Oil Search: both PNG LNG trains operating at full capacity

Oil Search said on Tuesday that both PNG LNG project trains are now operating at full capacity, just three months after first production.

“ExxonMobil’s development personnel are being steadily demobilised and, as they leave, I would like to congratulate them for delivering the Project ahead of schedule, within the revised budget and, together with the new Production Team, for completing the commissioning and ramp-up phase safely and efficiently,” Oil Search Managing Director, Peter Botten said in the company’s first half results statement.

“The only remaining development activity for this phase of the Project is the completion of drilling. The second of the two Hides Wellpad G wells, G2, and the Produced Water Disposal (PWD) well are both expected to reach their objective before the end of the third quarter. Two production wells on the Angore field and a production/exploration well, Hides F1 Deep, will then be drilled prior to demobilisation of the two Nabors rigs.

“The Production Team, comprising some 750 full time employees and contractors (of which approximately 50% are PNG citizens) working at Hides, the LNG Plant site and the Port Moresby PNG LNG Project office, is now in place and operating well. The focus for the team is to ensure continued incident free operations and to optimise the performance of the infrastructure that has been built,” Botten added.

Oil Search net profit after tax for the first half of 2014 was US$152.5 million, 34% higher than in the corresponding period of 2013. The increase reflected the first earnings contribution from the PNG LNG project.

Total oil and gas production rose 68% on the same period of 2013, to 5.4 million barrels of oil equivalent (mmboe), while total sales were 4.7 mmboe, including 1.3 mmboe of LNG and
condensate from the PNG LNG project.

The company’s revenue rose 34% to US$510 million, driven by first sales from the PNG LNG project, continued strong oil production and a slightly higher realised oil price of US$111.57 per barrel.

“With both PNG LNG Project LNG trains operating at full capacity, production in the second half of 2014 is expected to be materially higher than that achieved in the first half. Our production guidance has been narrowed, from 17 – 20 mmboe to 18 – 20 mmboe, based on the PNG LNG plant performance during startup and commissioning. Forecasts are subject to no major interruptions being experienced over the balance of the year.

“Higher production and sales will flow through to earnings and further strengthen our balance sheet position,” Botten concluded.