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Last Updated: Tuesday, 15 February, 2005, 16:43 GMT
Energy price rises boost BG Group
BG Group platform
BG has successfully managed to replace its reserves
BG Group, the UK energy exploration and production firm, has reported a 22% rise in annual profits on the back of strong gas and oil prices.

Pre-tax profits for the year to December 2004 were 1.52bn ($2.86bn).

BG, which was formed in 1997 after British Gas split into two firms, also raised production targets for 2006.

Chief executive Frank Chapman said BG had made "excellent progress in accelerating some key projects which will enhance our 2006 growth".

BG said production volumes had increased by 9% on the back of improved performances in its Kazakhstan and Egypt operations.

Reserves up

Other companies in the sector have faced problems boosting their reserves amid soaring world demand.

But BG is successfully managing to replace its reserves, at a rate of 126%, even as many firms struggle to hit 100%.

It also announced its intention to increase production and target growth opportunities in the North Sea, which accounts for about half its business.

The company said its strategy would push back the expected point of production decline in the North Sea to beyond 2007.

BG's results follow strong results from firms such as BP, Shell and ChevronTexaco.

BG's profit rise was limited by the fact that - unlike other firms in the sector - it reports in sterling. Weaker sterling thus hit its profits as international energy prices are set in dollars.

On top of that, gas prices, on which BG relies more than other firms, have not risen by as much as oil prices have.

Shares in BG Group closed up 7.25 pence, or 1.9%, at 395p.

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