Oil Search raises production forecast after bumper Q2 results

Vessel at Oil Search and Exxon-Mobil PNG LNG project

Vessel at Oil Search and Exxon-Mobil PNG LNG project

Oil Seach has upgraded its 2015 production target from 26–28 MMboe to 27–29 MMboe, off the back of solid Q2 results.

Production at the company’s PNG plant increased 7 per cent during the second quarter to 7.4 MMboe with the firm’s LNG operations contributing 76 per cent of total output.

Oil Search’s revenue for Q2 declined 17 per cent during the second quarter to US$391.5 million off the back of slumping LNG and gas prices, which averaged US$8.10 per MMbtu during the three-month period.

Total revenue for the six-month period ending 30 June, however was propped up by the company’s oil operations and finished 40 per cent higher compared to the same period in 2014.

Oil Search’s upgraded forecast comes after the company and its joint-venture partner Exxon-Mobil, in April secured a power sale agreement with the PNG government to commence supplying the country with electricity from July.

And preparations are reportedly underway to drill two wells in the first half of 2016 in PNG Block PPL339, which the firm has an operating interest of 70 per cent.

Oil Search managing director Peter Botten said he was confident the company’s PNG LNG plant would produce above the nameplate capacity of 6.9 MMt/a in 2015.

“The PNG LNG Project’s contract customers continued to take their full contractual volumes and the Project was successful in selling all its additional spot cargoes during the period,” he said.

Investors promptly responded to today’s announcement with the company’s share price increasing 4 per cent before the close.

Matthew Howell, research analyst with commercial intelligence firm Wood Mackenzie, said Oil Search’s quarterly update was expected.

“Over the past 12 months they have been quite positive on their LNG projects in PNG and the capacity of the plant. And that has been a good story for them,” he said.

“Historically, PNG is one of those countries that has had an oil industry, but not a great deal of oil production. So with the fruition of these LNG projects, they have really changed the PNG landscape.”

Enter your details to subscribe to the free fortnightly Gas Today e-newsletter

Thank you for signing up for the Gas Today Online Update.