Oil Search Maintains Production Targets
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Oil Search has reaffirmed its full-year production guidance despite a small dip in first quarter production. The company is the first of our trio of oil and gas majors to release their March quarter reports this week. Woodside and Santos are due to release their reports today and tomorrow.
The company told the ASX in its March quarter report that production fell 2% to 7.57 million barrels of oil equivalent. The oil and gas producer’s sales for the three months to March 2017 were down 9% to 7.22 Mboe due to the timing of shipments, but revenue was all but unchanged at $US343.7 million ($A454.5 million).
The Papua New Guinea-focused company said it was maintaining its production forecast for 2017, with output expected in the range of 28.5 to 30.5 Mboe. The company said it reduced its production costs to $US8-$US10 a barrel from the $US8.50-$US10.50 previously forecast.
Oil Search’s main asset is a 29 per cent stake in the PNG LNG development operated by Exxon Mobil Corp that began producing in April 2014.
It also owns a near 23% in the prospective Elk and Antelope gas fields in Papua New Guinea being developed by France’s Total SA.
CEO Peter Botten said yesterday that the March quarter saw talks begun between Exxon, Total and Oil Search on how best to develop the Elk-Antelope fields and other assets in Papua New Guinea, potentially making use of the PNG LNG project’s infrastructure.
“We expect talks regarding potential co-operation and integration of the next phase of LNG development to continue on an accelerated basis during 2017, leading to the delivery of binding commercial agreements before year end,” Mr Botten said in yesterday’s statement.
Oil Search ended March holding $US1.02 billion in cash, plus $US750 million in credit facilities. The company’s shares fell 1.9% to $7.21.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.