Oil Search's 1H Net Profit Jumps Five Times
Papua New Guinea focused Oil Search August 22 reported a 1H 2017 post-tax profit of $129.1mn, more than five times the first half of 2016 thanks to higher oil, gas and condensate prices.
The company’s breakeven oil price, including operating costs, corporate overheads, sustaining capital expenditure, interest payments and principal repayments, was $29.40/b, lower than the realised oil price of $53.35/b.
“Our robust asset base and financial strength enables us to continue to invest in growth projects, including the next phase of LNG development in PNG and further exploration, which can generate strong returns over the long-term, through what is expected to be a prolonged period of low oil prices,” said CEO Peter Botten. The 2017 full year production guidance has been upgraded to 29.0–30.5mn boe.
Output from the Exxon-operated LNG plant continues to beat nameplate, and marketing of the extra output, 1.2mn mt/yr, has met with some success, it said. "The interest levels highlight the marketability of PNG LNG’s reliable, high heating value gas and augur well for future marketing of expansion volumes. Terms with buyers are expected to be agreed by the end of 2017, in addition to the existing supply of 6.6mn mt/yr sold under long term SPAs with JERA, Osaka Gas, Sinopec and CPC," Oil Search said.
Discussions regarding the next phase of LNG expansion and development in PNG are continuing between Oil Search, ExxonMobil, operator of both the PNG LNG project and P’nyang, and French Total, the operator of Elk-Antelope, Oil Search said. Oil Search has 29% of the Exxon project and 23% in the Total project.
“Engagement remains focused on evaluating the various integrated development options for the Elk-Antelope and P’nyang gas resources. Key areas of discussion include establishing integration principles, including capacity and cost sharing; the optimal commercial model for asset ownership; and financing, whether to jointly or equity market the LNG and reaching alignment on future exploration acreage and activities,” Botten said.
The plan is to present an aligned view on the proposed coordinated development concept to the new Government in the fourth quarter of 2017, which will enable fiscal discussions to commence, before embarking on front-end engineering and design.
Oil Search believes that the most likely development scenario will involve the sharing of downstream infrastructure, through the location of at least 8mn mt/yr of additional LNG capacity on the existing PNG LNG project plant site, so that all stakeholders can benefit from the considerable construction and operating synergies available.
Shardul Sharma