MELBOURNE, Australia--Oil Search Ltd. (OSH.AU) racked up record production volumes in the last quarter, driven by the continued rise in output from Exxon Mobil Corp.'s (XOM) gas-export venture in Papua New Guinea.
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The growth in production buoyed the energy company's third-quarter sales revenue and puts it on track to deliver production for the year at the upper end of a target of 29 million-30.5 million barrels of oil equivalent.
Oil Search said it produced 7.91 million barrels in the third quarter, up 9.3% on the previous quarter and 3.7% ahead of a year earlier as the Exxon-led PNG LNG project produced at its highest quarterly rate since it came onstream in 2014. The company's oil and natural gas fields in Papua New Guinea also performed well, the company said.
Revenue for the quarter climbed to US$380.8 million, 23% higher than the same quarter last year and up 15% quarter-on-quarter even as oil prices rose on-quarter but average gas and LNG prices slipped.
Papua New Guinea's government sold the remainder of its almost 10% stake in Oil Search in late September, following federal elections the month before that saw Peter O'Neill returned as prime minister. Some analysts speculated the exit heightens Oil Search's appeal as a target for other energy companies.
Oil Search operates all of Papua New Guinea's currently producing oil fields, although its most valuable asset is a 29% interest in Exxon's PNG LNG project.
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The company has pinned its growth prospects on developing additional LNG production lines, drawing on the P'nyang gas field as well as the Elk-Antelope fields in a region of Papua New Guinea being developed by France's Total SA (TOT). Dicussions between Oil Search, Exxon and Total have stepped up in recent months on ways to leverage existing infrastructure at the PNG LNG plant site and reduce costs to support building at least two more production lines in the country.
Oil Search Managing Director Peter Botten worked progressed during the quarter on the next phase of LNG expansion in Papua New Guinea, and engineering studies are underway to evaluate a narrow range of options for the Elk-Antelope and P'nyang gas resources. The venture partners aim to present an aligned proposal to the new government in the fourth quarter, he said.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
October 16, 2017 19:13 ET (23:13 GMT)