OIL Search Ltd has responded to a challenging backdrop in 2020 by enhancing its resilience through sustained cost improvements and a focus on commercialising growth.
Managing director Keiran Wulff in its investor briefing yesterday said: “We have a clear hierarchy for allocating capital, prioritising sustaining capital and a strong, flexible balance sheet.
“We have stress tested our portfolio, instilled a disciplined approach to investment decisions and are well progressed in pursuing multiple options to ensure funding readiness for delivering Pikka (Alaska) and Papua LNG.”
He said the challenges posed by the Covid-19 pandemic, oil price downturn, and with global trends and societal expectations, had been the catalyst in reviewing past performance and making sustained improvements to position Oil Search for long-term success.
Wulff said the strategy comprised three disciplined phases:
- Focus business and resources on assets that matter, driving sustained low costs and simplification of PNG operations;
- Deliver world class resources, starting with commercialising the Pikka development at a breakeven cost of supply of less than US$40/barrel (K142.6) and prioritising the delivery of Papua LNG; and,
- Evolve by focusing on maximising shareholder returns and free cash flow, achieving full potential from Alaska and considering targeted complementary energy investments.
“We are now aiming to reduce operated green homes gas emissions intensity by in excess of 30 per cent by 2030,” he said.
“Together with the structural changes in our industry as the energy transition builds pace, these challenges have highlighted our need to focus on low cost projects, measurable action on sustainability and disciplined capital management.
“We will deliver low cost, low greenhouse gas intensity, high value energy that meets society’s needs with the ambition of being the preferred energy company for all stakeholders.
“We have learned some hard lessons this year, we are focused on delivering near term operating cash flow and strong returns underpinned by resilient operations and disciplined capital management,” Wulff said.