DISCOVERIES AND EXPLORATION ACREAGE

The first exploration phase on the Hassi Ba Hamou Perimeter (HBH) acreage (BG Group 36.75% and operator) has been completed. BG Group and partners have entered the two year, second exploration period and relinquished 30% of the block area. Under the first phase drilling programme, three appraisal and three exploration wells were completed. The RM­-1 exploration well was a new gas discovery, and is in addition to the existing HBH discovery appraised by the three appraisal wells completed. The RM discovery will be appraised during the second exploration period.

BG Group was successful in the first Algerian licence round held under the new hydrocarbon law, securing the Guern el Guessa concession north­west of the existing HBH permit. BG Group will hold 49% and be operator. Sonatrach will hold a 51% interest. This is a significant step for the Group in building a material business in Algeria.

Exploration continued offshore Brazil during 2008 where the exploration success and scale of resources discovered have been exceptional. BG Group and partners have now achieved five discoveries in the Santos Basin pre­salt play. BG Group currently estimates its net share of reserves and resources at over three billion boe.

The Tupi discovery on block BM­S­11 (BG Group 25%) is estimated to hold gross reserves of five to eight billion boe. Implementation of an extended well test (EWT) and initial development phase were sanctioned during 2008. First production from the EWT is expected in 2009 with gross production of 14 000 bopd. First production from the 100 000 bopd initial development phase is expected in late 2010. In April, operator Petrobras contracted three rigs from Seadrill to be used in the Tupi initial development and Tupi appraisal, as well as in the initial programme on BM­S­9.

In BM­S­9, the Guará well was announced as a discovery in June 2008, the second within this block. In September 2008, BG Group announced the completion of drilling on the Iara well in BM­S­11 and estimated gross recoverable volumes to be three to four billion boe. The exploration success with Guará and Iara has led the partnership to fast track planning on two additional 100 000 bopd initial development phases, with the objective of achieving first production in 2012 on Guará and 2013 on Iara. Evaluation Plans for the Carioca, Guará and Iara discoveries have been approved by the federal regulator.

Exploration and appraisal work is scheduled to continue in 2009 with three to four appraisal and development wells and five exploration wells. The Corcovado prospect on BM­S­52 was spudded in January 2009 and the Group is planning a second well during the year. There will also be drilling activity on BM­S­9 with the Iguaçu well which spudded in January 2009 and the Abaré West well. A well is also planned on Sagitário in BM­S­50.

The scale of the discoveries offers BG Group the opportunity to build a material, long­-term E&P business in Brazil with net production from the first three major developments planned to reach over 400 000 boed in 2020.

Further information:
	Brazil operations

In September 2008, BG Group began its drilling programme in Libya. The Group has drilled two wells in the Sirte Basin and one well in the Kufra Basin which were dry. A further well is expected to be drilled in the Kufra Basin in 2010.

Exploration and appraisal drilling began on Oil Prospecting Licence (OPL) 286­DO in November 2008. The first well, which completed in January 2009, encountered hydrocarbons but not in commercial quantities and was therefore written off. Another exploratory and appraisal well (Boi Deep) is expected to be drilled in first quarter 2009. The licence contains an existing discovery, Boi­-1. The current drilling campaign will help assess the prospectivity and commercial viability of the eastern half of the block. On OPL 332, processing of 3D seismic acquisition was completed in January 2008 and drilling is planned for 2010 after further evaluation.

In January 2009, BG Group completed a farm­in agreement for OPL 284, which gives BG Group a 45% interest. OPL 284 is located in deep water, approximately 250 kilometres south­east of Lagos.

Further information:
	Nigeria operations

BG Group started its Norwegian operated exploration drilling programme in 2007. In 2008, four wells were drilled and completed, of which two were BG Group ­operated. Three discoveries were made: Jordbær (BG Group 45% and operator), Pi North (BG Group 60% and operator) and Ververis (BG Group 30%). An appraisal well was drilled on the 2007 discovery Nucula (BG Group 20%) which discovered hydrocarbons but in sub-­commercial quantities. The licence remains under assessment for potential future opportunities. The Jordbær discovery, where gross reserves are estimated at 60­110 mmboe, is regarded as a potential play opener, with a number of similar prospects in BG Group ­held licences in the vicinity.

In 2009, exploration and appraisal drilling will continue with two BG Group­operated wells and one partner­ operated well. A commitment has been made to drill the high pressure/high temperature Mandarin prospect (BG Group 96% and operator) and an appraisal well on Bream (BG Group 40% and operator) is scheduled for the second half of 2009.

Further information:
	Norway operations

During 2008, BG Group continued drilling on Block 60, which contains the Abu Butabul gas and condensate discovery, and completed five wells in 2008. Drilling is planned to continue into 2009, with at least three further appraisal wells anticipated. Abu Butabul is a tight gas discovery and the ability to get gas to flow effectively and efficiently will be key to determining commercial viability. The Group is aiming to move to project sanction, with first gas targeted for 2012.

Further information:
	Oman operations

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