Oil Search said on Tuesday that Exxon, which operates the PNG LNG project and the P'nyang field, Total, which operates the Elk-Antelop project, examined "various development concepts for the Elk-Antelope and P'nyang gas fields" during the June quarter, where OIl Search's production slipped slightly due to programmed maintenance that shut down its two production facilities for 17 days.
“Oil Search believes the most likely development is based on the construction of two LNG expansion trains at the PNG LNG Project plant site, thereby utilising existing downstream infrastructure, using the existing gas resources in the Elk-Antelope and P'nyang fields,” Oil Search chief executive Peter Botten said.
But with local and national election in full swing in PNG, the joint venture partners will be working towards presenting their "aligned view" to the new government late in the September quarter, or early in the December quarter.
“We believe that LNG expansion will be a key focus for the new government, which will be seeking to see a development move forward in a timely manner.”
Production at PNG LNG fell 3 per cent across the quarter, but ran at an annualised rate of 8.65 million tonnes per annum during June, the highest monthly rate achieved since start-up in 2014.
Oil Search posted a 4 per cent fall in total production for the June quarter to 7.24 million barrels of oil equivalent, while total revenue dropped 3 per cent to $US332.5 million compared with the March quarter.
For the first half of calendar 2017, revenue was 16 per cent ahead the first half of 2016, to $US676.2 million.
The company's average realised LNG and gas price was US$7.93, 7 per cent higher than the first quarter average, while the average realised oil and condensate price decreased by 8 per cent to $US50.99 a barrel.
The company affirmed guidance for 28.5 mmboe to 30.5 mmboe and said its costs per barrel would be at the lower end of production guidance for $US8 to $US10.
Royal Bank of Canada analyst Ben Wilson said he is “awaiting the outcome of the PNG election [expected August 2017], after which we expect rapid progress toward a formal structure for expansion trains at PNG LNG to emerge over the second half.
“We retain our Outperform recommendation on Oil Search as one of the few LNG focused plays capable of materially growing group production in a weak LNG and oil market.”.
SOURCE: FINANCIAL REVIEW/PACNEWS