Oil Search Reports 85% Drop in H1 Underlying Profit

Sydney-listed Oil Search’s underlying profit, which strips out one off items, dropped 85% yr/yr during the six months to June 30 (H1) thanks to a sharp decline in oil and gas prices, it said on August 25 in a statement.

Oil Search’s core profit after tax slumped to $24.7mn (A$34.3mn) from $165.2mn a year earlier. The company reported a net loss of $266.2mn in H1 as against a net profit of $161.9mn in the same period of previous year owing to a pre-tax impairment charge of $374.2mn ($260.2mn after tax). Last month, the company said it would recognise a non-cash, pre-tax impairment charge of $360-400mn ($250-300mn on a post-tax basis). 

Total production was 14.66mn barrels of oil equivalent (mmboe), up 4% yr/yr, reflecting continued strong performance from the PNG LNG project and the recovery of oil production, the company said. Its average realised oil prices dropped 45% and LNG prices fell 15%.

In Papua New Guinea, the company said, ExxonMobil has now re-engaged with the government, “aimed at aligning the parties on terms for the development of the P’nyang field that are fair and balanced for all stakeholders and that consider current global LNG conditions.” In February, the government called off negotiations on the P’nyang gas agreement saying it was disappointed by ExxonMobil’s unwillingness to agree to reasonable terms in line with other international gas projects. 

Oil Search, ExxonMobil and France's Total have been working on developing the proposed Papua LNG project and the expansion of the existing PNG LNG plant. The proposed expansion of PNG’s LNG production and export capacity was dependent on the successful conclusion of the P’nyang gas agreement.