PNG LNG Lifts Oil Search
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Papua New Guinea-based Oil Search Ltd reported a 12.6 percent rise in fourth-quarter revenue on Tuesday, supported by strong output from the PNG LNG (liquefied natural gas) project and improving oil prices.
Production of oil and natural gas fell 4% quarter-over-quarter to 7.59 million barrels of oil equivalent in the three months through December but revenue was up 2.2% at $US389 million from $345.6 million in the year-ago quarter, in line with analysts’ estimate of $390 million.
The company said it expects 2018 full-year production to be in the range of 28.5 million to 30.5 million barrels of oil equivalent (mmboe), while 2017 production was 30.31 mmboe.
"Lower operated production is expected to be offset by higher production from the PNG LNG Project, which continues to perform very well, contributing higher margin barrels of oil equivalent to the Company’s production base.
Revenue for the year was up 17% at $US1.446 billion.
The ExxonMobil-led PNG LNG project produced at an annual rate of 8.3 million tonnes in the quarter, 20% above its nameplate capacity, the company said as a rapid rise in Chinese demand sent Asian basin LNG prices soaring in the final months of 2017.
“Fourth quarter production of 7.59 mmboe took full-year production to 30.31 mmboe, which was at the upper end of our guidance range and an all-time record,” the company said.
Oil Search said talks with its partners ExxonMobil Corp and Total SA on expanding the project had progressed and the companies expect to present their plan to the PNG government early this year.
They aim to make a final investment decision on the expansion in 2019, Oil Search said. The timing is a bit later than Oil Search has previously suggested.
The rise in revenue was also underpinned by a 16% rise in crude oil prices in the December quarter. Quarterly sales volume, however, fell 6% to 7.67 mmboe, Oil Search added.
Over 2017, Oil Search’s cash balance rose from $US863 million to just over $US1 billion. Over the same period, the Company repaid $US314 million of PNG LNG project finance debt, with net debt at the end of 2017 of $US2.61 billion, compared to $US3.08 billion at the beginning of the year. Including $US850 million of undrawn corporate credit facilities, Oil Search had total liquidity of nearly $US1.9 billion at the end of 2017.
The shares rose 0.4% to $7.69.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.