Oil Search reports US$733m revenue

OIL Search Ltd yesterday reported near record export revenues of US$732.9 million (K1.5 billion) after crude oil sales last year fell by 10.6% to 5.6 million barrels with average prices rising 44.8% to US$116.09 (K245.95) a barrel.
Total export revenue was 25.6% above the US$517.3 million figure for 2010 but below the record of US$814 million set in 2008 when oil prices briefly hit an all-time high of US$145 a barrel.
Oil Search managing director Peter Botten also noted in the company report for the December quarter last year that the PNG LNG project, led by ExxonMobil in which it has a 29% stake, remained on track to make its first LNG export sales in 2014.
The good news caused the Oil Search shares to rise by A$0.15 to A$6.81 (K14.75), its highest level since August last year.
The share price was close to all-time highs just above A$7 enjoyed for a brief period early last year.
Botten said the fourth quarter of last year was “a period of unprecedented constitutional and political uncertainty” and it was “testament to the strong Government support for PNG LNG that this did not affect either the project or Oil Search’s oil and gas activities”.
He said Oil Search had made progress on a range of construction activities for the Associated Gas Project, which would tie in gas reserves from the oilfields into the PNG LNG project, as well as projects to extend the life of the Kutubu, Moran and Gobe oilfields.
Production in the fourth quarter was 1.64 million barrels, taking full-year production last year to 6.69 million barrels.
“While 12.6% lower than the 2010 full-year, this result was at the upper end of the company’s guidance range of 6.2 million to 6.7 million barrels oil equivalent,” Botten said, adding that this was a pleasing performance in view of the maturity of the oilfields and a two-week maintenance shut down.
Botten said the Highlands gas expansion drilling campaign, to prove up additional possible gas reserves for two more LNG trains, had moved into full swing in the December quarter with plans to drill two wells at P’nyang South and Trapia.
Together with new seismic surveys the well results would be used to fully assess potential resources in the area.
Oil Search would release its financial results for 2011 on Feb 21.
Total exploration costs during the year amounted to US$60.6 million, of which US$9 million was spent on exploration activities in the Middle East.
“We anticipate that production in 2012 will be in a similar range to 2011, of 6.2-6.7 million barrels oil equivalent,” he said, nothing this had followed successful exploration and appraisal drilling in the oilfield area.
“Present forecasts indicate that production is likely to remain largely flat into 2013, assuming planned development activities are successful,” Botten said.