BG Group has made a £6bn approach to buy an Australian gas company - its biggest takeover bid ever - after reporting a 78% increase in first-quarter profits from soaring oil and gas prices.
The approach to Origin Energy is aimed at bolstering its position in the fast-growing Asia-Pacific liquefied natural gas (LNG) market by taking control of the Australian utility's reserves.
Shares in BG fell 5% in early trading as City analysts worried about its outline offer of A$14.70 (£7) a share in cash, a 40% premium to Origin's closing price of A$10.47 on Tuesday.
BG said yesterday that net profit rose to £767m from £432m in the same period last year and its results compare with a 12% rise in first-quarter profit at Shell and a 48% rise at BP.
BG's core upstream, gas and oil production unit had a 50% jump in profit thanks to a more than 10% rise in average gas prices and a rise of about 70% in crude prices. Frank Chapman, chief executive of BG, denied that the company was profiting at the expense of British homeowners, who have faced energy price increases of about 17% recently. Analysts said the purchase of Australia's second-largest energy retailer would help fill a hole in BG's LNG business, which is booming and soaking up shipments originally expected to land in the US.
David Thomas, a Citigroup oil analyst, said: "Strategically, such a purchase looks sound, based on BG's aspirations to have regional supply of LNG to Asia-Pacific markets."
But others fretted about the value being put on Origin. "It's a pretty high price and premium," said Sydney-based Jason Mabee, a utilities analyst at ABN Amro. Colin Smith, analyst at Dresdner Kleinwort, said the market would also need to be convinced about the logic of BG, Europe's fourth-largest non-government-controlled oil and gas company by market value, buying Origin's electricity assets.
The approach to Origin Energy is aimed at bolstering its position in the fast-growing Asia-Pacific liquefied natural gas (LNG) market by taking control of the Australian utility's reserves.
Shares in BG fell 5% in early trading as City analysts worried about its outline offer of A$14.70 (£7) a share in cash, a 40% premium to Origin's closing price of A$10.47 on Tuesday.
BG said yesterday that net profit rose to £767m from £432m in the same period last year and its results compare with a 12% rise in first-quarter profit at Shell and a 48% rise at BP.
BG's core upstream, gas and oil production unit had a 50% jump in profit thanks to a more than 10% rise in average gas prices and a rise of about 70% in crude prices. Frank Chapman, chief executive of BG, denied that the company was profiting at the expense of British homeowners, who have faced energy price increases of about 17% recently. Analysts said the purchase of Australia's second-largest energy retailer would help fill a hole in BG's LNG business, which is booming and soaking up shipments originally expected to land in the US.
David Thomas, a Citigroup oil analyst, said: "Strategically, such a purchase looks sound, based on BG's aspirations to have regional supply of LNG to Asia-Pacific markets."
But others fretted about the value being put on Origin. "It's a pretty high price and premium," said Sydney-based Jason Mabee, a utilities analyst at ABN Amro. Colin Smith, analyst at Dresdner Kleinwort, said the market would also need to be convinced about the logic of BG, Europe's fourth-largest non-government-controlled oil and gas company by market value, buying Origin's electricity assets.
Source: The Guardian|by Terry Macalister
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