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Oil Search has solid quarter

27th January 2021

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – ASX-listed Oil Search has reported a solid quarter of production during the three months to December, with its Papua New Guinea (PNG) liquefied natural gas (LNG) project delivering record annual production.

Total production for the fourth quarter ended December reached 7.06-million barrels of oil equivalent, down slightly from the 7.2-million barrels produced in the September quarter, with total sales declining from 7.5-million to 7.1-million barrels of oil equivalent in the same period.

The PNG LNG project produced 6.4-million barrels of oil equivalent during the quarter, bringing its full-year production to a record 25.7-million barrels of oil equivalent, up from the 24.9-million barrels produced in the previous 12 months.

PNG oil production for the quarter reached 564 000 bbl, while full year production was reported at 2.6-million barrels.

“Oil Search has delivered another solid quarter, resulting in record annual PNG LNG production against a backdrop of improving commodity prices,” said Oil Search MD Dr Keiran Wulff.

“Our focus on performance, cost and capital allocation continued to deliver results in the fourth quarter. We are embedding sustainable cost reduction initiatives and enhancing operations across the company to drive improved performance over the longer term.

“Our developments are also regaining momentum. During the quarter, the PNG Parliament passed all remaining amendments to Acts for Papua LNG fiscal stability. Extensive assurance reviews were completed for the Pikka Unit development and the project is ready to enter front-end engineering design in early 2021.”

Wulff noted that the phased development programme is targeting first oil in 2025 at 80 000 bbl/d of oil from a single well pad. Initial development costs have also more than halved, and the breakeven cost of supply under $40/bl made the project resilient to lower oil prices, Wulff said.

“Despite the material challenges of 2020, PNG LNG continued to outperform in the fourth quarter, ending the year with its highest ever annual production of 88-million tonnes. The North West Moran oilfield was also brought back on line during the quarter following the shut-in due to the 2018 earthquake. The recommencement of production was a great effort by all involved and resulted in gross contribution of around 2 500 barrels of oil a day, notwithstanding remote operational challenges and Covid-19 travel restrictions.”

Wulff said the company expected 2021 to be another challenging year, but that Oil Search would focus on maintaining its operational discipline despite the difficult conditions.

Edited by Creamer Media Reporter

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