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On 22 January 2019, Oil Search Limited (ASX: OSH) has released its robust fourth quarter financial results for the period ending 31 December 2018. Incorporated in 1929, Oil Search is a large-cap oil exploration company, operating majority of the oil-producing assets at Papua New Guinea (PNG). It holds a 29% stake in the PNG LNG Project, operated by ExxonMobil PNG Limited.
Oil Search recorded a 1% dip in 7.4 mmboe total oil production in Q4 2018, resulting in 2018 full year production to 25.2 mmboe (a decrease of 17% over the last yearâs 30.31 mmboe). While the 1H2018 was impacted substantially by the February 2018 PNG Highlands earthquake, the production recovered strongly in the second half, with the PNG LNG Project producing at an annualized rate of 8.8 MTPA, its highest-ever half-year rate.
Although the annual sales have decreased bY 17% from 30.04 mmboe in FY17 to 25.02 mmboe in FY18, the December quarter sales at 7.82 mmboe witnessed a 5% jump from the previous quarterâs 7.44 mmboe. Oil Search posted a 6% jump in quarterly revenue to US$503.1 million, driven by 5% jump in hydrocarbon sales and 5% increased LNG and gas prices, partly offset by 15% drop in realized oil and condensate prices. Despite the natural calamity (earthquake), the company witnessed a 6% jump in annual revenue of 2018 at US$1.54 billion, as compared to the previous year.
As announced on 16 November 2018, Papua LNG JV members signed an MOU with the PNG Government for the development of Papua LNG project, with the T&Cs to be applied to the Papua LNG Gas Agreement to be signed till 31 March 2019. The agreement will allow the commencement of Front-End Engineering and Design (FEED) phase of the project.
As announced on 12 November 2018, Oil Search has begun the Muruk 2 drilling in the PNG Highlands with High Arctic Rig 104, on behalf of the ExxonMobil-operated PDL 9 JV. Oil Search completed two 2D seismic operations in the onshore Papuan Gulf Basin and Forelands regions of PNG in Q42018, covering approximately 380 kilometres.
On 17 January 2019, Oil Search announced that the Pikka B well drilling which began in December 2018 in Alaska, successfully encountered hydrocarbons in the target Nanushuk sands, in line with pre-drilling expectations. Oil Search has completed the construction of ice road and well pad for Pikka C well, expected to spud in late January. With the Final Environmental Impact Statement (FEIS) issued in November by US Army Corp of Engineers and successful performance of Pikka B and Pikka C wells, Oil Search is looking forward to the transition of JV to FEED upon receiving âRecord of Decision.â
Stock performance:Â Although the scrip price is trending downward at 10.35% since last three months, the OSH stock has demonstrated a positive YTD return of 12.39% this year till date to its investors. The shares closed the dayâs session at A$7.580, down by 2.82%, with a market capitalization of A$11.88 billion and 1.52 billion outstanding shares.
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