That is higher than the nameplate 6.9 million tonnes per annum, and reflects a plant that is producing at an annualised 8.1MMtpa, the highest quarterly rate achieved since the LNG plant came on-stream in 2014, up 10% on the June quarter.

It follows some maintenance and a brief unplanned shut-down in the second quarter and a small reduction in gas flow and LNG production in August, when there was a peaceful landholder protest at the Hides plant that saw two wells at Hides shut-in until the landholders secured their goal of meeting with the government.

Oil Search's production guidance for the PNG LNG Project in 2016 remains between 22-23MMboe, and the company expects to come in at the higher end of that range.

"The third quarter of 2016 was another very strong period operationally for Oil Search," managing director Peter Botten.

Oil Search's net share of PNG LNG production was 5.94MMboe, comprising 25.9 billion cubic feet of LNG and 870,000bbl of liquids while the Oil Search-operated PNG oil and gas fields contributed 1.69MMboe net to Oil Search, compared to 1.75MMboe in the previous quarter.

Total revenue was $US309.5 million, driven by a 4% lift in hydrocarbon sales.

Revenue was 16% higher than in the June quarter despite lower liquids prices because PNG LNG was able to see 23% higher average realised LNG and gas prices, $6.44 per MMBtu, because of the three month lag between oil and LNG pricing.

After costs the company's cash balance rose to $939 million, although it is still paying down debts of $4 billion to pay for the PNG LNG development.

Net debt declined $159 million for the quarter and now stands at $3.145 billion.

In a note yesterday morning RBC Capital Markets said Oil Search's numbers were slightly better than it expected, aside from operating revenue.

"Oil Search appears to be well on track to hit the high end of CY16 production guidance in line with our forecasts," RBC analyst Ben Wilson said.

"We are retaining our outperform recommendation on Oil Search as our Aussie large cap exploration and production sector preference. We see Oil Search as one of the few LNG-focused exploration and production companies able to progress growth ambitions in the currently fully supplied LNG market."

Oil Search says that between P'nyang and Elk-Antelope there is sufficient undeveloped gas resource to underpin at least two additional PNG LNG-sized LNG trains, but it is hoping to ensure there is sufficient gas for a third train before a final investment decision is taken.

Oil Search managing director Peter Botten said production was just 1% lower than the all-time record level achieved in the first quarter of 2016, and he remains optimistic that Oil Search can continue to break records given PNG LNG has not been debottlenecked.

He also remains optimistic that significant savings and efficiencies can be achieved between Papua LNG and PNG LNG.

ExxonMobil's entry into the Total-operated PRL 15 Joint Venture has been delayed by a spoiler move from InterOil founder Phil Mulacek.

Serious talks about possible cooperation and integration of the next phase of LNG development can't start until the court finalises ExxonMobil's takeover of InterOil, but Botten is convinced that building the new trains at the PNG LNG site is the best move.

Botten also hinted that some horse trading is in the wind.

"Various commercial models can be applied to deliver project integration," he said.

"Studying the various options, their relative values and how the significantly increased overall value is shared equitably between the P'nyang, Elk-Antelope and PNG LNG owners is a core component of Oil Search's strategy refresh.

"Preliminary indications from this work suggest that unitisation in some form is an optimal development solution."

If successful, he believes the next LNG trains will be even more competitive globally than PNG LNG, which is already in the lowest-cost quartile globally in terms of production costs.

Botten said the company's cash flow break-even is expected to be than $28/boe, including principal repayments.

Despite all the good news, the company has reduced its capital expenditure guidance from $270-315 million to $240-275 million, with some works delayed until next year.