Oil Search Revises Annual Capex Target -- Update
16 Juillet 2019 - 4:20AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Oil Search Ltd. (OSH.AU) tweaked its
annual production target after a slip in second-quarter output and
lowered guidance for spending this year because of a rescheduling
of the expansion of gas-export operations in Papua New Guinea.
The oil and gas producer said Tuesday it now anticipates
production in 2019 of between 28 million and 31 million barrels of
oil equivalent, where it previously saw the top of the range at
31.5 million barrels.
That followed a 5.1% quarter-over-quarter drop in output to 6.9
million barrels in the second quarter after planned plant
maintenance dented volumes. Still, production for the first half
was up 38% at 14.1 million barrels as Oil Search seeks to more than
double production by the middle of the next decade with the
expansion in Papua New Guinea and its foray into Alaska.
For the second quarter, Oil Search's sales revenue was down 4.8%
on-quarter at US$378.9 million, but up 39% for the first half at
US$777 million.
Oil Search operates all of Papua New Guinea's producing oil
fields, though these are dwarfed by output from the Exxon Mobil
Corp. (XOM)-led US$19 billion PNG LNG operation, in which Oil
Search has a 29% interest.
Oil Search, with partners Exxon and Total SA (TOT), earlier this
year signed a deal with Papua New Guinea's government that paves
the way for a final investment decision on the expansion of
liquefied natural gas output in the country. Late last month, the
company agreed to exercise a US$450 million option to double its
stakes in prospective oil fields in Alaska, where it has been
drilling, and expects to lift the estimated resource.
The company, based in the Papua New Guinea capital of Port
Moresby and listed in Australia, said it now expects investment
spending at between US$500 million and US$610 million this year, a
drop from its earlier target of US$545 million to US$655
million.
In June, James Marape was sworn in as Papua New Guinea's prime
minister following the resignation of Peter O'Neill. The companies
are moving toward front-end engineering and design work on the
expansion of LNG production in the country, though the new
government has said it wants to review the gas agreement signed for
Total's proposed Papua LNG project that would make use of the PNG
LNG operation's infrastructure. The deal is a prerequisite for
beginning the engineering phase on Papua LNG, and a separate gas
agreement for another field is needed to launch engineering on
three proposed LNG production lines by the companies.
Oil Search Managing Director Peter Botten said his company and
its partners had in recent weeks met with the new leader and
members of his government to brief them on the LNG expansion plans.
He added the company's marketing team continued to talk with
potential buyers regarding an equity share of fuel produced in the
Papua New Guinea expansion, which would help underpin a decision to
go ahead with the development.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
July 15, 2019 22:05 ET (02:05 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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