Strong Fundamentals At BG Cushion Effects Of Energy Price Downturn

UK energy firm BG Group has managed to sustain above average earnings growth in Q306 despite a downturn in global energy prices and an increase in exploration and production (E&P) costs. The results confirm our favourable opinion of BG's recent performance, where it has continued to outperform its larger peers in terms of volumes and profitability, as well as in reserves replacement. However, the group is increasingly exposed to large-scale, capital intensive projects which have increased the company's risk profile through the short to medium term, although this is mitigated somewhat by the geographical diversity of its operations.

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