BG Group doubles reserves and resource potential of Santos Basin interests
BG Group (LON:BG.), the FTSE 100 gas giant, has issued a significant upgrade for its interests in the pre-salt Santos Basin, offshore Brazil. The company is now estimating mean total reserves and resources to be some 6 billion barrels of oil equivalent (boe) net, with an upside potential of 8 billion boe net. The upgrade represents a doubling of BG’s previous best estimate of 3 billion boe, which was published in February 2010. The news pushed the BG share price up by 5% to 1417.5p in early trading.
The aggregate range of total reserves and resources net to BG now stretches from 4 billion boe (P90) to 8 billion boe (P10). Existing discoveries account for 96% of the new calculation, which has been modelled using BG’s internal analysis based on probabilistic modelling of its Santos Basin interests. The analysis is based on a range of data, including the results of 29 drilled wells on existing discoveries, with two wells drilled on Lula since November 2010 proving particularly important in delineating the flanks of the field. Production from the first permanent floating production, storage and offloading vessel on Lula commenced in October 2010. The company has also shot more than 14,400 sq km of 3D seismic and said that full analysis of a completed extended well test on Lula Sul and the early results from the Guará EWT had indicated very large hydrocarbon volumes connected to each of the wells.
Sir Frank Chapman, BG’s chief executive, said: “The doubling of our estimated Santos Basin mean reserves and resources is clearly significant and demonstrates the continued rapid evolution of our understanding of these enormous discoveries. Robust economics and solid progress with the fast-track development programme will see gross installed production capacity rising steadily to reach more than 2.3 million boe per day by 2017. I believe this – alongside progress with major ventures in Australia, the US and across our global portfolio – will transform the scope, scale and value of BG Group.”
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BG Group plc (BG Group) is a natural gas company. The Company is engaged in the exploration, development and production of natural gas and oil. The Company operates in three business segments: Exploration and Production (E&P), Liquefied Natural Gas (LNG) and Transmission and Distribution (T&D). Effective January 1, 2012, the Company was managed across three regions: Americas and Europe; Africa, Central and South Asia, and Australia and East Asia, supported by Global Energy Marketing and Shipping (GEMS) and BG Advance. The Company has interests in 25 countries on five continents. During the year ended December 31, 2011, the Company acquired an interest in, and operatorship of, offshore blocks L10A (BG Group 40%) and L10B (BG Group 45%) in Kenya. During 2011, the Company acquired additional Marcellus shale properties in partnership with EXCO Resources, Inc. (EXCO). In 2011, the Company disposed of its interest in Genting Sanyen Power in Malaysia. more »
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6 Comments on this News show/hide all
Long long article on BG underscoring the value of its LNG/Brazil/US focus.
http://news.morningstar.com/articlenet/article.aspx?id=391208
Recent anxiety about a debt crisis has roiled European equities while concerns over a weakening global economic growth have taken a toll on shares of energy companies. We believe the combined effect of these two issues has created a buying opportunity in BG Group (BRGYY), one of our favorite, if often overlooked, international oil and gas companies.
Given a proven business model, favorable market conditions, and unrivaled growth, BG is significantly undervalued in our opinion.
At about GBX 1,250 or $100 per ADR share, BG trades well below our fair value estimate and provides a compelling risk/reward proposition, in our opinion. We do not think today's share prices accurately reflect BG's growth potential or the positive industry tailwinds of the coming years. While we admit BG is a bit of a long-term story, we also believe that our thesis could play out as early as next year when the company is expected to deliver double-digit production growth. As a result, the recent sell-off provides long-term investors with an attractive entry point to build a position in a name we feel could rise substantially over the next few years
Great, as I hold these shares. An Oasis in a desert of bad news
Great news. This stock will go far
Is this really the last BG comment or am I not using the search facility properly?
I see the price has now come back to where it was nearly 5 years ago which makes me think there may be some sort of value here but I am struggling to find any research that would allow me to get a handle on things.
Can anyone help?
In reply to tiswas, post #4
I don't think BG is generally worth commenting on much. However, the recent fall seems substantially overdone and I think it is beginning to enter top-up territory for me, as I previously suggested elsewhere.
However...shortage of cash is a problem - and I'm not about to liquidate other holdings yet.
I think BG has a really very interesting position in East Africa as well as South America, Australia etc - but it could drift even lower now that institutional sentiment appears to have been shot in the short term.
ps...there is another thread of similar vintage
I have just had a look at a very simple chart and 10.00 is certainly a major area of support through 2009 and 2010 so if that holds I could be tempted. If it fails no real support to 800.
Tis (part time chartist when he does not understand the fundies),