Oil Search: New gas deposit

 OIL Search Ltd said it has discovered modest quantities of natural gas during a new exploration job in Papua New Guinea and the find had encouraged it to continue drilling. 

According to its second quarter report, Oil Search’s Flinders and Hagana wells in the Gulf of Papua intersected good-quality geological properties that may indicate the presence of larger resources nearby. 

Oil Search said: “Although the volumes at Flinders and Hagana are likely to be relatively modest, the company has been sufficiently encouraged to take up a further well option and will drill the Kidukidu prospect once Hagana-1 is completed.”

The Australian company also said oil and gas output in the three months to June 30 fell 9.7% from a year earlier to 1.63 million barrels of oil equivalent.

“But we kept our annual guidance of between 6.2 million and 6.7 million BOE.

“Revenue in the quarter fell 3% from a year earlier to US$204.9 million (K460 million), the company said. 

Some of the company highlights during the quarter:

• The PNG LNG project is nearly 90% complete and remains on track for first LNG sales next year;
• PRL 3 JV studies for the potential development of the P’nyang gas field were ongoing during the quarter, with engineering scoping work continuing;
• 1.64 million barrels of oil were sold during the period, which helped drive total operating revenue for the quarter to US$204.9 million.

Managing director Peter Botten said: “The highlight of the 2013 second quarter was a series of successful exploration wells, each of which, subject to successful appraisal/development, has the potential to add materially to our production base.” 

In the Highlands, oil was discovered in both the Toro and Digimu sandstones at the Manada 6 well, he said. 

Botten said reparations are underway to apply to the PNG Government for an oil field development licence next month.

Oil Search had a cash balance of US$292.1 million (K656 million)  at the end of last month and its US$500 million (K1.1 billion) corporate facility remained undrawn resulting in liquidity of US$792.1 million (K .

Revenue in the quarter fell 3% from a year earlier to US$204.9 million (K1.7 billion).