Oil Search: Profits dive for the first time in five years
Oil Search profits plummet
Australian-listed Oil Search reported its first decline in profits in five years due to higher exploration costs and tax rates that resulted in 32% fall last year.
The Papua New Guinea-based outfit said net profit before one-offs was $140.8 million, compared with $207.5 million a year earlier.
Ten analysts had on average forecast Oil Search's net profit before one-offs to be $122.45 million, according to Reuters Estimates.
Oil Search, which is undergoing a strategic review of its business, forecast production to be between 9 million and 9.5 million barrels of oil equivalent this year.
The outfit said exploration costs jumped 92% last year from a year ago to $232.4 million, largely due to a relatively poor run for its drilling programme, which led to an expense of $163 million.
It plans to cut exploration spending by between 35% and 40% this year from last year to $130 million to $140 million, focusing on activities in Papua New Guinea, Yemen and Libya.
Oil Search said a 16% rise in its average realised oil price to $77.78 per barrel drove its sales revenue to a record high of $719 million last year, offsetting the effects of a 4% drop in output. It produced 9.78 million barrels of oil equivalent last year.
Operating costs rose 17% on higher equipment expenses and a strong Australian dollar.
Oil Search, a partner in an ExxonMobil proposed liquefied natural gas project in Papua New Guinea, said the 6.3 million tonnes per year LNG project would double its annual production to about 18 million boe.
The venture partners for the proposed $10 billion project, which also include Santos and AGL Energy, are expected to make a front-end engineering design decision late in the first quarter this year.
The LNG project will only use about 60% of the proven and probable resources in Papua New Guinea and studies have suggested that the most lucrative way of commercialising the remaining gas assets is through an expansion of the LNG plant, Oil Search said.
It added that it was still reviewing other options to develop the remaining gas.
The outfit also said on its expects changes in its Middle East and North African assets in the next six months.
"We expect some portfolio changes in the Middle East and North African assets in the next six months or so," Oil Search managing director Peter Botten said at a results briefing.
"Some of these assets may be mean more to other parties," he added.