Oil Search Revenue Lifted On-Quarter by Higher LNG Prices

By Robb M. Stewart

MELBOURNE, Australia--Papua New Guinea-focused Oil Search Ltd. (OSH.AU) enjoyed a jump in revenue in the third quarter as higher prices for its exported natural gas offset a dip in crude-oil over the previous quarter.

Production and sales volumes for the three months were also higher and the energy company said it continued to generate operating cash flows, boosting its cash balance.

Revenue for the three months through September rose 16% on-quarter to US$309.5 million, although it was 18% lower than the US$379 million of the same period a year earlier, the oil and gas company said Tuesday.

The average price realized for oil and condensate was slightly lower than in the second quarter at US$47.24 a barrel, but because of a roughly three-month lag between oil and liquefied natural gas pricing the realized price for LNG was 23% higher at US$6.44 per million British thermal units, the measure of energy content.

Production for the quarter rose to 7.63 million barrels of oil equivalent, up 6.3% on the previous quarter and ahead 2.8% on-year.

The company in July edged up its annual production forecast to between 28 million and 30 million barrels, a range it stuck with Tuesday. Still, Oil Search said it expected capital costs to be about 12% lower than its previous forecast, at between US$240 million and US$275 million.

Oil Search, which runs all of Papua New Guinea's currently operating oil fields, counts as its main asset a 29% stake in Exxon Mobil Corp.'s (XOM) PNG LNG liquefied natural gas venture. It also has a nearly 23% interest in another LNG development planned in Papua New Guinea, led by France's Total SA (TOT), that covers the onshore Elk and Antelope gas discoveries.

In July, Oil Search dropped plans to buy InterOil Corp. (IOC), one of its partners in Total's Papua LNG project, after it was outbid by Exxon.

It said Tuesday it expected talks to begin with Total after Exxon joins their joint venture on possible cooperation and integration on the next phase of LNG development in Papua New Guinea. Oil Search said it believes there is a sufficient gas resource in Elk-Antelope, as well as the P'nyang gas field in the country, to underpin at least two new LNG production lines of the scale of the existing PNG LNG operation.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

October 17, 2016 19:06 ET (23:06 GMT)

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