Oil Search records 16pc increase in sales revenue

Business

OIL Search has recorded a net profit of US$129.1 million (K401.22 million) the company’s first half-year report.
The report released yesterday said that the net profit was more than five times the result in the last corresponding period.
The strong result reflected:

  • A 16 per cent increase in sales revenue to US$676.2 million (K2.1 billion), underpinned by materially higher average realised oil/condensate and LNG/gas prices, which increased by 28 per cent and 26 per cent respectively;
  • A 12 per cent reduction in operating costs, resulting in total unit production costs of  US$8.52 (K26.47) per boe (barrel of oil equivalent) and an increase in operating margin to 74 per cent; and,
  • A 13 per cent reduction in depreciation and amortisation expense, driven by lower depreciation and amortisation rates for the PNG LNG project as a result of a material increase in project reserves following certification.

Managing director Peter Botten said the half-year profit was also 21 per cent higher than the 2016 full year core profit.
“During the first half, the company remained focused on optimising its cost base and driving operational efficiencies,” he said.
“Unit production costs including upstream, pipeline and downstream costs were very competitive.
“Other operating costs fell 34 per cent to US$55 million (K170.93 million), primarily due to a net increase in inventory reflecting the timing of shipments and InterOil bid-related costs in 2016.”
Botten said Oil Search financial position improved substantially over the half year.
“We repaid US$153.4 million (K476.74 million) of PNG LNG project finance debt and our cash position increased from US$863 million (K2.68 billion) to US$974 million (K3.02 billion). At the same time, we continued to invest to value accretive growth opportunities, such as the successful Muruk exploration programme,” he said.