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Oil Search - Quarterly Report 2019

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Oil Search (ASX: OSH) is an oil and gas exploration and development company. Oil Search operates oil and gas fields Papua New Guinea (PNG) and has a 29 per cent interest in the ExxonMobil-operated PNG LNG project. Oil Search also has interests in the United States. Oil Search has a market capitalisation of A$10.9 billion.

Oil Search - Quaterly report 2019

What are the main findings of Oil Search Quarterly report?

  • Total production (mmboe) for the September quarter is 6.81, down 1% from the previous quarter.
  • Total sales (mmboe) for the September quarter is 6.47, down 4% from the previous period.
  • Total revenue for the September quarter is US$361.1 million, down 5 per cent from the previous quarter.

What were the main drivers of this result?

Production was slightly down this quarter compared with the previous quarter. The reason for this is that production at the PNG LNG project and the Oil Search-operated oil fields was curtailed during part of August and September following the detection of damage to one of the mooring chains at the Oil Search-operated offshore liquids loading facility in the Gulf of Papua. Repair work on the damaged chain was completed in mid-October, with standard loading operations reinstated and production now ramping up to normal rates.

What is the outlook for Oil Search?

The outlook for Oil Search is impacted by PNG government policies towards the oil and gas industry.

After 12 months of negotiation, Papua LNG Gas Agreement was signed in April 2019. Downstream and Papua upstream pre-FEED effectively complete, FEED contracting well advanced and ready to award FEED contracts. The PNG Cabinet completed its review of the Papua LNG Gas Agreement. Key legislative changes required under the Agreement were passed by Parliament in mid-October. Additionally, discussions regarding the P’nyang Gas Agreement recommenced late in the third quarter.

What is the market reaction?

The initial market reaction to Oil Search September quarter 2019 report is neutral. Oil Search share price is flat and is currently trading at around A$7.15 (10.50 am, 22 October). Oil Search has a P/E ratio in the high-teens and an annual dividend yield of 2.7 per cent (unfranked).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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