Oil Search says revenue jumps on higher LNG prices

Papua new Guinea-focused Oil Search said its revenue more than doubled in the third quarter on the back of higher realized LNG prices.

Oil Search, which has a 29 percent stake in the PNG LNG project, said its operating revenue has reached $408.8 million in the July-September period. This compares to $189 million in the same period a year ago and $366.2 in the previous quarter.

The firm attributed the increase in revenue primarily to a rise in average realized LNG and gas prices.

According to Oil Search, LNG and gas realized prices increased 16 percent to $10.02/mmBtu when compared to the prior quarter. Prices surged when compared to 4.23/mmBtu in the third quarter of last year.

Also, compared to the prior quarter, total production increased by 5 percent to 6.9 mmboe when, but it dropped when compared to 7.2 mmboe in the same period last year.

PNG LNG continues to produce above capacity

The ExxonMobil-led PNG LNG project continued to perform 20 percent above nameplate production, averaging 8.5 mtpa in the third quarter.

The project’s annualized production rate reached 8 mtpa in the May-June period due to planned maintenance work.

Oil Search the project has delivered 30 LNG cargoes during the third quarter, compared to 26 in the prior quarter.

Santos said in its quarterly report, where it also revealed the FID on the Angore development project, that the project had delivered 29 LNG cargoes to customers during the quarter.

However, Oil Search said that PNG LNG has also supplied one partial cargo.

Out of the 30 cargoes, PNG LNG sold one shipment on the spot market and 29 cargoes under contract, including five under mid-term sale and purchase agreements, the firm said.

Merger with Santos

Oil Search and Santos have recently entered into a definitive merger deal that would create an LNG player worth about A$21 billion ($15.5 billion). Combined, they will have a 42.5 percent stake in PNG LNG.

The partners expect to complete the merger by the end of this year.

Next steps include the first court hearing in PNG and despatch of documents related to the scheme to Oil Search shareholders, the firm said.

“While the absolute focus of our workforce remains on safely delivering our strategic objectives, important steps were also taken during the quarter to advance the opportunity presented by the proposed merger with Santos,” Peter Fredricson, Acting CEO of Oil Search, said.

“The potential benefits of a combined entity remain clear, with the merged entity expected to sit amongst the world’s 20 largest global oil and gas companies, bringing greater access to capital markets to enable funding for new and existing opportunities,” he said.

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