Papua New Guinea (PNG)’s largest explorer Oil Search has seen its profits grow by 34% in the first half of the year thanks to its “transformational” liquefied natural gas (LNG) project.
The increase to $152.5million for the six months to June 30, from $113.5million for the same period last year, was driven primarily by first earnings contribution from the PNG LNG Project.
Production from the $19billion ExxonMobil-operated asset was launched in April this year and contributed to the company’s overall 68% increase in output, up to 5.4million barrels of oil
equivalent (boe).
Oil Search’s sales for the six-month period amounted to 4.7million boe, including 1.3million boe of LNG and condensate from the PNG LNG Project.
Revenue also rose by 34% to $510million, driven by first sales from the PNG LNG Project, continued strong oil production and a slightly higher realised oil price on the previous year.
“The first half of 2014 was one of the most significant periods in Oil Search’s history,” said managing director Peter Botten.
“Major milestones were reached in April, when LNG production from the PNG LNG Project commenced, and in May, when the first LNG cargo left PNG bound for Japan.
“The commencement of revenue streams from the PNG LNG Project signals the start of Oil Search’s corporate transformation.”
The project – an integrated development including gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central provinces of Papua New Guinea – is expected to produce more than 9trillion cubic feet of gas over an estimated lifespan of 30 years.
Oil Search estimates it will add around 21million boe net to its output in 2015, resulting in total production more than four times the 2013 levels.
“The company is in a good financial position to be able to fund our growth projects, a position that will only strengthen in coming years with steady cash flows now being generated from both the PNG LNG Project and our oil fields,” Botten added.
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