Oil & Gas Company Oil Search released its half year results today (August 22, 2017).
Despite a slight drop in production levels in comparison to the same period in 2016, an increase in world oil prices coupled with low operating costs in the first half of 2017 ensured a profit of US$129.1 – equivalent to just under K400 million.
Oil Search Results at a glance:
• Total production of 14.81 mmboe, similar to 1H16:
o PNG LNG achieved record annualised rate of 8.65 MTPA in June following compressor upgrade, high rates sustained into July
• Robust financial metrics:
o Net profit after tax of US$129.1 million, more than five times 1H16 NPAT
o Unit production costs remained low at US$8.52/boe
o Improved operating cash flows and strong liquidity
• 2017 interim dividend of four US cents up from one US cent in 1H16
• Very encouraging exploration/appraisal results on Muruk, with activity set to accelerate in 2017 onwards
• Dialogue progressing between PRL 15 and PRL 3 joint venture partners, focused on presenting aligned view on next phase of LNG expansion and development to new PNG Government in 2H17
According to Oil Search Managing Director, Peter Botten, the results are pleasing.
“During the first half, the Company remained focused on optimising its cost base and driving operational efficiencies. Unit production costs, including upstream, pipeline and downstream costs, were a very competitive US$8.52 per boe, which contributed to a strong operating margin of 74%, up from 65% in the previous corresponding period. We have revised down our oil price forecasts, in line with current market expectations. Pleasingly, this has not resulted in any impairment to the carrying value of any asset. Our robust asset base and financial strength enables us to continue to invest in growth projects, including the next phase of LNG development in PNG and further exploration, which can generate strong returns over the long-term, through what is expected to be a prolonged period of low oil prices.”
