Oil Search's core profit was $US360 million ($A498 million) and production spiked more than 50% despite one of the most challenging years in recent history for the oil and gas industry, however the Papua New Guinea-focused oiler saw its profit reduced from $482.8 million to a loss of $39.4 million thanks to a one-off impairment charge of $399.3 million on its Taza PSC in Kurdistan
Following drilling and testing the gross recoverable 2C contingent resources in Taza were downgraded 165.8MMbbl to 56.4MMbbl, with the centre of the field likely to be too tight to flow, however while there remains a material resource base at Taza the value of the field has been reduced to zero.
While the Iraq writedown swung the company from what would have been a $353.2 million profit to a loss, the company was able to otherwise keep its balance sheet pristine, with no other writedowns with all producing assets assessed against a range of short, medium and long-term oil prices.
Production was a record 29.25 million barrels of oil equivalent for calendar 2015.
Managing director Peter Botten said Oil Search kicks off 2016 in a strong position, with its PNG LNG project again outperforming nameplate and the PNG oil fields generating free cash.
Further, the company has a defined path to growth from the low-cost, globally competitive PNG LNG expansion and the Papua LNG development also being considered a high probability of moving to a final investment decision while other regional projects, such as Browse or Greater Sunrise remain in limbo.
He also said that there is now a potentially significant opportunity to accelerate gas supply from the Kutubu/Agogo and Moran associated gas fields to the PNG LNG project, which would deliver increased gas delivery flexibility, this would have other benefits, including optimising capital investment, bringing forward the end of field life and reducing the future cost of supporting ageing facilities and wells, in the face of declining oil production.
A feasibility study is underway.
The board has approved the payment of a 2015 final unfranked dividend of $US0.04/share for a total dividend of $0.10/share, within the company's payout ratio target range of 35-50%, at 42%.
The company has 2P oil reserves of 87.2MMbbl and 2P gas reserves of 2.18Bcf, 9% and 5% lower respectively than in 2014, primarily due to the record levels of production during 2015, while 2C contingent resources fell by 27% to 57.1MMbbl, driven by the Taza revision, although that was partially offset by gas resources increasing 2% to 3.6Tcf thanks to a material upgrade in estimated 2C resources at P'nyang, which is likely to underpin PNG LNG Train 3.
Botten does not believe there will be any substantial rise in the oil price until 2017 or 2018.