Oil Search says the fully operational Papua New Guinea liquefied natural gas plant should produce at above capacity for the rest of the year, resulting in an upgrade to full-year production guidance.
The Exxon Mobil-operated PNG LNG plant, in which Santos also has a stake, has performed without a hitch since starting last year, ramping up both its production trains faster than expected and producing at above nameplate capacity.
“Based on the PNG LNG plant’s performance to date, we are confident the project can continue to produce above nameplate capacity of 6.9 million tonnes per year,” Oil Search managing director Peter Botten said.
The strong performance and its expected continuation led Oil Search to boost 2015 production guidance from between 26 and 28 million barrels of oil equivalent to between 27 and 29 million barrels.
Oil Search said its 29 per cent stake in PNG LNG had netted it 24.7 billion cubic feet of LNG for the June quarter, which indicated the plant ran at an annualised rate of 7.1 million tonnes.
The plant led Oil Search to log record quarterly production, but sliding oil prices meant revenue slumped. Gas and crude oil production was 7.41 million barrels of oil equivalent in the second quarter, up 7.3 per cent on the previous quarter and 94 per cent on a year earlier.
Revenue was down 17 per cent from the previous quarter at $US391.5 million , after the average price the company received for LNG fell to $US8.10 a million British thermal units, from $US12.37 in the March quarter and $US14.41 a year earlier.
While revenue was down, Oil Search beat production and revenue estimates from Morgans CLIMB, which forecast 7.2 million barrels of oil equivalent production, and UBS, which forecast production of 7 million barrels and revenue of $US366m.
“This was a strong result, driven by continued strength out of PNG LNG,” Morgans analyst Adrian Prendergast said.
PACNEWS