Oil Search disappointed the market yesterday with its June quarter and half year production and sales report, missing market forecasts which saw the shares fall 2.2% to $7.18.
The company told the ASX that says second-quarter production and revenue dipped by 5.0% as expected, but the first half was less than analysts had forecast as the company struggles to recover after last year’s earthquake in Papua New Guinea (which happened in February 2018).
The company said total production for the April-June period was 6.9 million barrels of oil equivalent, down from 7.2 million barrels a year ago because of scheduled maintenance activity. The first production was 38% higher at 14.1 million barrels from the June half-year of 2018 when the earthquake halted operations and delayed production and shipments of oil, gas, and LNG.
Based on performance to date, the company said production guidance for 2019 (December 31) full year is 28 – 31 million barrels, with the upper end slightly down on the previous outlook.
Revenue for the second quarter was $US378.9 million ($A538.1 million), down from $US398.1 million a year ago (when prices were much higher).
First half 2019 revenue was 39% higher at $US777 million ($A1.1 billion).
The company also cut its full-year investment expenditure guidance to $US500 million to $US610 million from $545 million to $655 million following delays for the expansion of its PNG gas plant.
Oil Search said that it June 30 it had liquidity of $US1.44 billion, comprising $US538.3 million in cash and $US900 million in credit facilities.
A further $US300 million of corporate credit lines is in the process of being finalised, to provide additional flexibility ahead of the Alaskan option payment, which will complete in late August.
Oil Search also said talks with the PNG government on the P’nyang gas agreement are on hold until the government – led by the newly elected Prime Minister James Marape – completes a review of the Papua LNG agreement.
