Natural gas company BG Group (LON:BG.) expects demand to remain strong and expects its liquefied natural gas (LNG) operations in particular to keep performing well in the foreseeable future.
The stock rose in early trade in reaction and by 8.53 am, was up 2.87 per cent at 1,487.5 pence.
The company reported results for the full year and fourth quarter to the end of December 2011. Full-year revenues and other operating income rose 22 per cent year-on-year to US$21.15 billion, while operating profit was up 19 percent from 2010 at US$8.209 billion.
In the fourth quarter, revenues and other income was up 34 per cent from a year earlier at US$5.83 billion and operating profit 19 per cent higher at US$2.15 billion.
BG is raising the final dividend to 12.96 cents per share from 8.19 cents per share a year earlier, bringing the full year dividend to 23.76 cents per share, an increase of 10 per cent compared with last year.
Chief executive Sir Frank Chapman said: "The outlook for global gas and LNG demand is strong. BG Group is well set to capitalise on these opportunities and is making good progress with delivering its plans."
"Not only is our LNG supply set to exceed our 2015 target of 20 million tonnes per annum (mtpa), but we believe that a BG Group supply portfolio of 30 mtpa by 2020 is now within reach. The near-term picture is also very positive and we are raising our LNG profit guidance for 2012 by over 30 per cent to between US$2.6 and US$2.8 billion. Our LNG business is set fair with the prospect of excellent profit momentum for many years."
Deutsche Bank reiterated its ‘buy’ recommendation for BG and maintains a 1,850 pence price target.
In a research note on UK companies, Deutsche said: “Our positive Buy stance reflects our expectation of strong earnings and cash flow growth into the medium term as BG’s substantial resource base in Brazil and Australia is monetised and the excellent outlook for LNG trading.
“Allowing for execution risk our asset model suggests fair value of towards 1850p, much of which should be released as Brazilian oil production builds over the period to 2015. Risks to our positive stance include cost overruns and project delays, not least in the aforementioned territories,” it added.