BG Group - Dropping Off Wall Street's Radar?

Apr.21.08 | About: BG Group (BRGYY)

UK-based energy company BG Group seems to be dropping off the radar of many US-based investors. The company de-listed from the NYSE last year and that was reason enough for Wall Street to forget about it. It still trades in the US on the over-the-counter tier known as International OTCQX. It trades under the symbol BRGYY.PK.

BG Group is an energy company with bright prospects for the future in both their exploration & production division and their liquified natural gas division. BG is currently exploring in many corners of the globe but the biggest excitement regarding the company is their exposure to the possibly huge oil fields lying offshore of Brazil. BG Group has seven concessions in the Santos Basin,offshore Brazil. Their interests in these concessions range 20% to 60%.Since they began drilling in the Santos basin,BG has found nothing but success.

In 2007,they confirmed the size of the Tupi Sol find at 5-8 billion boe. This was the largest global find since 2000 and BG Group owns 25% of it. Just this past week there was even more excitement when Brazil's energy regulator Haroldo Lima spoke about another Brazilian oil field. This time it was the Carioca oil field in which BG holds 30%. Mr.Lima said the field could contain 33 billion boe and be the largest find in 30 years. Suspicions are that it may be only half that size but that is still a lot of oil. BG will do drilling in that area this summer and also in 2009 to define how much oil is really there.

Another major business for BG Group is natural gas and LNG(liquified natural gas). For instance,BG owns a 32.5% interest in the Karachaganak field in northwest Kazakhstan which is one of the largest gas and condensate fields in the world. BG has become a leader in the LNG industry. They do not have as many gas assets as do the larger players such as Royal Dutch Shell but BG is much more nimble and flexible.BG's fleet of ships has the most flexibility of any in the industry.

They can deliver gas anywhere that BG pleases and are not locked into long-term contracts like their competitors. This has allowed BG to take advantage of the booming economic growth in Asia where they now ship 80% of their gas.Just this past week,BG announced a 20 year deal to become Singapore's principal gas supplier. This gas will be shipped from the company's coal bed methane project in Australia.

Global investors are aware of BG Group however.BG Group's stock (OTCQX:BRGYY) is up about 65% over the last year and about 12% year-to-date. This compares to Petrobras which does trade on the NYSE and is up approximately 150% and 7% respectively.

Disclosure: Author is long BG Group