OSL nets 236pc profit for 2017

In a statement announcing the full year results for 2017, the company says the profit is buoyed by strong oil and gas prices and strong production levels.

Managing Director Peter Botten said: “Sales revenue benefited from the rise in global oil and gas prices, with the average realised oil and condensate price increasing by 24 percent to US$55.68/barrels of oil (bbl) and the average realised LNG and gas price 21 percent higher, at US$7.67/one million British Thermal Units (mmBtu).

“This more than offset slightly lower sales volumes, driving a 17 percent increase in total revenue to US$1.45 billion.

“Unit production costs remained highly competitive at US$8.67 per barrels of oil equivalent (boe), and the Company’s operating margin was a healthy 73 percent.

“Other operating costs increased from US$131.7 million to US$141.1 million, primarily reflecting the impact of higher sales on royalties, levies and selling expenses as well as a provision for redundant warehouse stock.

“Depreciation and amortisation charges of US$11.95 per were significantly lower than in 2016, reflecting the impact of higher 2P reserves following the recertification of the PNG LNG Project fields.’’

Meanwhile, Botten says 2018 will be a pivotal year for the company, with many activities reaching important milestones.

OSL’s key objectives in 2018 include the following:

• Maintain the focus on personal and process safety and target improvements in all safety metrics.
• LNG Expansion:
  • Complete the negotiation of cost sharing and integration agreements between the PRL 15, PRL 3 and PNG LNG joint ventures.
  • Negotiate gas agreements for LNG expansion volumes with the PNG Government.
  • Complete technical studies supporting integration.
  • Commence equity marketing of Oil Search’s share of expansion LNG.
  • Commence discussions with prospective lenders on joint project financing.
  • Make a decision on Front End Engineering and Design.
  • Progress the Associated Gas Expansion (AGX) opportunity, to increase the volume of gas being provided to the PNG LNG Project from the Kutubu, Agogo and Moran fields, to support PNG LNG expansion.

• PNG LNG Project:

• Support the PNG LNG Project operator in progressing the tie-in of the Angore A1 and A2 wells into Project infrastructure and undertaking modifications to the Hides Gas Conditioning Plant in the second quarter of 2018.
• Sign binding contracts for an additional 1.3 MTPA of LNG offtake.

• Continue to focus on cost reductions and improving efficiencies across the organisation.
• Undertake well work activities on operated oil fields to help mitigate natural production decline.

• Drill the Muruk 2 appraisal well in the North-West Highlands and Kimu 2 and Barikewa 3 in the Gulf and Forelands.
• Acquire seismic in the North-West Highlands and onshore Papuan Gulf Basin, to mature prospects adjacent to existing or planned infrastructure for potential drilling and development, subject to establishing a clear route for commercialisation.
• Alaska North Slope:

• Assume operatorship of the Alaska North Slope assets.
• Build a locally-based development and operational team in Anchorage.
• Undertake preparations for appraisal drilling in 2019.
• Create value from the Option.

• Continue to invest in activities in PNG that promote a stable operating environment. These include:

• Supporting the PNG Government, where possible, to address outstanding PNG LNG benefits distribution delays and LNG expansion activities.
• Completing, on behalf of the PNG Government, the construction of APEC Haus, a new function centre that will house the Asia-Pacific Economic Cooperation Summit in 2018.
• Completing the construction of a 58 MW gas fired power station in Port Moresby and making a Final Investment Decision on the Markham Valley Biomass Project.
• Continuing the Company’s extensive social programmes, managed both directly and by the Oil Search Foundation.