PERTH (miningweekly.com) – ASX-listed Oil Search on Tuesday said that it was on track to achieve its full year production guidance, despite a decrease in production for the second quarter.
Total production for the quarter was down to 6.58-million barrels of oil equivalent, from the 6.86-million barrels of oil equivalent in the March quarter, on the back of planned maintenance work, while total sales increased slightly from 6.68-million to 6.69-million barrels of oil equivalent.
Total operating revenue for the quarter under review increased from the $301.5-million reported in the March quarter to $366.2-million, as average realised oil and condensate prices increased from $57.38/bl to $71.55/bl, and average realised liquefied natural gas (LNG) and gas prices increased from $7.10 to $8.61.
“Oil Search delivered strong production in the latest quarter, supported by the safe completion of the major planned maintenance campaign at Papua New Guinea (PNG) LNG by the operator, ExxonMobil. Operated production from our Moran and Agogo fields continues to perform strongly, and operated gas production was able to offset some reduced production from the Hides gas conditioning plant during upstream maintenance activities,” said Oil Search acting CEO Peter Fredricson.
“The macro environment helped drive an increase in revenue despite the planned rate reduction at PNG LNG during the quarter. Sales volumes were broadly similar to the first quarter due to careful inventory management and flexibility from using the spot market.
“While the Covid-19 outbreak continues to impact PNG, strict operating procedures and logistical measures have ensured continued safe and reliable production with no impacts to Oil Search or ExxonMobil operated production facilities. Pleasingly, there has been strong uptake of the Covid-19 vaccine in the Port Moresby office, which has allowed nearly all staff to return to work there.
“In Alaska, the Pikka Phase 1 project is tracking in line with original expectations from a technical and permitting perspective. It is in everyone’s interest that we commit to a final investment decision (FID) on this high quality asset only when appropriate funding and ownership levels are in place,” Fredricson said.
He noted that during the second quarter PNG LNG had progressed financing, technical and commercial work on the expansion scope in preparation for a further ramp-up in project activity in the second half of 2021.
Key deliverables from this preliminary work will allow the project to progress towards its objective of entering front-end engineering design in 2022.
Oil Search earlier this month revealed that it had received a confidential, non-binding indicated change of control proposal from fellow-listed Santos, which the company and its advisers had rejected, as it was determined not to be in the best interest of shareholders.
Santos had offered 0.589 new Santos shares for each Oil Search share held, which would have given Oil Search shareholders a 37% interest in the merged group and Santos shareholders a 63% interest.