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Oil Search revenue hit by commodity price

Staff Reporter | 3:37 PM | |
OIL Search Limited’s revenue fell 33 percent to US$580.8million despite recording high levels in production and sales volumes. Managing director Peter Botten in releasing the firm’s half year results said the drop in revenue was driven by the materially lower realised commodity prices. “Average realised oil and condensate prices fell 27 per cent while LNG and gas prices were 40 per cent lower than in the previous corresponding period. “As a result, despite an eight per cent reduction in unit production costs to a very competitive US$8.21/boe reflecting the successful implementation of a range of major cost reduction initiatives, net profit after tax for the first half was US$25.6million,” he said.

Mr Botten said total production for the first half of 2016 was 14.9million barrels of oil equivalent (mmboe) which for the firm was the second highest half year result in its corporate history. He said the PNG LNG project had produced an annualised rate of 7.7 metric tonnes per annum which he said was significantly above the name plate capacity of 6.9 MTPA while the PNG oil and gas fields had contributed 3.52mmboe, compared to 3.38mmboe in the previous corresponding period.

“This was achieved despite a planned production rate reduction for routine compressor maintenance and an unplanned shutdown relating to the generation control system in May, the first the project had been completely shut down since production started in mid-2014. “Pleasingly the operator had brought the plant back online quickly and safely with production reaching a new monthly high of 8.2MTPA in June,” he said. He said sales volumes rose five percent to 15.2mmboe, which was also a record for the company.

He said during the first half of 2016 that 53 LNG cargoes were sold-45 had been under long term contracts and eight on the spot market. Six of the eight that had been sold on the spot market were vended to customers in Japan, reflecting the desirability of PNG LNG’s high heating value gas to Japanese consumers. “As at the end of June 205 LNG cargoes had been delivered from the project since commencing sales.

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