Oil Search spends US$513m in Q2

By MALUM NALU
OIL Search spent US$512.9 million during the June quarter of this year mostly in Papua New Guinea, according to its June quarterly report to the Australian Securities Exchange (ASX) yesterday.
Of this, US$421.2 million was spent on the PNG LNG project, US$73.8 million on exploration and evaluation activities (which included Iraq), and US$17.9 million on oil field development work.
Managing director Peter Botten said total operating revenue for the quarter was US$211.3 million, 13% higher than in the first quarter of this year (US$187.2 million), reflecting 28% higher oil liftings, offset by lower oil prices. 
Total operating revenue in the first half of this year was US$398.5 million, 7% higher than in the corresponding period of last year.
At the end of last month, Oil Search held US$852.2 million in cash, excluding joint venture balances, while its revolving oil facility, with a commitment limit of US$217.5 million, remained undrawn, providing total liquidity of US$1.07 billion. 
Some US$2,349.2 million had been drawn down from the PNG LNG project finance facility at the end of June.  Highlights of the quarter were:
 Good progress was made on PNG LNG project construction activities during the second quarter of this year.Highlights included the completion of the offshore pipeline lay and the raising of both LNG storage tank roofs at the LNG plant site near Port Moresby;
Oil Search’s total oil and gas production for the second quarter was 1.8 million barrels of oil equivalent (mmboe).  This was 24% higher than first quarter production of 1.46 mmboe, with operations back to normal following the previous quarter’s planned facilities shutdown for work related to the PNG LNG Project.  The strong second quarter performance took total production for the 2012 first-half to 3.26 mmboe (3.56 mmboe in the first half of last year);
Total oil sales for the quarter were 1.61 million barrels (mmbbl), compared to oil production of 1.54 mmbbl.  Crude inventory awaiting sale at the end of June 2012 was 0.06 mmbbl;
The average realised oil price in the second quarter was US$108.73 per barrel, 12% lower than the price achieved in the first quarter of US$124.14 per barrel, due to a decline in global oil prices. 
The average realised price for the first half was US$115.48 per barrel, compared to US$116.89 per barrel in the previous corresponding period;
During the quarter, Oil Search completed drilling the P’nyang South 1 ST1 well.
A substantial gas accumulation was discovered in the primary reservoir objective, which is expected to result in a material increase in estimated gas resources at P’nyang. 
Resource evaluation and preliminary analysis of development options for the P’nyang field is now underway.  The P’nyang well is the first in a series of potentially high impact wells to be drilled in PNG and overseas over the next 18 months;
 During the quarter, Trapia 1, an exploration well in the Highlands region of PNG, commenced drilling.  The well is targeting a gas structure on trend with the Hides and Angore PNG LNG gas fields. 
The Taza well in the Kurdistan region of Iraq, drilling a substantial oil and gas prospect, spudded shortly after the end of the quarter and
n Bids have been received from a number of parties to acquire an interest in Oil Search’s acreage in the Gulf of Papua.  Negotiations are expected to conclude shortly.