Three months into a now-hostile bid battle with Australia’s Origin Energy, today’s second-quarter results from BG Group gave investors the chance to appraise the British company’s merits away from the inflated rhetoric of M&A.

Once again, it was BG’s liquified natural gas operations which stood out, with second-quarter profits nearly quadrupling - from £88 million to £367 million - on the company’s ability to divert cargoes to booming Asian markets.

That surge offset a disappointing performance in natural gas production - caused by temporary shutdowns at its facilities in Grangemouth in the UK and Panna in India - and enabled quarterly operating profits to touch a record £1.43 billion.

But it was BG’s success in finding new reserves that gave long-term investors the greatest comfort. Over the last three months, BG has made no fewer than eight significant discoveries, spanning Algeria, Brazil, Norway, Thailand, Trinidad and the UK. The remainder of 2008 promises more of the same, with BG due to provide updates on further drilling in Brazil, Norway, Egypt and Oman.

However, the stockmarket has paid little heed to BG’s prowess with the drill bit: its shares, partly unsettled by Origin, have underperformed the FTSE all share by five per cent over the last three months to trade at just 10 times 2008 earnings.

That seems mean given the potential of BG’s extensive Brazilian assets and the possibility that it could itself become a target. Buy at £10.93.

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