended 31 December 2011 was paid on 25 May 2012 to shareholders on
the register at the close of business on 13 April 2012. The interim dividend
of 11.88 cents per ordinary share ($403 million) in respect of the year ending
31 December 2012 is payable on 7 September 2012 to shareholders on the
register as at 3 August 2012.

 

10. Quarterly information: earnings and earnings per share

                                           2012  2011      2012      2011
                                                      cents per cents per
                                             $m    $m     share     share
First quarter                                                            
   Total Result - continuing operations   1 219   595      35.9      17.5
   Total Result - discontinued operations     2     2       0.1       0.1
   Business Performance                   1 267   819      37.3      24.2
Second quarter                                                 
   Total Result - continuing operations      31 1 245       0.9      36.8
   Total Result - discontinued operations   252   (2)       7.4     (0.1)
   Business Performance                   1 073 1 120      31.6      33.1
Third quarter                                                  
   Total Result - continuing operations         1 060                31.3
   Total Result - discontinued operations         (2)               (0.1)
   Business Performance                         1 021                30.1
Fourth quarter                                                 
   Total Result - continuing operations         1 336                39.4
   Total Result - discontinued operations           -                   -
   Business Performance                         1 477                43.5
Full year                                                      
   Total Result - continuing operations         4 236               125.0
   Total Result - discontinued operations         (2)               (0.1)
   Business Performance                         4 437               130.9

11. Commitments and contingencies

Details of the Group's commitments and contingent liabilities as at 31
December 2011 can be found in note 24, page 127 of the 2011 Annual Report and
Accounts.

There have been no material changes to the Group's commitments in respect of
capital expenditure, other commitments or contingent liabilities in the six
month period to 30 June 2012.

12. Related party transactions

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 2011 can be found in note 25, page
129 of the 2011 Annual Report and Accounts. There have been no material
changes in these relationships in the period ending 30 June 2012. 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

                                First
       Second Quarter         Quarter                            Half Year
               2012     2011     2012                            2012     2011
                                        Production volumes
                                        (mmboe)                               
                8.0      6.2      8.1   Oil                      16.1     12.8
                8.8      8.8      8.4   Liquids                  17.2     17.5
               44.5     43.9     44.4   Gas                      88.9     86.8
               61.3     58.9     60.9   Total                   122.2    117.1
                                                                     
                                        Production volumes
                                        (boed in thousands)          
                 87       68       89   Oil                        88       71
                 97       97       92   Liquids                    95       97
                489      482      488   Gas                       488      479
                673      647      669   Total                     671      647
                                                                     
                                        Average realised oil
            $109.18  $117.95  $116.96   price per barrel      $112.76  $113.08
                                                                     
                                        Average realised
                                        liquids price per
             $89.95   $98.32   $99.78   barrel                 $94.76   $90.88
                                                                     
                                        Average realised UK
             70.92c   72.46c   73.56c   gas price per          72.16c   69.94c
           (44.61p) (44.43p) (46.59p)   produced therm       (45.54p) (43.42p)
                                                                     
                                        Average realised
                                        International gas
                                        price per produced
             41.08c   39.02c   37.79c   therm                  39.43c   37.53c
                                                                     
                                        Average realised gas
                                        price per produced
             44.25c   42.75c   41.15c   therm                  42.70c   41.12c
                                                                     
                                        Lifting costs per
              $5.68    $5.83    $6.22   boe                     $5.95    $5.54
                                                                     
                                        Operating
              $9.71    $8.93    $9.54   expenditure per boe     $9.63    $8.46
                                                                     
              $9.18    $7.96    $8.53   Depreciation per boe    $8.86    $7.59
                                                                     
                                        Development
                                        expenditure
                                        (including
              1 623    1 541    1 437   acquisitions) ($m)      3 060    2 736
                                                                     
                                        Gross exploration
                                        expenditure ($m)             
                                        Capitalised
                                        expenditure
                                        (including
                164      238      240   acquisitions)             404      752
                 60       80       72   Other expenditure         132      181
                224      318      312   Total                     536      933
                                                                     
                                        Gross exploration
                                        expenditure by
                                        country ($m)                 
                 33       27       40   Australia                  73       53
                 17       69       74   Brazil                     91      144
                 42        4       12   Egypt                      54        7
                 73       30       97   Tanzania                  170      123
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