LONDON (AFX) - Natural gas producer BG Group PLC said trading for the first quarter was ahead of analysts' expectations, driven mainly by the strong performance of its liquefied natural gas business.
The LNG unit is expected to book quarterly operating profit of at least 130 mln stg, reflecting strong volumes and demand.
The LNG shipping and marketing business delivered 40 cargoes in the quarter, ahead of the 28 cargoes it shipped a year earlier. About two-thirds of the latest quarter's cargoes were sold to markets outside the US, BG said in a trading statement.
The rest of the group's key businesses -- Exploration & Production, Transmission & Distribution, and Power -- traded broadly in line with expectations, it said.
Analysts quickly upgraded their estimates for the quarter, which they expect to show record earnings for the LNG division.
'The outlook for LNG operating profit in excess of 130 mln stg is more than double the consensus expectation and represents an increase of over 65 pct on Q4,' said Citigroup.
Citigroup raised its earnings estimate for BG by 3.1 pct to 48.9 pence per share for 2006, by 0.6 pct to 46.82 pence for 2007, and by 1.1 pct to 43.89 pence for 2008.
Merrill Lynch, meanwhile, lifted its net income estimate by 8.7 pct to 510 mln stg in the quarter and by 2 pct to 1.7 bln stg in the full year.
The broker praised BG for its 'winning strategy' for LNG that offers scope for further upward earnings revision.
Current estimates for the LNG segment remained conservative as demand and prices are likely to stay robust for the rest of the year, it said.
The stock is currently fully valued, limiting its advance. But sector followers think the share price's potential downside will be protected by bid speculation.
BG shares rallied a few days ago on market talk that US oil giant Exxon Mobil Corp could be mulling 750 pence a share bid for the UK energy group.
Both BG and Exxon Mobil declined to comment.
At 2.40 pm, BG shares were up 7-1/2 at 727 pence. monicca.egoy@afxnews.com mbe/jfr COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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