Oil Search reports strong financial year despite quake

OIL Search announced a net profit after tax increase of US$341 million (K1.1 billion), up 13 per cent from 2017, according to the 2018 full year results.
OIL Search has reported very strong financial results for 2018 despite its operations being affected by the Feb 2018 earthquake in the Highlands.
Managing director Peter Botten said the strong performance came on the back of stronger global oil and gas prices, with the average realised oil and condensate price up 27 per cent and LNG and gas price 31 per cent higher.
He said this when realising the financial results for 2018.
Botten said this more than offset a 17 per cent decline in production and sales volumes due to the temporary shut-in of production following the Feb earthquake and resulted in a six per cent increase in total revenue, to US$1,535.8 million (K5.1 billion).
It also reflected a 10 per cent increase in production costs resulting from earthquake-related remediation work to repair infrastructure and reinstate production, net of insurance recoveries, and an 86 per cent increase in exploration expense, reflecting the extensive seismic acquisition programme conducted in the onshore Gulf and Forelands regions in PNG as well on the Alaska North Slope.
Botten said Oil Search and its joint venture partners also made significant progress on LNG expansion in PNG.
A memorandum of understanding was signed between the PRL 15 joint venture and the PNG Government in November, outlining key terms and conditions for the Papua LNG Gas agreement.
Material advances were made in the commercial agreements required to move to the front-end engineering and design (Feed) phase.
Botten said the Government and PRL 15 joint venture were on track for finalising the agreement before the end of next month.
A gas agreement for the P’nyang PRL 3 is expected to be finalised shortly after, which will allow aligned Feed entry decisions to be made on the proposed three-train LNG expansion.
Upstream pre-Feed work is largely complete, with preliminary market engagement underway.
Downstream pre-feed technical work is also going well and remains on schedule for completion toward the end of the first quarter of 2019.
Oil Search also recorded a marked improvement in its 2018 safety performance, with the production operations achieving one-year total recordable injury (TRI) free in November.
Oil Search’s total recordable injury rate (TRIR) (recordable incidents per million work hours) decreased more than 18 per cent from 1.93 in 2017 to 1.58 in 2018.
While it continues to strive for zero injuries, the downward trend in TRIR was a pleasing result, particularly considering the devastating earthquake, which fortunately did not result in any injuries to Oil Search staff or contractors.
“The earthquake in Feb 2018, along with the numerous strong aftershocks had a significant impact on our operations, and whilst none of our staff and contractors were injured, our communities in and around our operations were seriously impacted,” Botten said.
Oil Search continues to provide long-term recovery assistance to the communities in Hela, Southern Highlands and Western provinces impacted by the disaster.
“In partnership with Oil Search Foundation, we are working to provide access to clean water and sanitation facilities, re-establish gardens to support subsistence lifestyles and rebuild houses, roads and infrastructure.”