Oil Search’s Oil Quest May Get Sour On Doubtful Quality At Elk-Antelope Project

  • May 07, 2019 AEST
  • Team Kalkine
Oil Search’s Oil Quest May Get Sour On Doubtful Quality At Elk-Antelope Project

As per the media reports, Government of Papua New Guinea (PNG) has doubts on the quality and volume of the recent oil and gas discoveries at Elk-Antelope, which has attracted an investment of around $4.5 billion by three giants Total, Oil Search and Exxon. It is said that if the project fails, there would be a substantial financial loss to the PNG. Oil Search Limited (ASX: OSH) holds an interest of 17.7% in PRL 15 (Papua LNG) post-government and landowner back-in.

The Papua LNG Gas agreement includes sustainable future domestic usage of gas under the domestic market obligation. The company supports increased usage of gas within PNG not only to support in building local industry but also in generating sustainable power. A deferred payment mechanism provision has been set in place for the government's payment of previous costs to ease the financial burden related to the state’s acquisition of its equity interest in the Papua LNG Project. The agreement also noted the development of national content to improve the socio-economic conditions of the local workforce affected by the Papua LNG Project.

It is expected that OSH will focus on moving towards working with ExxonMobil, PRL 3 operator, and the government to close out an agreement with the state for the development of the P’nyang field and the commencement of the Front End Engineering and Design (FEED) phase for the proposed three train integrated development at the PNG LNG plant site. It will include Front End Engineering and Design for the OSH's operated Associated Gas Expansion (AGX) Project. The Front End Engineering and Design is anticipated to result in a final investment decision by 2020 to ensure that first production from the new LNG trains are available by 2024.

In another update, the company announced that the company’s 2019 Annual Meeting of Members would be held in Ballroom 1 of the Hilton Hotel, Port Moresby, Papua New Guinea and will commence at 10:30 AM on 10th May 2019.

In its 2018 highlights, the first half was dominated by the Highlands earthquake in February and subsequent activities to restore operations and deliver relief to the local communities. The second half showed a robust recovery with PNG LNG achieving record half-year production rate of 8.8 MTPA and progressive recovery in operated production. Despite 17% lower production, NPAT increased by 13% to US$341 million. The Board of Director declared a final dividend of US$8.5 cents per share, taking the full year dividend to US$10.5 cents per share.

On the stock information front, at market close on 7th May 2019, the stock of Oil Search was trading at $7.440, down 1.195% with a market capitalisation of $11.76 billion. Its current PE multiple is at 23.74x, and its last EPS was noted at $0.317. Its annual dividend yield has been noted at 1.98%. Today, it touched day’s high at $7.59 and day’s low at $7.45, with a daily volume of 3,421,957. Its 52 weeks high price stands at $9.265 and 52 weeks low at $6.700. Its absolute returns for the past one year, six months and three months are -5.88%, -2.46%, and -4.8%, respectively.


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