105pc rise in profit: OSL

Oil Search reported a net profit after tax of US$161.9 million, 105 percent higher than the first half of 2018, which was impacted by the Highlands earthquake.

In its 2019 half year results report, OSL said this was a strong result, underscored by an excellent performance from the PNG LNG Project, which produced at an annualised rate of 8.6 MTPA for the first half of 2019, despite a two-week partial shut-in for scheduled maintenance.

“Total revenue increased 39.3 percent to US$776.9 million, driven by higher hydrocarbon sales volumes and an 8 percent increase in realised LNG and gas prices, partly offset by 9 percent lower realised oil and condensate prices.

“Total unit production costs for the first half were US$12.97 per boe, at the upper end of first half guidance, due to higher than expected earthquake recovery work within our operated production facilities which was not offset by insurance recoveries and a value-accretive well workover campaign.

“Excluding the financial impact of the earthquake, first half production costs were US$11.76 per boe. Other operating costs fell 7 percent, mainly driven by increased hydrocarbon inventories on hand and lower selling and distribution costs, due to LNG tanker leases being capitalised (previously expensed) following the adoption of IFRS 16 Leases from 1 January 2019.

“Unit depreciation and amortisation charges were slightly higher than in the corresponding period of last year at US$12.51 per boe, reflecting a higher proportion of PNG LNG production in the first half product mix.

“Oil Search ended the first half with liquidity of US$1.43 billion, comprising US$538.3 million in cash and US$895.7 million in undrawn corporate facilities.

“The Company generated operating cash flow of US$418.5 million during the period, which was used to fund a scheduled PNG LNG project finance debt repayment of US$174.3 million and the 2018 final dividend of US$129.5 million.

“Approximately US$135 million was spent on exploration and appraisal programs in PNG and Alaska during the first half. This included the Muruk 2 appraisal well, the second phase of seismic acquisition on the Eastern Foldbelt, the Company’s inaugural appraisal drilling campaign in Alaska and pre-FEED works for LNG expansion in PNG.

“To provide additional financial flexibility ahead of the Alaska Option payment of US$450 million in late August, US$300 million of one-year corporate credit facilities have been arranged, which, once standard regulatory approvals are received, will increase the Company’s total undrawn bank facilities to US$1.2 billion.

“In addition, revised ownership agreements with Repsol executed late in the first half will result in the receipt of US$64.4 million in late August 2019.”

Press release