Annual Report and Accounts 2009 - BG Group

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130 Shareholder Information Glossary of terms For the purpose of this Report the following definitions apply: ‘2P reserves’ Proved plus Probable reserves. See page 118 ‘3P reserves’ Proved plus Probable plus Possible reserves ‘$’ or ‘US$’ US Dollars ‘£’ or ‘UK£’ UK Pounds Sterling ‘A$’ Australian Dollars ‘ABI’ Association of British Insurers ‘Act’ The Companies Act 2006 ‘ADR’ American Depository Receipt ‘ADS’ American Depositary Share ‘AGM’ Annual General Meeting ‘AIS’ Annual Incentive Scheme ‘bbl’ Barrel ‘bcf’ Billion cubic feet ‘bcfd’ Billion cubic feet per day ‘bcma’ Billion cubic metres per annum ‘BG Group’ or ‘Group’ BG Group plc and its subsidiary undertakings, joint ventures and associated undertakings ‘BG Energy Holdings BG Energy Holdings Limited, a subsidiary of Limited’ or ‘BGEH’ BG Group plc ‘billion’ or ‘bn’ One thousand million ‘boe’ Barrels of oil equivalent. BG Group uses a conversion factor of 1 boe equals 6 000 cubic feet of natural gas ‘boed’ Barrels of oil equivalent per day ‘bopd’ Barrels of oil per day ‘btu’ British thermal units ‘CN00C’ China National Offshore Oil Corporation ‘Combined Code’ The Combined Code on Corporate Governance issued by the UK Financial Reporting Council ‘Companies Act’ as defined in section 2 of the Act ‘Companies Act 2006’ has the same meaning as the Act ‘Company’ BG Group plc ‘Contracted volumes’ LNG volumes which BG Group has a right to receive over a period of more than 12 months ‘CMI Bureau’ Continuous Mortality Investigation Bureau ‘CPC pipeline’ Caspian Pipeline Consortium ‘CSG’ Coal Seam Gas ‘CSOS’ Company Share Option Scheme ‘Directors’ Report’ See Business Review and Legal Notice, inside front cover ‘Discovered resources’ See page 118 ‘E&P’ Exploration and Production ‘EPS’ Earnings per share ‘EPV’ Estimated Present Value ‘EU’ European Union ‘Financial Statements’ The Group and parent company Financial Statements for the year ended 31 December 2009 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the balance sheets, the statements of changes in equity, the cash flow statements, and the related notes ‘GAAP’ Generally Accepted Accounting Principles ‘GEC’ the BG Group Executive Committee ‘HSSE’ Health, Safety, Security and Environment EXPLANATORY NOTE FOR US INVESTORS RELATING TO GAS AND OIL RESERVES AND RESOURCES BG Group continues voluntarily to use the SEC definition of proved reserves to report proved gas and oil reserves in this Annual Report and Accounts. BG Group also voluntarily adopted the SEC definition of probable reserves in 2009 and that is used, where appropriate, in the Report. For further details of BG Group’s proved reserves as at 31 December 2009, and related supplemental gas and oil information, see Supplementary information – gas and oil, on page 118. This Report also contains additional information about other BG Group gas and oil reserves and resources that would not be permitted in SEC filings. For an explanation of terms used in connection with such additional reserves and resources information, refer to page 118. ‘IAS’ International Accounting Standard issued by the IASB ‘IASB’ International Accounting Standards Board ‘IFRIC’ International Financial Reporting Interpretations Committee ‘IFRS’ International Financial Reporting Standards issued by the IASB and endorsed by the EU ‘JV’ a joint venture ‘LIBOR’ London Interbank Offered Rate ‘LNG’ Liquefied Natural Gas ‘LTIP’ Long Term Incentive Plan ‘LTIS’ Long Term Incentive Scheme ‘m’ Million ‘managed volumes’ Comprises all LNG volumes contracted for purchase and having related revenue and other operating income recognised in the applicable period ‘Management Report’ See Business Review and Legal Notice, inside front cover ‘mmboe’ Million barrels of oil equivalent ‘mmbtu’ Million British thermal units ‘mmcm’ Million cubic metres ‘mmscfd’ Million standard cubic feet per day ‘mmscm’ Million standard cubic metres ‘mmscmd’ Million standard cubic metres per day ‘mtpa’ Million tonnes per annum ‘MW’ Megawatt ‘MWth’ Megawatt thermal ‘OTCQX’ The US over-the-counter market on which BG Group’s ADRs are listed. See page 132 ‘Possible reserves’ Reserves which analysis of geological and engineering data suggests have a less than 10% chance of recovery, see page 118 ‘PSC’ Production Sharing Contract ‘Proved reserves’ See page 118 ‘Probable reserves’ See page 118 ‘Risked exploration’ See page 118 ‘ROACE’ Return on Average Capital Employed ‘RPIX’ Retail Prices Index excluding mortgage interest repayments ‘SEC’ The United States Securities and Exchange Commission ‘SIP’ Share Incentive Plan ‘T&D’ Transmission and Distribution ‘tcf’ Trillion cubic feet ‘TRCF’ Total Recordable Case Frequency ‘TSR’ Total Shareholder Return ‘Unit lifting costs per boe’ Calculated by excluding royalty, tariff and insurance costs from ‘unit operating costs/expenditure’ as defined below ‘Unit operating costs/ Calculated by dividing production and expenditure per boe’ other operating costs (royalties) on page 125 by the net production for the period. This measure does not include the impact of depreciation and amortisation costs and exploration costs as they are not considered to be costs associated with the operation of producing assets ‘WDDM’ West Delta Deep Marine Reference conditions (2010) • Brent Oil price $70/bbl • US Henry Hub $7/mmbtu • US$/UK£ exchange rates of $1.7:£1 • US$/A$ exchange rates of $1:A$1.35 • All production includes fuel gas LEGAL NOTICE Certain statements included in this Annual Report and Accounts contain forward-looking information concerning the Group’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which the Group operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company’s control or can be predicted by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a description of factors that may affect our business, financial performance or results of operations, we urge you to look at the Principal Risks and Uncertainties included in this Annual Report and Accounts. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. The Company undertakes no obligation to update any forward-looking statements. BG Group is subject to the regulatory requirements of the Financial Services Authority of the United Kingdom. www.bg-group.com
Index Item Page Accountants’ fees and services 82 American Depositary Receipts 89, 132 Annual General Meeting (AGM) 45, 62, 134-140 Assets 71 Total 71, 79, 127 Net 71, 79, 127 Associates 79, 92, 112-113, 129 Audit fees 82 Balance sheets 71-72 Five year financial summary 127-128 Basis of consolidation 66 Basis of preparation 66 Borrowings 71, 94-95 Business Combinations 66, 76 Business Review 2-37 Capital investment/expenditure 24-29, 80 Cash flow 26, 74, 111 Five year financial summary 128 Chairman’s statement 6-7 Charitable donations 63 Chief Executive’s statement 8-9 Commitments and contingencies 104-106 Committees 46-47 Community 34-37, 63 Corporate Governance 38-64 Debt/equity ratio 127 Decommissioning 28, 67, 102, 104 Deferred taxation 67, 71, 103-104 Depreciation and amortisation 28, 66, 80-81, 90-91 Derivatives 67-68, 95-101 Directors 38-39 Directors’ Report 2-64 Disposals, re-measurements and impairments 27, 69, 87, 129 Dividends 6, 24-25, 63, 89 Earnings per ordinary share 4, 6, 24-25, 69, 89, 127 Employees 34-35, 63, 83-86 Equity 72-73 Exploration and Production (E&P) 2, 5, 16-19, 24-25 Exploration expenditure 24, 28, 67, 81 Finance income and costs 25-28, 88 Financial instruments 29, 67, 75-76, 95-101 Financial Review 24-29 Five-year financial summary 127-128 Foreign currencies 67 Gearing 6, 24, 127 Going concern 64 Goodwill 66, 71, 90 Governance 42-49 Group Executive Committee 9, 40-41, 47 Health, Safety, Security and Environment 33, 34-37, 46 Item Page Historical production 126 Independent Auditor’s report 65 Income statement 69 Five-year financial summary 127 Internal Control Framework 42-46 Impairments 28-29, 69, 87, 129 Inventories 71, 93 Investments 71, 92-93 In subsidiary undertakings 112 Other 92-93 Joint ventures 79, 92-93, 113, 129 Key performance indicators 4-5 Leases 67, 81, 94-95, 105 Legal proceedings 105 Liquefied Natural Gas (LNG) 2, 20-21, 24-26 New accounting standards 75-76 Notice of AGM 134-140 Operating review 16-23 Operating costs 81-82 Operating profit/(loss) 24-29, 69, 78-79, 127 Other intangible assets 71, 90 Other operating income 69, 78, 87 Petroleum revenue tax 88, 103 Power Generation (Power) 2, 23, 26 Presentation of non-GAAP measures 129 Principal accounting policies 66-68 Principal risks and uncertainties 30-33 Property, plant and equipment 66, 71, 91 Provisions for other liabilities and charges 71, 102 Related party transactions 106 Remuneration report 50-61 Research and development 63, 68,81 Retirement benefit obligations 71, 107-110 Return on average capital employed 128-129 Segmental analysis 77-80 Share capital 62-63, 72-73, 104, 134-140 Shareholder information 132-133 Statement of comprehensive income 70 Strategy 10-15 Substantial shareholders 62 Supplementary information – gas and oil 118-125 Suppliers 63 Sustainability 9, 34-37 Taxation 26, 67, 69-74, 88, 103-104 Trade and other payables 71, 102 Trade and other receivables 71, 93 Transition to reporting in US Dollars 114-117 Transmission and Distribution (T&D) 2, 22, 25 BG Group Annual Report and Accounts 2009 131 Directors’ Report Business Review Directors’ Report Corporate Governance Financial Statements Shareholder Information
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A world leader in natural gas Annua
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Contents Directors’ Report: Busin
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ALGERIA UK NORWAY TUNISIA ITALY LIB
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E&P production (mmboe) 250 200 150
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Governance and risk One of the most
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Sustainability and safety BG Group
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Performance A cost leader BG Group
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Australia QGC BG Group has made sig
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Outlook Market context The challeng
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The Buzzard field (BG Group 21.73%)
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FPSOs, with the first targeted to c
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Dragon LNG, UK During 2009, work on
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Power Generation BG Group has a pro
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expenditure was £1 651 million (20
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and associates amounted to approxim
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BG Group uses a range of long-term
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Commodity prices Principal risks an
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Credit Principal risks and uncertai
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communities, partners, contractors,
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involved. In 2009, BG Group complet
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4 5 6 10 11 7. Jürgen Dormann Non-
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3 4 5 8 9 10 5. Robert Booker Execu
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A DIRECTORS The Board The Board is
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evaluation. Accordingly, during 200
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Board Committees Sustainability Com
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Audit Committee and auditors Lord S
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Other external advisers also provid
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TSR performance for the Performance
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Director’s length of service. Fur
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DEFERRED BONUS PLAN Award date Ashl
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DIRECTORS’ INTERESTS IN ORDINARY
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Directors’ pension provisions wer
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Share capital In order to enable th
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Financial Statements Independent Au
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REVENUE RECOGNITION Revenue associa
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Consolidated income statement Notes
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Balance sheets as at 31 December As
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Statements of changes in equity Cal
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Notes to the accounts 1 NEW ACCOUNT
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2 SEGMENTAL ANALYSIS AND RESULTS PR
Page 81 and 82: 2 SEGMENTAL ANALYSIS AND RESULTS PR
Page 83 and 84: 3 OPERATING COSTS Included within t
Page 85 and 86: 4 DIRECTORS AND EMPLOYEES A) DIRECT
Page 87 and 88: 4 DIRECTORS AND EMPLOYEES continued
Page 89 and 90: 5 DISPOSALS, RE-MEASUREMENTS AND IM
Page 91 and 92: 8 DIVIDENDS £m 2009 2008 Pence per
Page 93 and 94: 12 PROPERTY, PLANT AND EQUIPMENT TH
Page 95 and 96: 13 INVESTMENTS continued THE COMPAN
Page 97 and 98: 17 BORROWINGS continued The effecti
Page 99 and 100: 18 FINANCIAL INSTRUMENTS continued
Page 105 and 106: 21 DEFERRED TAX Deferred taxes are
Page 107 and 108: 23 COMMITMENTS AND CONTINGENCIES co
Page 109 and 110: 25 PENSIONS AND POST-RETIREMENT BEN
Page 111 and 112: 25 PENSIONS AND POST-RETIREMENT BEN
Page 113 and 114: 26 NOTES TO THE CASH FLOW STATEMENT
Page 115 and 116: 27 PRINCIPAL SUBSIDIARY UNDERTAKING
Page 117 and 118: CONDENSED CONSOLIDATED INCOME STATE
Page 119 and 120: Special Purpose Auditors’ Report
Page 121 and 122: A) RESERVES ESTIMATED NET PROVED RE
Page 123 and 124: B) STANDARDISED MEASURE OF DISCOUNT
Page 125 and 126: C) CAPITALISED COSTS Capitalised co
Page 127 and 128: E) RESULTS OF OPERATIONS The result
Page 129 and 130: Five year financial summary (unaudi
Page 131: Shareholder Information Presentatio
Page 135 and 136: SHAREHOLDER PROFILE as at 31 Decemb
Page 137 and 138: the Directors may determine and oth
Page 139 and 140: ordinary share capital (excluding t
Page 141 and 142: Appointing a corporate representati
Page 144: BG Group plc 100 Thames Valley Park
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