Oil Search Slashes Guidance After Quake

Australia-listed Oil Search has cut its production guidance for 2018 following the Papua New Guinea LNG terminal being closed for almost seven weeks after an earthquake, the company said April 18.

“As a result of the earthquake, Oil Search has revised its 2018 production guidance to 23 – 26mn barrels of oil equivalent (boe), while unit production costs are expected to be in the range of $10.50–13.50/boe and depreciation and amortisation charges are forecast to be between $12 and $13/boe. Capital cost guidance has been reduced to $425–520mn,” the company said.

Prior to the earthquake, Oil Search had been expecting to produce 28.5mn boe-30.5mn boe this year. Capital expenditure was pinned at $475mn-$575mn.

It revised its LNG production guidance for PNG LNG for the year down to 89-96bn ft³ from its previous forecast of 105-109bn ft³, it said. PNG LNG was closed February 26 by the 7.5 magnitude earthquake and production did not resume until April 13.

PNG LNG is operated by ExxonMobil (33.2%), with Santos (13.5%), National Petroleum Company of PNG (16.8%), JX Nippon Oil and Gas Exploration Company (4.7%), Mineral Resources Development (2.8%), and Oil Search (29%) holding interests in the project.

PNG LNG’s nameplate capacity is 6.9mn mt/year but it has produced in excess of 8.5mn mt/year.