Oil Search Net Profit at USD 175.8 Mil (PNG)

Oil Search said its 2012 net profit after tax (NPAT) including significant items was US$175.8 million. Excluding significant items, underlying NPAT was US$153.0 million.

HIGHLIGHTS

• Total oil and gas production in 2012 was 6.38 mmboe, within the Company’s guidance range despite several shutdowns during the year.
• Sales volumes for the year were 6.13 mmboe, 8% down on 2011.
• The average realised oil price was US$113.97/bbl compared to US$116.09/bbl in 2011.
• Total revenue from operations was similar to 2011, at US$724.6 million.
• Liquidity remains strong, with US$488.3 million in cash (including JV balances) and an undrawn revolving facility of US$500 million at year end.
• A 2012 final dividend of two US cents per share was announced, taking the 2012 full year dividend to four US cents per share, consistent with 2011.
• A strong reserves and resource base has been confirmed, with proven and probable reserves increasing, fully replacing production. 2C contingent resources increased by 77.4 mmboe, or 24%, to 395.1 mmboe, underscoring the resource base to underpin further gas commercialisation.

Commenting on the 2012 results, Oil Search Managing Director, Peter Botten, said: “Oil Search delivered a solid set of operational and financial results in 2012 and the Company’s growth strategy remains firmly on track, with significant progress made on the PNG LNG Project, gas expansion in PNG and exploration activities in the Middle East.

“2012 production of 6.38 mmboe was within the guidance range provided in late 2011. This was a good result given the unexpected facilities shutdown in the third quarter for the Kumul Marine Terminal inspection, resulting in the deferment of approximately 0.4 mmboe of production. The Company was again successful in mitigating the natural decline of our mature PNG oil fields, with in-field drilling and well work continuing to yield high-value incremental barrels.

“While total revenue was similar to 2011, Oil Search’s reported net profit was 13% lower, at US$175.8 million. This was largely driven by higher exploration expense, of US$144.0 million compared to US$60.6 million in 2011. This reflects the Company’s increased level of exploration activity in 2012, with several high impact wells drilled during the year, including the P’nyang South discovery, which resulted in a 24% increase in our contingent resource base.

“Reported profits included significant items of US$22.8 million after tax, comprising a US$42.0 million profit from asset sales, partly offset by a US$19.2 million impairment charge related to the PRL 1 (Pandora gas field) retention licence, which expired this month. Excluding significant items, underlying net profit after tax was U$153.0 million.”

PNG LNG Project

“The PNG LNG Project, operated by Esso Highlands Limited, was 75% complete at the end of 2012.

“At the LNG plant near Port Moresby, much of the heavy construction on the process trains, tanks, flare and jetty is complete and the focus has moved onto pipework, instrumentation and electrical work. Both the offshore and onshore pipelines are also making good progress. The offshore pipelay was completed in 2012, while 212 kilometres of the 292 kilometre onshore pipe has been welded and clearing of the remaining pipeline route is advancing towards Hides.

“Runway paving at the Komo airfield has progressed significantly and Antonov operations, bringing in key items of heavy and sensitive equipment for construction of the Hides Gas Conditioning Plant (HGCP), are expected to begin in April, meeting the required timing of the overall Project schedule. At the HGCP, foundations have been laid and structural steel is being erected.

“Drilling on the first two Hides development wells at B pad is presently underway. The second rig is anticipated to start drilling on the C pad in early 2013.

Associated Gas construction works at the Kutubu and Gobe processing facilities are well advanced and preparations are underway for the supply of commissioning gas to the Project. The life extension refurbishment of the Kumul Marine Terminal and PL 2 oil export system is substantially complete.

The Project remains on target for first LNG sales in 2014. We are confident that the Operator will be able to deliver the Project within the revised cost outlook announced in November 2012, of US$19 billion. As previously indicated, the capital cost increase is expected to be funded 70% by debt and 30% by equity. Discussions are currently underway to secure the US$1.5 billion of supplemental debt that is provided for under the existing project finance agreement, to fund the 70% debt component.

“We are particularly pleased with the Project’s continued creation of job opportunities for the local community and workforce development. Nearly 40% of the current 21,220 workforce PNG nationals while, to date, the Project has delivered more than 1.6 million hours of training, with over 678,500 hours delivered in 2012.”

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LNG World News Staff, February 26, 2013; Image: Oil Search