BG Group Plc Boosts Its Dividend By 10%

Earnings and production slip at BG Group plc (LON:BG), but there is a chunky dividend increase to cheer investors.

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BG Group (LSE: BG) (NASDAQOTH: BRGYY.US) is in the midst of reinventing itself at the moment, by focusing on fewer, bigger projects. So today’s half-year results from the gas specialist need to be considered in that context.

Revenues and profits for the first half of 2013 were both down 3%, with a 2% fall in production levels the main factor, but with higher operating costs contributing as well.

Hitting targets

In terms of its two major projects, Brazil and LNG in Australia, BG seems to hitting its targets as promised.

A third production platform came into operation as planned in Brazil, and two more are scheduled for next year. BG’s eventual target here is 15, but this will take several years, and the company is reliant on Petrobras, the operator of these licences, to carry out the heavy lifting.

In Australia, the first phase of the Queensland Curtis LNG project is still on track for first production next year, and to hit budget.

All this investment continues to drive the group’s net debt higher, however. It now stands at $11.2bn, a rise of $0.6bn over the position at the end of 2012. BG was still able to sanction a 10% increase in its dividend, although it currently only pays out around a fifth of its earnings.

A red flag

Egypt remains an area of concern. It accounted for 15% of profits last year, and the ongoing political turmoil in the country could have an impact going forward. Production hasn’t been affected so far, but BG has seen more gas diverted for domestic use, and away from its LNG plant.

Additionally, BG is owed $1.3bn from the Egypt General Petroleum Corporation, of which nearly half is overdue.

In all, you could say this was a fairly mixed report, and the shares responded accordingly with a gentle 1% rise to 1,194p.

That said, BG Group has been as stellar performer for shareholders since it joined the market back in the 1980s, under the guise of British Gas. If you want to spot the growth stars of tomorrow then this free Motley Fool report can get you started.

Download this report today – it’s totally free and yours to keep.

> Stuart doesn’t own any share mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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