OSH Oil Search Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--Oil Search Ltd. (OSH.AU) scaled back its production target for the year after operations were disrupted by damage to its offshore loading facility in Papua New Guinea.

Still, the energy company said Tuesday the expansion of liquefied natural gas activities in the country and its oil development in Alaska were pushing ahead, both nearing the early engineering and design phase.

After output and sales revenue were squeezed in the third quarter, Oil Search said it now anticipated full-year production of between 27 million and 29 million barrels of oil equivalent, against an earlier forecast for 28 million-31 million barrels.

Production from the flagship PNG LNG operation and Oil Search's oil fields was cut in August and September after damage was detected to one of the mooring chains at an offshore liquids loading facility in the Gulf of Papua. Repairs were completed in the middle of this month, and Oil Search said normal loading was restarted and production was ramping back up.

In the latest quarter, production dipped by 1.0% on the previous three months to 6.81 million barrels, and was down 10% year-over-year. Lower sales and the timing of LNG shipments, combined with weaker oil prices globally, left revenue 4.7% lower quarter-on-quarter and down 24% on a year earlier at US$361.1 million.

The company, based in Papua New Guinea's capital of Port Moresby and listed on the Australian exchange, saw its production slump by 17% in 2018 to 25.2 million barrels after operations in Papua New Guinea were temporarily shut down by a massive earthquake and series of aftershocks in the country's Highlands region.

Established in 1929, Oil Search operates all of Papua New Guinea's producing oil fields, has interests in several big natural-gas fields on the island, and has stakes in a liquefied natural gas operation controlled by Exxon Mobil Corp. (XOM) and another planned LNG project headed up by Total SA (TOT).

Exxon's PNG LNG operation and Total's Papua LNG development have plans to build three LNG production lines in the coming years with a combined capacity of roughly 8 million tons a year. Oil Search is also developing oil fields it has bought in Alaska in an effort to diversify beyond Papua New Guinea and a reliance on LNG.

Oil Search said the Pikka project in the Alaskan assets it is developing was set to enter the engineering and design stage by the end of the year. The company has also recently hired an investment bank to help with the planned sale of a 15% equity stake in its core Alaskan leases, which would cut Oil Search's interest in the assets to 36% from 51% now.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

October 21, 2019 19:22 ET (23:22 GMT)

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