BG doubles estimate of its Brazilian reserves
Friday 01 July 2011
BG Group more than doubled the estimate of its oil and gas reserves in Brazil yesterday, sending the resources group's stock soaring nearly 5 per cent.
The Santos Basin off the coast of Rio de Janeiro has long been a jewel in BG's crown, after an unprecedented string of exploration successes in its "pre-salt" floor in recent years.
BG is now estimating that its holdings have a mean net potential of 6 billion barrels of oil equivalent (boe) in the region, twice the 3 billion boe estimated in the company's most recent strategy presentation, in February.
BG's chief executive Sir Frank Chapman – who was knighted for "services to the oil and gas industries" in the Queen's Birthday Honours list last month – described the upgrade as "significant" yesterday.
"The doubling of our estimated Santos Basin mean reserves and resources demonstrates the continued rapid evolution of our understanding of these enormous discoveries," he said.
Under its fast-track development programme, BG's production capacity in the region is set to grow steadily to 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," Sir Frank said.
Analysts at Evolution Securities, who reckon BG's Brazilian assets are worth 1,000p a share, said the upgrade could increase this by 280p per share. BG shares closed up 64p at 1,414p.
The company has interests in five blocks in the Santos Basin, held in partnership with other major oil companies including Brazil's state-owned Petrobras, and Repsol YPF Brasil. The biggest reservoirs so far are at the Lula/Cernambi fields, which are estimated to hold a total of between 7 and 11 billion boe. Meanwhile Iara holds an estimated 3 to 4 billion boe, and Guara between 1.5 and 2 billion boe.
BG Group's latest estimates of its own portion of the reserves comes from analysis of the latest data from appraisal activity including drill stem tests and extended well tests indicating stronger-than-expected productivity and better links between reservoirs.
While the scale of the Santos Basin fields is not in doubt, getting the oil and gas out will not be easy – or cheap. The finds are in so-called "ultradeep water", deep in rocks lying under more than 2,000 metres of Atlantic ocean. Trickier still, the oil and gas is buried another 3,000 metres under the sea floor, hidden from traditional seismic imaging by a thick layer of salt in the rock above.
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
- 3 Russian girl takes her own life after parents find pornography on her computer
- 4 Ball pool for adults opens in London
- 5 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Russian girl takes her own life after parents find pornography on her computer
Ball pool for adults opens in London
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...