Oil Search suffered a small sell off in yesterday's down day, despite revealing higher revenues for the year.
The shares shed around 35c to finish at $4.35 which was the day's low.
The sell off may have been prompted by a hint of lower than expected second half earnings.
"The Company's financial results for the year to December 2007 will be released to the market on 19 February 2008.
"As indicated previously, second half operating costs are expected to be slightly higher than those recorded in the first half, due to increased activity levels and the impact of the strong Australian dollar.
"The full year amortisation rate (including depreciation and site restoration) is expected to average around US$14.50 per barrel of oil equivalent, while the effective tax rate for the full year is likely to be between 60 – 65%.
"Exploration expensed in the second half of 2007 will continue the trend seen in the first half, reflecting the considerably higher exploration expenditure incurred over the year," the company told the ASX.
Interim earnings of $46.9 million were down sharply from the $115.3 million earned in the first half of 2006. The company blamed increased taxes, higher non cash costs and higher exploration spending.
There seems to be a suggestion that costs will be up in the second half as well.
The company said that following a strong fourth quarter, sales revenue for the 2007 full year reached a record level of US$690.2 million, compared to US$628.9 million in 2006.
"Key drivers were continued strong production from the PNG oil fields and high oil prices, with Oil Search realising an average price for the year of US$77.78 per barrel, 16% higher than in 2006.
"Oil and gas production net to Oil Search for the fourth quarter was 2.47 mmboe, 3% lower than in the third quarter of 2007, due to natural field decline in PNG and a lower contribution from Egypt. Total production for the 2007 full year was 9.78 mmboe, which was in line with Company forecasts.
"Fourth quarter oil sales were 2.37 million barrels, compared to oil production of 2.21 million barrels, bringing sales and production for the year broadly into balance.
"The average realised oil price achieved for PNG crude in the fourth quarter was US$95.73 per barrel, 25% higher than in the third quarter.
"In December, two of the three cargoes lifted were sold at prices in excess of US$100 per barrel, a record for the Company.
"Sales revenue for the fourth quarter of 2007 was US$229.8 million, 33% higher than in the third quarter.
"Advances were made during the quarter on a range of pre-FEED activities for the world-scale PNG LNG development operated by ExxonMobil. Much of this work is now nearing completion, in preparation for a FEED decision to be made during the first quarter of 2008.
"Production commenced in December 2007 from the Shahd and Ghard fields in the East Ras Qattara block in Egypt. The two wells are producing at a combined rate of 1,200 bopd, with oil being trucked to nearby processing facilities. Oil Search has a 49.5% interest in the East Ras Qattara Block. This represents Oil Search's second producing area in Egypt.
"As at the end of 2007, Oil Search had a cash position, net of debt, of US$326.5 million, compared to US$467.9 million at the beginning of the year. Over the year some US$213 million was spent on exploration and appraisal activities, US$20 million net on gas commercialisation and US$155 million on development and rig purchases. A total of US$163.6 million of exploration and evaluation costs was expensed (subject to audit review).
"The annual asset impairment review process is currently underway and will be completed in February. During the year, US$154.6 million (US$159.2 million in 2006) was spent on development, production and other capital items."
