Oil Search Production Dips, But 2017 Guidance Maintained
By Robb M. Stewart
MELBOURNE, Australia--Papua New Guinea-focused Oil Search Ltd. (>> Oil Search Limited) said it was sticking with 2017 production guidance despite output in the second quarter slipping due to planned maintenance at its operations and Exxon Mobil Corp.'s (>> Exxon Mobil Corporation) PNG LNG gas-export facility.
Production for the quarter declined 4.4% quarter-over-quarter to 7.24 million barrels of oil equivalent in the three months through June, and inched down 0.5% to 14.81 million barrels for the first half of the year.
That left the company on track to produce 28.5 million to 30.5 million barrels for the year, the company said.
The company, based in the Papua New Guinea capital of Port Moresby and listed in Australia, said it also continued to expect operating costs would be between US$135 million and US$145 million and overall capital expenditure US$380 million-US$480 million.
Sales revenue for the second quarter was 3% lower at US$332.5 million, as a rise in the average price it realized for liquefied natural gas offset a fall in the oil price, but was 16% higher for the first half at US$676.2 million. There is a lag between crude-oil and prices for LNG, which are often benchmarked against oil.
Oil Search's main asset is a 29% stake in the PNG LNG gas-export project operated by Exxon that began producing in April 2014. It also owns assets, including a near-23% interest in the prospective Elk and Antelope gas fields in Papua New Guinea being developed by France's Total SA (>> Total SA).
The company said there was strong customer interest in longer-term LNG supply agreements, and Exxon continued to market up to 1.3 million tons in fuel from the PNG LNG project. Output from the project averaged 8.65 million tons a year in June, the highest rate since start-up, it added.
Write to Robb M. Stewart at [email protected]