Oil Search Ltd (ASX:OSH) clocks a 16% operating revenue growth courtesy oil price recovery

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Summary

  • Despite reduced output due to unplanned production halts, Oil Search reported a 16% growth in operating revenues to US$301.5 million.
  • The recovery in the oil and gas prices has contributed immensely towards the growth in the operating revenues. Oil Search anticipates achieve its targeted production for 2021.
  • The Australia energy subindex, ASX 200 Energy, registered the worst decline of over 4% since January.

Papua New Guinea-focussed Oil and Gas player Oil Search Ltd (ASX:OSH) reported a 16% q-o-q growth in the operating revenues to US$301.5 million. The growth is accredited to the recovery in the oil prices despite the decline in the total output to 6.9 mmboe, registering a decrease of 2.7% against Q4 of 2020. The company released the activity report for the first quarter ending on 31 March 2021.

Read Here: Worsening COVID-19 situation in India hitting oil prices, ASX Energy stocks feel the heat

The company recorded an operating revenue of US$214.4 million from LNG and gas sales and US$78 million from oil and condensate streams. The company reported an average realised price for oil and condensate of US$57.38 a barrel while the average realised price for LNG and gaseous products stood at US$7.1 during the quarter. The excellent recovery in the prices has contributed immensely towards the growth in the operating revenues.

Copyright © 2021 Kalkine Media Pty Ltd. (Data source: Company update 23 April 2021)

Oil Search’s LNG-producing assets in Papua New Guinea averages 8.5 MTPA during the quarter with unplanned Hides shutdown. The operating assets at Agogo and Moran outperformed their respective guidance for the quarter and aided toward offsetting the lower LNG output at the PNG assets. Despite the unplanned Hides halt, PNG LNG continued to deliver all long-term contracted cargos.

Also Read: Demand-supply game balancing the crude oil markets

The production guidance for 2021 remains unchanged and the investment expenditure for the year has been reduced by US$75–95 million.

Crude Oil crumbles as COVID-19 infections rise

Crude Oil, the world’s largest commodity, is witnessing one of the worst weekly declines on accounts of rising COVID-19 infections in India and Japan and the unexpected rise in the US crude oil stocks. India, the third largest oil consumer and importer, has witnessed the record high infections exceeding 3,00,000 active cases a day during the week. The rising cases aversely impacts the hopes of the demand recovery in these geographies, which may put a significant downward pressure on crude oil in the upcoming months.

Must Read: Pandemic takes crude oil on a roller coaster ride

Brent crude oil benchmark 1-month futures traded at US$65.82 a barrel at 3:12 PM AEST on 23 April 2021.

The Australia energy subindex, ASX 200 Energy, registered the worst decline of over 4% since January. The decline of the oil prices directly impacted the Australian energy indices and stocks.

Important Read: Are rising Crude Oil Prices a concern for energy hungry nations?

Oil Search Ltd closed at $3.78 a share on 23 April 2021, registering a weekly decline of over 4.5% during the week. The largest LNG producer, Woodside Petroleum (WPL.ASX), declined by over 5%, while Santos Limited (ASX:STO) decreased by over 3% during the week.

All financial information pertains to Australian Dollar unless stated otherwise.


 


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