PNG Focused Oil Search Ups 2016 Production Guidance
Papua New Guinea-focused Oil Search last week upped its 2016 full year production guidance to 28-30mn barrels of oil equivalent. In April, it guided for 27.5-29.5mn boe.
Total production in the first half of 2016 was 14.9mn boe, the second highest half-year in company’s history while sales volumes rose 5% to 15.2mn boe, a record for Oil Search, the company said on August 23 while announcing its results for the six months that ended on June 30.
The string of poor results continues for Australia listed energy firms as Oil Search too has reported poor results. Its net profit of A$25.6mn (US$19.3mn) was down 89% from the same period of last year. Total revenue fell 33% to $580.8mn as realised prices for oil and condensate slumped 27% and prices for its gas and LNG product fell 40%. It managed to cut production costs by 8%.
PNG LNG project (Credit: Oil Search)
PNG LNG Project
Performance from the PNG LNG project was very strong, averaging 7.7mn mt/yr during the first half, 12% above the nameplate capacity of 6.9mn mt/yr. During the first half of 2016, 53 LNG cargoes were sold, comprising 45 sold under long-term contracts and eight sold on the spot market. Six of the eight spot cargoes were sold to customers in Japan.
Last month, Oil Search withdrew its bid to buy InterOil after it was trumped by ExxonMobil. InterOil on July 18 announced that ExxonMobil had offered a 'superior proposal'.
In May, InterOil entered into an agreement to be acquired by Oil Search for $2.2bn, with Oil Search to sell about 60% to Total for $1.2bn. Under the arrangement agreement between Oil Search and InterOil, Oil Search had the opportunity to submit a revised offer before or after any agreement is entered into by Interoil and ExxonMobil.
“Following a detailed review of the ExxonMobil proposal, including an analysis of the recent Elk-Antelope resource certification, the value and opportunities offered by cooperation between Papua LNG and PNG LNG and the likelihood of realising this value by having ExxonMobil in the Papua LNG Joint Venture, the Oil Search Board has decided it is not in the best interests of shareholders to submit a revised offer for InterOil,” Oil Search said last month. Exxon will pay more than $2.5bn for InterOil.
Oil Search has interests in two PNG based LNG projects: ExxonMobil operated PNG LNG project, which is due for expansion, and Total operated Papua LNG project, which is based on development of the Elk-Antelope gas fields in PRL 15. InterOil too has a 36.5% stake in Papua LNG project.
Shardul Sharma