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BG lifts investment target after Enron deal and jump in pre-tax profits.

GAS exploration group BG yesterday said it was upping investment levels by more than pounds 500m following the purchase of Enron Oil & Gas India.

Reading-based BG said its planned investment between 1999 and 2003 was expected to rise from pounds 5bn to pounds 5.6bn.

BG announced earlier this month it had bought Enron Oil & Gas India from the collapsed US energy giant for $350m (pounds 246.5m) and yesterday said the deal established the region as BG's sixth core region.

BG said ramping up investment would create additional shareholder value, while its exploration and production target would move up from 425,000 barrels of oil equivalent per day (boepd) in 2003 to 440,000 boepd.

But BG also conceded it would miss its 2003 target for ROACE, the return on average capital employed, because of the investment hike.

BG expects ROACE to be 11-12pc in 2003, instead of the 13pc originally forecast, although 2006's target of 14pc remains unchanged.

The update came as BG, originally part of the former British Gas business, posted figures for the year to December 31.

Group turnover rose 13pc to pounds 2.67bn on improved production levels, higher realised gas prices and favourable US dollar exchange rate movements, while bottomline pre-tax profits jumped from pounds 574m to pounds 902m.

Chairman Richard Giordano said, "BG Group continued to deliver strong performance in the [fourth] quarter, completing a year of consistent underlying profit and earning growth."

He added, "2002 will benefit from a full year's production from fields brought onstream in 2001."
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Feb 22, 2002
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