BG to return cash despite poor results

The gas exploration group BG announced a £750m return of cash to shareholders yesterday despite an 18 per cent fall in fourth-quarter profits.

The company also predicted its likely production levels beyond 2009 for the first time. Output last year was 601,000 barrels per day, up 19 per cent on 2005. The company forecast that by 2012 this figure could climb to one million bpd.

The chief executive Frank Chapman said: "During the year we have increased our E&P [exploration and production] resources by almost one billion barrels and our outlook for earnings growth to 2009 remains outstanding. We have also improved our distinctive long-life asset base and significantly enhanced the projects that will drive growth to 2012."

BG said it would hit the upper end of its production growth forecasts of six to 10 percent per annum to 2012, much stronger than the larger rivals Shell and BP, which have said they expect growth only of about 1 to 2 per cent to the end of the decade.

BG also said the strong outlook allowed it to launch another share buy-back programme and raise dividends, despite cost inflation of 10 per cent. It backed up the growth forecasts by saying discoveries in the North Sea and Brazil were proving to be very significant. The company also plans to double exports from the Karachaganak gas condensate field in Kazakhstan.

Fourth-quarter net profit, excluding non-operating items, fell to £410m. However, at constant currencies and upstream prices, operating profit was up 5 per cent. Full-year profit was 24 per cent higher at £1.7bn.