Oil Search (OSH) narrowly beat its full-year production guidance, thanks to a solid performance in the December quarter and the company now expects to output to steady in 2017.
PNG-focused oil and gas producer reported a 12% rise in total revenue for the December quarter to $US345.6 million ($A456.3 million).
Sales volume rose in the quarter to 7.93 million barrels of oil equivalent (Mboe), while production rose 1% to 7.72 Mboe.
“This very pleasing result was driven primarily by the PNG LNG Project, which produced at an annualised rate of approximately 8.3 MTPA during the quarter, up from 8.1 MTPA in the third quarter and 20 per cent higher than the nameplate capacity of 6.9 MTPA,” managing director Peter Botten said the 4th quarter production report.
“The high performance and reliability seen to date from all components of the PNG LNG Project infrastructure are enabling the co-venturers to derive significant additional value from the existing installed capacity and the annualised production rates currently being achieved auger well for 2017.
“Our operated production also performed above expectations during 2016, reflecting continued success in actively managing these mature fields.”
That helped push full-year production to 30.24 Mboe, up 3% from 2015, and just ahead of the company’s guidance for a maximum output of 29.5 Mboe for 2016.
Sales for the year rose 6% to 30.59 Mboe, but total revenue slid 22% to $US1.24 billion, thanks especially to lower oil prices during the first half.
The sees 2017 output in the range of 28.5 to 30.5 million Mboe.
Oil Search will detail its full-year results on February 21. Oil Search shares were down slightly -0.2% at $6.99.
The big news from the report was a looming reserves boost for the company’s PNG gas fields.
Oil Search said an independent assessment of fields that supply the producing PNG LNG project was likely to result in an increase to reserves.
As well, the company said gas was found at the Muruk-1 exploration well in December, while gas is also available at the undeveloped P’nyang and at Elk-Antelope that could be used for an expansion of LNG capacity.
Managing director Peter Botten said the resources support Oil Search’s view that there is more than enough gas discovered in PNG to supply “At least two, and possible three, expansion trains" of LNG production in addition to the two units at the PNG LNG venture.
This expansion is contingent though on the messy situation involving InterOil of Canada being tidied up
InterOil shareholders are due to vote on the sweetened bid from Exxon Mobil on February 14. The takeover, if successful, will bring ExxonMobil into the Elk-Antelope venture, opening up scope for a more cost-effective expansion of LNG production.
“Contingent on the successful completion of this offer, Oil Search anticipates that formal talks regarding cooperation and integration of the next phase of LNG development will commence, on an accelerated basis, in early 2017,” Mr Botten said in the quarterly report yesterday.
