Net profit rose to 308 million pounds, excluding non-recurring items, due mainly to high gas and oil prices, the company said in a statement. The result was at the bottom end of a forecast range of 305 million to 338 million pounds in a Reuters poll of 10 analysts, who gave an average forecast of 317 million pounds.
The gain, however, exceeded an average 30 percent rise in net profits at integrated oil firms such as BP Plc and Royal Dutch Shell Plc, which were also buoyed by record oil prices and strong gas prices in the quarter.
BG's shares were down 0.2 percent at 527 pence at 1610 GMT, in line with the DJ Stoxx European oil and gas sector index.
BG's share buyback plan is in line with rivals including BP and Shell, which have spent much of their bumper revenues on buying their own shares, to the annoyance of world leaders who want the firms to invest more in boosting output.
Some analysts said the buybacks suggested that BG, like the rest of the sector, was starting to find it harder to secure attractive investment opportunities.
In the past, BG has returned less cash to investors than the oil majors, using its money to invest in achieving one of the strongest production growth records in the industry.
"We believe that this could signal that growth rates could slow from the exceptional rates that have been seen over the last five years," Teather & Greenwood said in a research note.
But BG said it was raising its investment budget for 2005 and 2006 by 500 million pounds, to 3.1 billion pounds, to exploit new investment opportunities.
Chief Executive Frank Chapman said the company had increased its net exploration acreage by one-third since the start of 2005.
Chapman added that the investment increase was not related to high cost inflation in the industry, currently running around 10 percent a year.
BG's upstream exploration and production unit was the main profit driver.
The 44 percent increase in exploration and production operating profit was lower than expected, however, because hydrocarbon output was disappointing, analysts said.
Oil and gas output was up 4 percent in the third quarter on the same period last year, at 41.2 million barrels of oil equivalent (boe) or 449,000 boe per day (boepd).
Analysts had expected production around 467,000 boepd. "This (underperformance) appears to be due to a more aggressive maintenance programme than expected," Citigroup said in a research note.
BG said it expected strong growth in output in the fourth quarter and added that it was on track to meet its 2006 production target of 580,000 boepd.
The average price that BG will receive for its North Sea gas production sold under contracts in the year from October 1, 2005, will rise to 23 pence per therm from 20 pence per therm in the previous 12 months.
This represented "quite a modest level of increase", with spot market rates twice the contracted level, Chapman said.
BG said it would continue to sell around 70 percent of its UK gas under such contracts.
Some analysts had predicted the firm would increase the proportion of gas it sold on shorter contracts to take advantage of higher prices in the spot market.
UK gas accounts for almost 30 percent of BG's total hydrocarbon production, analysts said.