The Papua New Guinea-focused oil and gas producer, Oil Search reported a heavy impact of the February earthquake on its net profit.
The company reported a net profit of $79.2 million, 39 percent below the $129.1 million recorded in the first half of 2017.
The earthquake resulted in a 31 percent reduction in production and sales volumes, due to a temporary shut-down of both Oil Search operated production and the PNG LNG project, as well as a 14 percent increase in production costs.
The company said in its report that these largely reflect remediation and other costs associated with the earthquake, net of insurance recoveries and the bringing forward of maintenance programmes during the earthquake shut-down period. The average unit production cost for the half was $14.04/boe.
“Oil Search’s financial performance for the first half of 2018 reflected the impact of the 7.5 magnitude earthquake, which struck the PNG Highlands in late February 2018,” the company’s managing director, Peter Botten said.
However, Botten noted that all production facilities are now back online and are presently operating above the pre-earthquake levels, with production from Oil Search-operated facilities progressively ramping up.
“Total revenue declined by 18 percent to $557.8 million, with lower product sales volumes partly offset by higher realized oil, gas and LNG prices,” Botten said.
Total production in the first half of 2018 was 10.24 mmboe, 30.9 percent less than in the corresponding period in 2017, due to the impact of the PNG Highlands earthquake.
For the first half, the PNG LNG project delivered 38 cargoes of LNG, compared to 53 cargoes during the corresponding period of 2017. However, the average price realized for LNG and gas sales increased 17.6 percent compared to the prior comparable period, to $9.02 per mmBtu, buoyed by stronger global oil prices but reflecting an approximate three-month lag between the spot oil price and LNG contract prices.