Oil Search has stellar quarter
PERTH (miningweekly.com) – Takeover target Oil Search has reported its highest quarterly production in the company’s history, with Oil Search delivering 7.42-million barrels of oil equivalent during the three months to September.
This was up from the previous record high of 7.41-million barrels of oil equivalent delivered in the June quarter.
MD Peter Botton said the increased production reflected the continued strong production from both the Papua New Guinea (PNG) liquefied natural gas (LNG) project and from the company’s operated oilfields.
“The PNG LNG project performed well above the nameplate capacity of 6.9-million tonnes a year, operating at an annualised rate of around 7.4-million tonnes during the quarter, and reaching higher daily rates on test.”
Botton said demand for the project’s spot volumes remained robust, reflecting the proven reliability of the plant and the high heating value of the gas relative to LNG projects globally, making it well-suited to regional Asian reticulation networks.
“Given the PNG LNG plant’s exceptional performance in the nine months to September, Oil Search is confident the project can sustainably achieve annualised production of at least 7.3-million tonnes a year over the balance of 2015 and 2016.
“Production optimisation and potential debottlenecking provide opportunities to deliver significant additional value and returns to Oil Search and its co-ventures and, together with a potential third LNG train, remain a key focus for the operator,” Botton said.
During the quarter under review, Oil Search worked on sourcing gas to support the expansion of the PNG LNG project, and Botton said on Tuesday that it was anticipated that a substantial portion of the gas would come from the P’nyang field, augmenting reserves at Hides and the other oilfields.
At least one, and potentially two, wells would be drilled at P’nyang in 2016 to confirm resource modelling and to move the existing resource into the contractable category.
Meanwhile, Oil Search during the quarter also fended off a takeover offer from fellow listed Woodside Petroleum, which in September launched an A$11.7-billion takeover offer for Oil Search.
Woodside intended to offer 0.25 of its own shares for every one Oil Search share held.
The board of Oil Search has unanimously rejected the approach, saying the offer was highly opportunistic and grossly undervalued the company, while diluting the growth profile available to Oil Search shareholders.
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