The National, Thursday July 26th, 2012
STRONG progress at the ExxonMobil-run US$16 billion Papua New Guinea liquefied natural gas project is buoying the prospects of minority partner Oil Search.
The export project is shaping up as one of the few regional mega-projects in recent years with the potential to meet its original timetable.
Oil Search, which has a 29% stake in the project, on Tuesday said the Southern Highlands fields were on track to send gas to the LNG plant being built at Port Moresby in the second quarter of next year, and that a 2014 export target remained on track.
The company also reported stronger-than-expected second-quarter oil production and revenues.
Analysts said the progress on the two PNG LNG trains, or plants, was encouraging, but noted that a strong upstream performance over the next year, including building an airstrip and gas plant, were critical to meet the 2014 target.
Credit Suisse, which rates Oil Search as “outperform” with a target price of $8.30, is forecasting an early 2015 start-up.
But if the project can come in on time, it would add a further A$0.37 per share to the company’s valuation.
On Tuesday, Oil Search shares rose A$0.02 to A$6.60, giving the company a market value of A$8.8 billion.
Oil Search reported second-quarter production of 1.8 million barrels of oil equivalent, up 24% from the previous quarter, as operations returned to normal after a PNG LNG-related shutdown, and beating expectations of 1.7 million barrels.
Revenue rose 13% from the previous quarter to US$211 million on the back of the higher production, beating expectations of US$180 milliom.
The results led Deutsche Bank to boost its 2012 earnings forecasts for Oil Search by 4% to US$194 million.
Oil Search said the auction to find a partner for its Gulf of Papua exploration ground was going well.
“Bids were received and negotiations are continuing with potential farm-in partners, with completion of a farm-out expected to conclude shortly,” Oil Search managing director Peter Botten said.
At the big onshore Hides gasfield, drilling is scheduled to start imminently, Botten said.