Mar 1, 2010

More gas on the cards for Oil Search

OIL Search plans to focus 2010 exploration efforts on finding more gas to underpin liquefied natural gas expansion in Papua New Guinea and expects to resolve the remaining issues for PNG LNG this quarter reports PNG Industry news.

Managing director Peter Botten said in a statement key exploration activities this year included drilling the Wasuma, Korka and Mananda Attic wells, as well as onshore and offshore seismic in Southern Highlands province.

He added the company would also continue its seismic and drilling program in the Middle East and North Africa.

While development activities will focus on gas conservation and improving facilities, infrastructure reliability as well as extending facility life to support the PNG LNG project, Oil Search is still looking to get the most out of its oil assets.

This includes drilling one or two development wells on the Moran field; appraising the Agogo deep play, which had encountered oil in several intervals in a previously untested footwall forelimb compartment; and carrying out a workover campaign in the Kutubu, Moran and SE Gobe fields.

Botten said the new deep intervals at Agogo will be flow tested to determine hydrocarbon content, reservoir productivity and the potential for further development opportunities.

"Importantly, the discovery of oil in the Agogo footwall forelimb has opened up a new play fairway in the Fold Belt and has significant implications for the development of analogous structures below existing fields and the prospectivity on trend in adjacent licences."

Botten also touched on progress for the PNG LNG project.

"The remaining issues to financial close, including the signing of the final SPA (sales purchase agreement), which will result in the PNG LNG plant's initial capacity being fully contracted, are expected to be resolved during the first quarter of 2010 with first draw-downs from the project financing facility expected shortly before financial close," he said.

Meanwhile, Oil Search reiterated that full-year 2010 production would be about 10 percent lower than in 2009 at 7.2-7.4 million barrels of oil equivalent.

The company posted a net profit after tax of $US133.7 million (K367 million) for 2009, down from $US313.4 million (K860 million) in 2008, due to lower production and lower oil prices.

Revenue for the year was down 37 percent from 2008 to $US512.2 million (K1.4 billion) while production was 5 percent lower to 8.1MMboe, due to natural decline at its mature PNG oil fields, facilities downtime and the sale of the Middle East producing assets in May 2008.

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