Oil Search is another company about to undergo a company-changing experience.
Unlike Amcor See next story), Oil Search will be changed by a long-pursued LNG project, something that it has been working at for years.
Except this project is enormous, one of the largest announced in the past year and one that will also remake Papua New Guinea in coming years.
Oil Search is a partner in the $US15 billion Exxon Mobil Corp-led liquefied natural gas project in Papua New Guinea.
Like Amcor Oil Search’s 2009 financial performance is also a ‘base’ report from which the benefits of the huge project in coming years can be measured.
The company said 2009 profit fell 57% on lower sales and prices.
It joined the likes of Santos, AWE and other producers in revealing the impact of the oil price rise and fall in the last two years: 2008 was a record, and 2009 saw a fall, with a stronger Australian dollar adding to the pressures.
Santos is another local partner in the huge PNG project.
Oil Search said in a statement to the ASX that net profit fell to $US133.68 million, or $A149 million down 57% from $US313.36 million, or $A361 million, in 2008.
Excluding significant items, net profit was $US96.6 million ($A111 million), down 58.5% from the $US240 million ($A276.4 million) in 2008.
Oil Search said 2009 total oil and gas production was 8.1 million barrels of oil equivalent (mmboe), 5% lower than in 2008 but in line with guidance.
Sales fell 37% to $US512.2 million.
The company said it was paid an average $US65.40 a barrel for oil in 2009, a decline of 35%.
The shares ended up 11 cents, or 2%, at $A5.41.
Oil Search cut its final dividend to 2 cents from 4 cents a year earlier.
Total for the year is 4c a share, down from 8c on capital expanded by the big funding raising issue during the year.
That was to help fund its share of the PNG project’s costs.
In the statement, Mr Botten said that “2009 was a watershed year for Oil Search, following the decision in December to proceed with the development of the PNG LNG Project.
“Financial Close for the Project is subject to the completion of the final sale and purchase agreement and the finalisation of financing arrangements with lenders, both of which are scheduled to be achieved in the first quarter of 2010.
"Reaching project sanction of a world scale LNG development in less than two years from commencing Front End Engineering and Design is a major achievement and is the culmination of much hard work by the Operator, ExxonMobil, the other Project participants, the PNG Government, landowners and a range of other key stakeholders.
"PNG LNG is a transformational project for Oil Search.
“At plateau, it will add approximately 18 million barrels of oil equivalent (mmboe) each year to Oil Search’s production, more than doubling present day production and providing a strong cashflow for the Company for over 30 years.
"As a result of the PNG LNG Project development decision, Oil Search has booked an additional 505 mmboe as proven and probable reserves, taking total reserves in this category to 567 mmboe.
"This is over eight times higher than the Company’s proven and probable reserves at the end of 2008.
“This again highlights that the development of this Project is a transformational event for Oil Search," he said.
