While revenue for the second quarter dropped, Oil Search has posted the highest quarterly production in the company’s history thanks to a boost in production from the PNG LNG project.
Total production for the three months to the end of June reached 7.1 million barrels of oil equivalent (MMboe), up from 6.9 MMboe in the March 2015 quarter.
The PNG LNG project contributed 5.67 MMboe to total output, while production from the base PNG oil and gas business was 1.74 MMboe.
Based on the PNG LNG plant’s performance to date, Oil Search is confident the ExxonMobil-led project can continue to produce LNG above the nameplate capacity of 6.9 million tonnes per annum in 2015.
Based on the strong production figures in the first half of the year, Oil Search upgraded its 2015 output forecast range to between 27 and 29 MMboe, up from 26 to 28 MMboe.
On the financial front, Oil Search’s revenue dropped 17 per cent on the prior quarter US$392 million.
June quarter dropped 17 per cent compared with the first quarter, plunging to $US391.5 million from $US472m, on the back of falling energy prices.
The average realised LNG and gas price was US$8.10 per mmBtu, 35 per cent lower than in the first quarter, partially offset by a 20.3 per cent increase in average realised oil and condensate prices to US$61.69 per barrel.
This brought total revenue for the first-half of 2015 to US$863.8 million, up from US$510 million in the first-half of 2014.
Sales volumes for the three months tipped in at 7.41 MMboe, up 5 per cent on the March quarter, underpinning total sales revenue from LNG, gas, oil and condensate for the quarter of US$372.7 million.
Oil Search highlighted the positive impact its comprehensive review has had on the company’s bottom line, with cost reduction work helping to reduce full-year production cost guidance per barrel of oil equivalent from US$10-12/boe to US$9-11/boe.
“Oil Search remains focused on fiscal discipline and has reduced its operating cost base, with further efficiency opportunities to be progressed in the second half, following completion of the first phase of our business optimisation program, Oil Search managing director Peter Botten said.
“With strong production and a solid balance sheet, the company is well positioned to progress its value accretive growth projects, despite the current weak global oil and LNG price environment.”
At the end of June, Oil Search had US$843 million in cash and debt of US$4.28 billion.
Oil Search said it did not expect to book any impairment charges in the first-half of 2015.
Oil Search shares gained 3.9 per cent to $7.22.
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