Oil Search says oil production on target

Oil Search says a strong final three months of the year has helped it produce 6.38 million barrels of oil equivalent (mmboe) in 2012, which is within the company's guidance range of 6.2 to 6.7 mmboe.

Full year production was 4.6 per cent lower than the 6.68mmboe produced in 2011, but the company said this had been achieved despite shutdowns at several facilities in Papua New Guinea (PNG).

Oil Search said on Tuesday that its production in the three months to the end of December 2012 was 1.79 mmboe, compared to 1.64 mmboe in the prior corresponding period.

During the quarter, 1.66 million barrels of oil were sold, at an average oil price of $US111.09 per barrel, 3.1 per cent lower than the third quarter price of $US114.67 per barrel.

"Oil Search finished the 2012 calendar year on a high note, with a strong fourth-quarter production performance from our core PNG oil fields and good progress made on the PNG LNG (liquefied natural gas) project and other growth opportunities, including gas expansion and material oil exploration," Oil Search managing director Peter Botten said in a statement.

The crude oil inventory position increased by 81,000 barrels compared to the 2011 year-end position.

Operating revenue for the quarter was $US218.2 million, up from $US201.5 million a year earlier.

Revenue for the 2012 full year was $US724.6 million, down from $US732.9 million in 2011.

The company said that at the end of 2012, the PNG LNG project was about 70 per cent complete and on track for first LNG sales in 2014.

Plant capacity had risen to 6.9 million metric tonnes per annum (mmtpa).

The estimated project cost has risen from $US15.7 billion to $US19 billion. The company advised the share market of the rise in the project cost in November 2012.

A number of major pieces of infrastructure had either been completed or were nearing completion, and the rest of the works were progressing in line with schedule.

Mr Botten said the rise in the cost of the project was disappointing, but the economic impact was largely offset by the five per cent increase in the LNG plant capacity and considerably higher oil prices than at the time the project was sanctioned.

Mr Botton said Oil Search continued to develop options for LNG growth.

Oil Search will release its full year financial results on February 26.

Shares in Oil Search were nine cents higher at $7.20 on Tuesday.

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