By Robb M. Stewart
MELBOURNE, Australia--Oil Search Ltd. (OSH.AU) achieved the
highest quarterly production in its history during the second
quarter, prompting it to lift its output guidance for the year even
as it continues to cut costs to tackle weak natural-gas prices.
Gas and crude-oil production hit 7.41 million barrels of oil
equivalent in the three months through June, a rise of 7.3% on the
prior quarter and up 94% on a year earlier, the Papua New
Guinea-based energy company said Tuesday.
Still, sales revenue for the period was down 17%
quarter-on-quarter at US$391.5 million after the average price the
company received for gas and liquefied natural gas dropped 35% to
offset a 20% recovery in the average oil and condensate price from
the first three months of the year.
Revenue for the first half of 2015 was US$863.8 million, up from
US$510 million the year before, Oil Search said.
Santos Ltd. (STO.AU) and larger Woodside Petroleum Ltd. (WPL.AU)
have also been struggling with weaker prices. Last week, Santos
said second-quarter sales revenue fell 19% on-year to 786 million
Australian dollars (US$580 million), while Woodside reported a 47%
drop in revenue for the period to US$989 million.
Oil Search, which is listed in Sydney and has been operating in
Papua New Guinea since 1929, said its core oil and gas business is
highly profitable at prevailing prices. Its main asset is a 29%
stake in the PNG LNG liquefied natural gas development operated by
ExxonMobil Corp. (XOM) that began producing in April 2014.
It forecast production for the full year of between 27 million
and 29 million barrels of oil equivalent, a rise on earlier
guidance of 26 million-28 million. For the first half, production
costs are expected to be lower than previously expected at between
US$8 and US$10 a barrel after some work was deferred until the
second half of 2015, the company said.
Oil Search is due to release its half-year results on Aug.
25.
Write to Robb M. Stewart at robb.stewart@wsj.com
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