OSL’s successful results for the first half of 2015 are as follows;
- Net profit up 49 per cent to US$227.5 million (K654.7m), driven by near tripling of production;
- Operating cash flow more than double 1H14;
- Interim ordinary dividend tripled, from two US cents to six US cents, 40 per cent payout ratio on 1H15 core profit;
- Maintains a strong balance sheet and liquidity position;
- Good progress on gas commercialisation activities in PNG, with potential PNG LNG expansion and Papua LNG Project among most competitive new LNG projects globally; and
- Business Optimisation Program in progress: OSH well placed, given strong cash flows from quality assets, cash operating margin of 75 per cent, balance sheet strength but BOP an opportunity to recalibrate cost structure, drive further efficiencies.
The team’s outlook so far is:
- 2015 production guidance increased to 27 – 29 mmboe, comprising: 6.3 – 6.9 mmboe from operated oil fields and Hides GTE;
- 21 – 22 mmboe from PNG LNG Project;
- 2H15 focus items;
- Ongoing oil production optimisation initiatives, with focus on process safety, reliability and well integrity;
- Continued delivery of Kutubu, Gobe Main and SE Gobe (third-party) gas to PNG LNG Project, operation of liquids export system via Kumul Marine Terminal; and
- Support operator in maximising PNG LNG production opportunities through optimisation/debottlenecking.
According to Oil Search, the outlook of the business environment will experience some positive changes seeing that the Oil market appears oversupplied into 2016 while inventories remain at record levels.
The falling of oil prices have an impact in the LNG prices and markets and will require ‘lower for longer’ pervasive in management thinking.
However, OSH will remain well positioned in giving a strong production with PNG LNG outperforming and further strong production, potential upside from our top quartile, high margin fields, solid balance sheet and liquidity and a strong cash flow generation.