BG Group strategy drives industry-leading growth

BG Group will today present its Fourth Quarter and Full Year 2008 results and annual strategy update.

Key points from the strategy presentation

* Record 2008 results: earnings per share up 74% and operating profit up 65% to £5.4 billion.
* Clear and powerful integrated gas major strategy.
* Transformational strategic success in Australia and Brazil.
* Geographically diverse, long-life assets strongly position BG Group in current pricing environment.
* An industry-leading global LNG business with sustainable competitive advantage.
* LNG profit outlook extended: profit before interest and tax expected in 2009 £1.4-1.5 billion; 2010 £1.2-1.3 billion.
* E&P and LNG growth targets confirmed.
* Proved and probable reserves up 64% year-on-year to more than 5.8 billion barrels of oil equivalent.
* Total E&P reserves and resources up 31% year-on-year to more than 13 billion barrels of oil equivalent.
* Reserves and resources base sufficient to support annual production growth of 6-8%, out to 2020.
* Capital expenditure for 2009-2012 estimated at £16 billion; 2009 £4 billion.
* BG Group strongly funded to finance these growth plans.

BG Group Chief Executive Frank Chapman said: "2008 was a year of record results, extending a 12 year trend that has seen operating profits rise to £5.4 billion. Our strategy and performance have delivered, as intended, sustained high earnings growth and good financial returns over more than a decade.

“We have now assembled a powerful opportunity set, together with a group of people with the ambition and skills to exploit those opportunities. And we have the financial strength to realise the material value inherent in our portfolio, and in so doing achieve a bright and positive future.”

The Group’s plans will be presented to analysts and investors at 1400 GMT on 5 February 2009 at an event hosted by BG Group Chairman Sir Robert Wilson, Chief Executive Frank Chapman and Chief Financial Officer Ashley Almanza. The presentation will be webcast live at www.bg-group.com, after which a recording of the event, transcript of the presentations and a copy of the slide presentation will be available online. This news release should be read in conjunction with these materials.

In addition, the Group has also published details of its Q4 and Full Year results for 2008, which have been announced separately at www.bg-group.com and this release should be read in conjunction with this information.
Business context

BG Group is a world leader in natural gas, with interests across the gas value chain in 27 countries on five continents. The Group’s strategy, focused on connecting competitively priced resources to specific,
high-value markets, has delivered strong growth for more than a decade. The Group has a proven track record in exploration, with strict capital discipline and cost controls underpinning an inherently robust financial position.

The severe downturn in the global economy is reducing the demand for hydrocarbons. This has been reflected in a fall in oil prices. Although global gas prices have also fallen, they have done so to a lesser extent than international oil benchmarks.
The Group’s geographically diverse, low cost, long-life existing assets remain inherently robust across a wide range of oil and gas prices. Additionally, the development of the Group’s growth opportunities and expansion of existing assets will benefit from lower unit costs as the price of raw materials fall and industry supplier and manufacturer margins are compressed.
Key portfolio developments

Global LNG

* Portfolio has longevity and scale with contracted supply volumes of 12.6 million tonnes per annum through to 2020.
* Growth is secured. Target of 20 million tonnes of volumes by 2015 will be achieved by QCLNG coming on stream in 2014.
* Low cost base, flexible portfolio and range of assets provide a significant and sustainable competitive advantage.
* LNG profit outlook extended: profit before interest and tax expected in 2009 £1.4-1.5 billion; 2010 £1.2-1.3 billion.

Australia

* QGC is a transformational strategic success and is in final stages of integration as a BG Group business.
* Targeting production of around 225 000 barrels of oil equivalent per day, with opportunities to increase this further.
* 2P reserves increased in 2008 to more than 3.7 trillion cubic feet and total resources to over 11 trillion cubic feet.
* Queensland Curtis LNG is progressing well and will manufacture around 7.4 million tonnes per annum of LNG, from two trains, beginning in 2014.
* Resources in QGC acquired for an average of just $0.36 cents per million British thermal units.

Brazil

* Total of five discoveries in Brazil in pre-salt Santos Basin.
* BG Group’s share of resource amounts to over 3 billion barrels of oil equivalent.
* Production from Tupi extended well test expected within the next 12 weeks.
* Initial phase of Tupi sanctioned at US$3.7bn. First production expected in late 2010.
* Two major new discoveries in 2008 - Guará and Iara. Production planned to commence in 2012 and 2013 respectively.
* Five exploration wells planned for 2009 targeting Iguacu, the BG Group-operated Corcovado, and Sagittario.
* Strong growth in Comgás this year, with huge potential to continue its growth and value creation as new domestic gas supply becomes available.

Egypt

* Good progress in Egypt, with Rosetta Phase 3 and West Delta Deep Marine Phase 4 projects delivered.
* Improved domestic gas prices agreed.

India

* Improved prices secured for gas from Panna and Tapti.
* Drilling of the first east coast well expected in late 2009.

Kazakhstan

* Achieved record gross production in 2008 of 136 million barrels of oil equivalent from Karachaganak.
* Good progress with the fourth stabilisation train, which will bring export capacity to western markets to 10.3 million tonnes per annum in 2010.
* As reported at Q3 results, a review of the Phase III development of Karachaganak is being undertaken to ensure an optimal development plan. Future development will take place in stages. Production to increase from 100 000 barrels per day to 125 000 barrels per day by 2010.

Norway

* Three potential developments - Pi North, Bream and Jordbaer.
* The Jordbaer discovery has gross reserves of 60 to 110 million barrels of oil equivalent and is a
play-opener in the North Tampen area.
* The North Tampen area has a potential of some 1 billion barrels of gross reserves in blocks where BG Group has an interest.
* Four wells are planned in 2009, including the spudding of Mandarin, BG Group’s highest potential prospect, where BG Group has a 96% equity stake.

Trinidad and Tobago

* Poinsettia achieved first gas in January 2009.
* In total, BG Group with partners have uncommitted gas reserves and resources amounting to 4 trillion cubic feet and is developing commercialisation options.
* Good exploration success in 2008, with three discoveries in Block 5(c), where BG Group will become operator later this year.

Tunisia

* Making progress with in-fill drilling at Miskar and with the Hasdrubal project.
* Production expected to increase from 32 000 barrels of oil equivalent a day to 56 000 barrels of oil equivalent a day over the next two years.

UK North Sea

* UK production plateau of over 50 million barrels oil equivalent per annum extended, with the decline anticipated in 2008 now put back to 2014.
* Made possible by continued success in adding reserves; amounting in the last 5 years to some 300 million barrels oil equivalent net to BG Group.
* An asset swap with BP will lead to a step-change in BG Group’s operational control of key producing assets in the North Sea. Completion expected in second quarter 2009.

Exploration

* 43 wells were drilled in 2008, with 22 successes. Particular success in Brazil, Trinidad and Tobago, and Norway.

Reserves and resources

* Almost doubled reserves and resources in the last three years to 13 billion barrels oil equivalent, providing 58 years reserves life at 2008 production levels.
* Proved and probable reserves increased in 2008 by 64% to 5.8 billion barrels oil equivalent.
* Reserves and resources are the basis for production growth up to 1.6 million barrels oil equivalent per day by 2020.