Join our daily newsletter At The Bell to receive exclusive market insights
- 2020 has dealt one last blow to Oil Search (OSH), which reported a 42 per cent drop in revenue for the fourth quarter of the year
- Total revenue for the period came to US$259.5 million (roughly A$335.14 million), representing a 37 per cent increase over the prior quarter but a substantial slide compared to the year before, which saw US$446.7 million (roughly A$576.91 million) in revenue
- The company said the increase was due to higher LNG and oil and condensate prices compared to earlier last year, which have still failed to return to pre-COVID levels
- Production for 2021 is expected to be lower than 2020 due to scheduled service programs, which is in turn anticipated to drive an increase in unit operating costs
- Oil Search is down 2.79 per cent to $4.18 per share
2020 has dealt one last blow to Oil Search (OSH), which reported a 42 per cent drop in revenue for the fourth quarter of the year.
For the three months ending December 31, 2020, the Papua New Guinea-focused oil and gas explorer generated US$259.5 million (roughly A$335.14 million) in revenue.
While that figure represents a 37 per cent increase compared to US$189 million (roughly A$244 million) the quarter before, it signals a distinct failure to return to pre-COVID normality and a stark contrast to revenue of US$446.7 million (roughly A$576.91 million) generated in the fourth quarter of 2019.
More positively, Oil Search set a new record for annual LNG production, ending the year with 8.8 million tonnes, thanks in part to the resumption of production at the North West Moran oil field which was shut-in following a 2018 earthquake.
“The recommencement of production was a great effort by all involved and resulted in a gross contribution of around 2500 [barrels of oil per day], notwithstanding remote operational challenges and COVID-19 travel restrictions,” said Keiran Wulff, Managing Director of Oil Search.
However, production this year is anticipated to fall with scheduled service programs at the PNG LNG plant for trains one and two. As a result, unit operating costs are expected to increase in line with the decline in production.
Nevertheless, Keiran remains optimistic, adding that “2021 will continue to be another challenging year and the company is absolutely focussed on maintaining the operational discipline that resulted in excellent results in 2020 despite the difficult conditions.”
As of December 31, Oil Search had US$1.44 billion (roughly A$1.86 billion) in liquidity, which consists of US$540.8 million (roughly A$698.44 million) in cash and US$895.6 million (roughly A$1.16 billion) in undrawn credit facilities.
Oil Search is down 2.79 per cent to $4.18 per share at 1:04pm AEDT.
