Oil Search’s Profits Slump after PNG Earthquake

Australia-listed Oil Search saw its profits slump in the first half of 2018 following an earthquake during the period in Papua New Guinea where its PNG LNG project is based, the company said August 21.

The company’s net profit after tax for January-June (1H) 2018 was $79.2 million, which is down 39% year on year from $129.1mn, Oil Search said in its half year results.

“Oil Search’s financial performance for the first half of 2018 reflected the impact of the 7.5 magnitude earthquake, which struck the PNG Highlands in late February 2018 and resulted in the temporary shut-in of all Oil Search-operated production and the PNG LNG Project,” Oil Search’s managing director Peter Botten said.

“Pleasingly, all production facilities are now back online, a major achievement by our and ExxonMobil’s operational teams, with PNG LNG presently operating above pre-earthquake levels and production from Oil Search’s operated facilities progressively ramping up,” he added.

The company’s total revenue dropped 18% year on year from $676.2mn to $557.8mn, while total production and sales each fell by 31% from 14.81mn barrels of oil equivalent (boe) to 10.24mn boe and from 14.18mn boe to 9.77mn be, respectively.

Meanwhile, the strong recovery in production from PNG LNG following the earthquake resulted in the company lifting its 2018 production guidance. It’s now expecting 24mn boe-26mn boe, up from the previous expectation of 23mn boe-26mn boe, it said.

PNG LNG is operated by ExxonMobil (33.2%), with Santos (13.5%), National Petroleum Company of PNG (16.8%), JX Nippon Oil and Gas Exploration Company (4.7%), Mineral Resources Development (2.8%), and Oil Search (29%) holding interests in the project.