Oil Search, the owner of a 29 percent stake in the PNG LNG project, has reported a full-year net profit of $US89.8 million, compared to last year’s $39.4 million loss.
However, its core profit, excluding one-offs, fell 70 percent to $106.7 million as average LNG prices dropped by a third and oil prices slid 12 percent. Average LNG prices dropped 33 percent to $6.36 per mmBtu.
The Papua New Guinea-focused company said its oil and gas production in 2016 reached an all-time record of 30.24 million barrels of oil equivalent (mmboe), driven by the ExxonMobil-operated PNG LNG project.
“Over the past few months, global oil markets have rallied in response to OPEC’s decision in late 2016 to cut production and appear to have stabilised in the US$50 – 60 per barrel range. Spot LNG prices have also increased sharply, driven by short term supply and seasonal issues,” Oil Search Managing Director Peter Botten said.
“While we expect spot LNG prices to soften from current levels through 2017, the long term LNG market fundamentals remain strong, with major Asian buyers expected to have substantial new LNG requirements early next decade,” he added.
Oil Search also said it would boost capital spending in 2017 to help expand output in Papua New Guinea. The company plans to spend between $360 million and $460 million.