PNG LNG to fuel Oil Search growth

OIL Search expects to funnel a large part of its share of earnings from the PNG LNG liquefied natural gas project in Papua New Guinea into growth opportunities.
PNG LNG to fuel Oil Search growth PNG LNG to fuel Oil Search growth PNG LNG to fuel Oil Search growth PNG LNG to fuel Oil Search growth PNG LNG to fuel Oil Search growth

Company chairman Brian Horwood told the company's annual general meeting there were good prospects for adding one or more LNG trains to the initial two-train product after its commissioning.

He added that Oil Search's main focus over the next two years would be to prove up gas reserves to underwrite these additional trains.

Managing director Peter Botten said the company would focus on moving proved and probable reserves of about 500 million barrels of oil equivalent into the proved category through field development optimisation and further appraisal.

Oil Search will also carry out a program to appraise discoveries where it has estimated resources of about 281MMboe as well as carry out exploration for new gas discoveries.

Meanwhile, the company posted a 33% drop in revenue to $US133.9 million ($A144.8 million) for the quarter ending March 31, 2010, compared to the previous quarter.

This was due to lower realised oil prices and liftings.

Production for the quarter was also down 10% to 2 million barrels of oil equivalent due to natural field decline, testing of some key wells for reservoir management purposes and a scheduled shutdown at Gobe for routine inspection and maintenance.

Oil Search added the testing of wells is aimed at optimising performance from the Kutubu field over the rest of this year.

The company spent $US36.9 million on exploration and evaluation, most of it on the Wasuma well in Papua New Guinea and the Al Meashar well in Block 7, Yemen.

Meanwhile, the company expects to produce 7.2-7.4MMboe this year with incremental activity expected to flatten the decline curve in 2011-13.


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