LONDON -- BG Group (LSE: BG.L) shares slipped 1% to 1,207.5 pence after it cut its year-end production forecast from 750,000 barrels of oil equivalent per day to 720,000.

BG blamed "the long-term shut down at the Elgin/Franklin field, the deferral of the Jasmine field start-up to 2013, and the scaling back of drilling operations in the U.S." for the fall in the production rate. However, it's still a marked increase on the 650,000 barrel run rate BG started this calendar year at.

Despite an increase in both production volumes and prices for the second quarter, profits fell by 4% due to higher costs.

There were plenty of bright spots in these results, however. For example, the interim dividend is being increased by 10% to 11.88 cents, which is 7.64 pence. And net debt was reduced to $10.2 billion and the average maturity of these borrowings is 17 years, which is a payment profile that many European countries would kill for right now.

BG may be a fraction of the size of larger rivals such as Royal Dutch Shell and BP, but its focus on gas and expanding production profile should mean it has much better growth prospects.

Liquefied natural gas is becoming an increasingly important part of BG's business, and operating profits for this year are now expected to be at the upper end of the $2.6 billion to $2.8 billion range.

BG's expansion plans also seem to be progressing well. In Brazil, Petrobras (NYSE: PBR) continues to develop its "big five" discoveries in the Santos basin. BG reckons its stake in these projects could add 600,000 boed to its own production numbers by 2020. BG is also expecting to produce its first LNG in Australia in 2014, and it has seen continued success with the drillbit in Tanzania.

At the current share price, BG is valued at 40 billion pounds and trades on a forecast price-to-earnings ratio and yield of 14 times and 1.3% respectively.

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