OSL not phased by price drop

 OIL Search Ltd says even given current decline in global oil prices, the company is not considering changes to its strategic review for this year – which was put together late last year.  

Managing director Peter Botten said no changes to the strategic review were anticipated at the moment as the majority of the company’s production remained profitable even during drop in oil prices. “In October 2014, Oil Search announced the outcomes of a major strategic review. Since the review was finalised, the oil price has seen an almost unprecedented rapid decline, falling by 40 per cent in the fourth quarter alone, and is now trading at less than half the level when the strategic review began.

“During the review, the company stress-tested its comprehensive cash flow analyses for lower oil prices.   

“However, the material and rapid downturn in oil price has prompted the review outcomes to be re-examined. At this stage, we do not anticipate any changes to the core strategic direction of the company.

“No changes to the core strategic direction are anticipated, with the company focusing on the delivery of PNG LNG expansion and development of the Elk/Antelope fields.   

Botten said in particular, Oil Search remained fully focused on next phase of LNG development in PNG.

“That underpinned by gas from the North-West Highlands and Gulf hubs as these LNG trains offer attractive economic returns, even if a weak oil and LNG pricing environment persists,” he said.

“With the majority of the company’s production profitable even at current oil prices and a strong balance sheet and liquidity position, with which to pursue growth opportunities, Oil Search is very well placed to manage the current low oil price environment.”