BG enjoys a boost from rising oil and gas prices

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The Independent Online

As BP's shares headed south, BG claimed the FTSE 100 crown last night with forecast-beating results.

The oil and gas group said its underlying earnings over the second quarter had climbed by 27 per cent to $1.12bn (£683m), compared with market expectations of $1.07bn. The rise in earnings came as the group reported progress at its prized Brazilian operations. "The reservoirs [there] are really performing at the extreme upside end of the expectation spectrum," BG's chief executive, Sir Frank Chapman, said. "They really are excellent reservoirs."

The upbeat assessment follows last month's doubling of the company's estimates of its oil and gas reserves in the South American country.

The results were boosted by high commodity prices and a lower exploration charge. BG also reported a rise in production, overcoming the weakness seen in the first three months of the year. The group said that, against the second quarter in 2010, oil and gas production was up 3 per cent this year.

The uptick came as the unrest in Egypt and Tunisia gave way to stability, and some North Sea fields returned to production following planned maintenance. "While there continued to be sporadic disruption from social unrest in Egypt and Tunisia, this has a relatively small impact on production," the company said. "We have invested $4.4bn in organic growth in the first half and made good progress across our major growth projects in Australia, Brazil and the US," Sir Frank said, as BG's share price rose by more than 4 per cent or 61.5p to 1,486.5p.

The update was welcomed by analysts, with Richard Rose at Oriel Securities saying: "The company continues to benefit from higher commodity prices and a sector leading operating cost base."