Source: The National, Wednesday January 30, 2013
OIL Search finished the 2012 calendar year on a high note, with revenues for the 2012 full year of US$724.6 million (K1.52 billion) and US$218.2 million (K457 million) for the fourth quarter, according to its December quarterly report released yesterday.
The company’s financial results for the year to Dec 31, 2012 will be released to the market on Feb 26, 2013.
Managing director Peter Botten said the fourth quarter featured a strong production performance from its core PNG oil fields and good progress made on the PNG LNG project and other growth opportunities, including gas expansion and material oil exploration.
At the end of last year, the PNG LNG project was about 70% complete and on track for first LNG sales in 2014.
The estimated project cost has increased to US$19 billion while the plant capacity has risen to 6.9 million metric tonnes per annum.
“For the PNG LNG project, a number of major pieces of project infrastructure are now at, or nearing, completion, with the remainder of works progressing generally in line with schedule,” Botten said.
“Importantly, runway pavement at the Komo airfield is progressing well and first cargo flights, which will bring in key items of equipment for the construction of the Hides Gas Conditioning Plant (HGCP), are planned to commence this year.
“Oil Search’s associated gas and PRL 2 life extension projects are also advancing and remain on track to supply commissioning gas to the LNG plant this year.
“The operator, Esso Highlands Ltd, has reconfirmed the project remains on schedule for first LNG sales in 2014.
“Following a cost and schedule review by the operator in November, the capital cost estimate for the project has increased from US$15.7 billion to US$19 billion.
“While this is disappointing, the economic impact is largely offset by a 5% increase in LNG plant capacity and considerably higher oil prices than when the project was initially sanctioned.
“Project economics remain sound.”
The PRL 3 JV has begun development studies to assess potential design concepts for the P’nyang gas field, which may include a third PNG LNG train.
“Oil Search continues to develop its options for LNG growth,” Botten said.
“During the quarter, design studies for the P’nyang gas resource in PRL 3 continued, with a range of options under consideration, including the potential for a third PNG LNG train.”
A farm-down of Oil Search’s Gulf of Papua acreage to TOTAL S A was executed and documentation submitted for PNG government approval.
Botten said this satisfied one of the company’s core strategic objectives, which was to bring an experienced LNG operator into the licences, to share risks during the exploration phase.
“Assessment of the new 3D seismic data in the Gulf licences has been encouraging and planning for the offshore drilling programme, beginning in the first-second quarter of this year, is well advanced,” he said.