The BG in BG Group stands for British Gas, but BG Group exploits not only gas assets but also oil, in 25 countries. In addition to conducting its core oil and gas exploration and production operations, the integrated energy company is engaged in liquefied natural gas (LNG) production, and gas transmission and distribution. In 2011 BG Group reported proved reserves of 12.8 trillion cu. ft. of natural gas, 1.1 trillion barrels of oil, and an annual production of 234 million barrels of oil equivalent. The group is one of the largest exploration and production companies in the North Sea, and has also moved into the lucrative US shale gas market through an alliance with EXCO Resources.
A 2009 deal with EXCO entailed BG Group paying about $1.4 billion for what amounts to a half stake in EXCO's shale gas operations in Texas and Louisiana.
In 2010, BG Group entered another alliance with EXCO to develop that company's producing and non-producing natural gas assets in the Appalachian Basin. The partnership operates upstream assets and a 50-50 midstream joint venture company which invests in gathering and transportation in Pennsylvania and West Virginia. BG paid $835.2 million for its 50% stake in the joint venture.
BG Group is focusing on current and new exploration and production projects. In conjunction with its exploration operations, it constructs gas infrastructure and develops gas markets.
As part of its strategy to develop gas markets around the world, the company has acquired key gas distribution and transmission operations in Argentina, Brazil, and India. It owns stakes in the largest gas distributors in Argentina (MetroGas) and India (Gujarat Gas Company Limited and Mahanagar Gas Limited). It also owns 25% of the UK's Interconnector, a pipeline system that links the industrial port of Bacton on the Norfolk coast of England to the Continental Europe energy markets.
To raise cash to pay down debt and invest in its core businesses, in 2010 the company sold its 50% stake in UK-based power station company Seabank Power Limited to Electricity First Limited for $320 million, and its Northern Ireland power station to AES for $150 million, effectively exiting the power generation segment.
On the exploration and production front, in 2011 the company was engaged in appraisal drilling in Brazil and reported oil and gas discoveries in Tanzania, the UK, and Norway, and a large leasehold acquisition in Kenya.
In 2011 the recovering economy, stronger demand for oil and gas, and higher oil prices helped to lift BG Group's revenues by 23% in 2011, and its net income by more than 26%. In particular the company, which is developing a major liquefied natural gas (LNG) plant in Australia, saw demand for LNG spike in 2011 (LNG revenues grew by almost 30% that year). BG Group expects LNG demand from energy-hungry Japan, China, and India to continue to grow rapidly.
In 2012, to free up capital, the BG Group agreed to sell its 60% in Comgas, Brazil's largest gas distribution company, for $1.8 billion. It also agreed to sell its 65% stake in India's Gujarat Gas Company.
That year it also signed a deal with Spectra Energy to develop a 525-mile pipeline from northeast British Columbia to serve BG Group's potential LNG export on the northwest coast of the province. – less