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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (77448)	1/8/2007 10:05:42 AM
From: LoneClone	Respond to of 206085

Hidden Value BG Not Shown in Share Price By Cyril Widdershoven 06 Jan 2007 at 10:38 AM EST resourceinvestor.com AMSTERDAM (ResourceInvestor.com) -- The success of BG [LSE:BG; NYSE:BRG], the British natural gas giant, currently expanding its overall LNG sales force, still has not been shown in share performance. Several international financial institutions have been downgrading BG based on their assessments that BG shares are still expensive. On which real assessments of financial analysts, such as Goldman Sachs are based, seems to be unknown, but the latter has stated that it still views shares as expensive. In the same statement, Goldman Sachs has stated that the BG management has shown high quality based on a differentiated strategy focusing on global LNG sales and local natural gas markets. Recently, BG shares have been on a downward trend, losing part of its attractiveness for stock market investors. Based on former performance, and the overall asset base of BG, this seems to be contrary to future expectations. BG’s total assets, vast natural gas reserve operations in Egypt and Trinidad & Tobago, combined with new attractive blocks in West Africa, Mauritania and possibly India should however reassure investors of its potential. Contrary to current market emotions, BG’s attractiveness is hidden, not always showing in its financial reporting, but based on total assets, lack of real competition and a project history that majors would kill for. Oil analysts already have stated that in the coming years, BG could be a real force to reckon with as the British gas giant has again surprised the market with statements of expansion plans in Trinidad & Tobago. BG, in combination with its joint venture partner, American oil and gas major Chevron [NYSE:CVX], have signed Heads of Agreement (HoA) with the National Gas Company of Trinidad & Tobago Ltd (NGC), by which it has committed itself to supply 220 million cubic feet of natural gas per day for a period of 15 years. First contractual deliveries are planned for the start of 2009. After several major expansions of its LNG plants in the Caribbean country, BG now targets, as it has been doing in Egypt (and elsewhere) local markets. Diversification of its supply base is being combined with the same approach to local markets. International press sources have quoted BG’s Executive Vice President North America, Caribbean and Global LNG, Martin Houston, as stating:“the proposed agreement underpins the commercialization of 1.2 trillion cubic feet of currently undeveloped gas in the East Coast Marine Area. This is an excellent project and BG Group is delighted to have reached this agreement with NGC.... We remain committed to our extensive exploration and production activity in the East and North Coast Marine Areas as well as the onshore Central Block and will continue to work closely with the Government to promote further expansion and recovery of Trinidad & Tobago’s natural gas resources.” At the same time, to support its overall LNG transport capabilities, BG has signed contracts for two new LNG vessels to be built by South Korean giant Samsung Heavy Industries. The vessels are expected to be delivered in 2010, holding each a capacity of 170,000 cubic metres. At present, Samsung is already building four smaller vessels for BG. Another major issue that could support BG’s position soon is its overall attractiveness to majors for partnership on new international ventures. At the same time that BG reported its expansion plans in the Caribbean, Indian oil and gas major ONGC [NSE:ONGC] reported that it is assessing the option of taking several international operators as partners on upcoming E&P blocks. One of its targeted partners is BG, which has vast experience on deepwater gas exploration and production blocks already. ONGC also is discussing possible scenarios with Italian oil and gas major ENI [NYSE:E] and Brazilian oil major Petrobras [NYSE:PZE]. BG’s position in India has been strong since in 2005 when ONGC and BG Exploration and Production India Ltd., a unit of BG, entered into three development agreements for deepwater blocks in India. Conclusion The future of BG as a company and major gas producer is bright, whatever analysts around the world are currently stating. Around 2001-2002, main theories surrounding BG were based on its overall debt-position not taking into account ongoing developments and possible cash streams. This seems to be again the case. Investors should not only looks at profit margins of crude oil companies, but have a more open mind to the possibilities of single resource players. When it’s time to put some new eggs in the basket; this one should not turn into an ugly duckling.