OIL Search has announced a US$25 million (K87.1mil) core profit in the first half of this financial year.
Other highlights include:
- Non-cash, after-tax impairment of US$260 million (K905.9m), largely reflecting portfolio prioritisation;
- Net loss of US$266 million (K926.8mil); and,
- Balance sheet strengthened and liquidity increased to US$1.67 billion (K5.8bil).
Managing director Keiran Wulff said on Tuesday when the company announced its results that it had been an interesting first six months given the impact of the Covid-19 pandemic combined with the decline in oil prices and structural changes occurring in the sector.
“It has also been one of the opportunity for us and with the support of staff, we are coming through these challenges, more focused and disciplined and better position to advance our growth projects going forward,” Wulff said.
“Leading into this downturn, we were very focused on fully advancing our world class projects in PNG and Alaska which would have had a material impact on the size and shape of the company.
“Whilst we have been one of the companies that has been most exposed to the downturn in the oil price, we will be one of the companies which will be most impacted by the upturn when it inevitably occurs.
“With a US$30 billion dollar (K102.76bil) drop in capital investments across the industry, a cut in production and lower inventory levels, we are now seeing prices recover from lows of around US$11(K37.67) a barrel in March to over US$44 (K153) a barrel today.
“Whilst we are confident that prices will return to higher levels to support new investments, we are not relying on it. We are really driving performance in decreasing our breakeven cost across the business,” he said.
Wulff highlighted key actions taken by the company this year which included:
- Proactive Covid-19 response to ensure business continuity;
- Material cost reductions with 2020 capital expenditure cut by 40 per cent;
- US$700 million (K2.44b) equity raise;
- Major restructuring; and,
- Initiatives to reduce breakeven costs of all projects well advanced.
He said Oil Search was well placed to manage over a prolonged period.