Analysts still buoyant on Oil Search

THE oil price retreat that took some gloss off Oil Search’s March quarterly production report has not dimmed analysts’ positive consensus view on the company as one of the best going around for its size.
Analysts still buoyant on Oil Search Analysts still buoyant on Oil Search Analysts still buoyant on Oil Search Analysts still buoyant on Oil Search Analysts still buoyant on Oil Search

The West Texas Intermediate oil price eased 0.3% on Tuesday morning to $US56.23 a barrel as Oil Search's management reaffirmed its full year production guidance of 26 to 28 million barrels of oil equivalent.

Total revenue of $US472.3 million ($A608.75 million) for the three months to March is nearly triple what Oil Search reported a year ago as production from its PNG LNG project kicked in from May last year.

However, the recent slide in the oil price and maintenance shutdown at PNG LNG meant that the latest revenue was 16% below the December quarter, while production of 6.91MMboe is 5% under the same periods.

Motley Fool analyst Brendan Lau, who owns shares in Oil Search said all that was unlikely to prompt analysts to make any downgrades - "at least nothing material".

"Most experts agree that Oil Search is one of the best-placed large cap stock in the sector, thanks to the amount of cash its PNG LNG joint venture project with energy giant Exxon is forecast to generate," Lau said.

While he has shares in the company, Lau's views appear consistent with the fact that 14 analysts rate Oil Search as a ‘buy', which is more than the 12 who did so one month ago, and even three months ago.

Then there is the fact that the consensus forecast among 18 investment analysts covering Oil Search polled by the Financial Times as of April 17 was that the company would "outperform the market".

The previous consensus forecast advised investors to hold their position in Oil Search.


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