Oil Search output dips in June quarter

Papua New Guinea-focused Oil Search said it is sticking with 2017 production guidance despite output in the second quarter slipping due to planned maintenance at its operations and Exxon Mobil Corp’s PNG LNG gas-export facility.

Production for the quarter declined 4.4 per cent quarter-over-quarter to 7.24 million barrels of oil equivalent in the three months through June, and inched down 0.5 per cent to 14.81 million barrels for the first half of the year.

That left the company (OSH) 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 $US135 million and $US145 million and overall capital expenditure $US380 million-$US480 million.

Sales revenue for the second quarter was 3 per cent lower at $US332.5 million, as a rise in the average price it realised for liquefied natural gas offset a fall in the oil price, but was 16 per cent higher for the first half at $US676.2 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 per cent 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 per cent interest in the prospective Elk and Antelope gas fields in Papua New Guinea being developed by France’s 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 tonnes in fuel from the PNG LNG project. Output from the project averaged 8.65 million tonnes a year in June, the highest rate since start-up, it added.

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