Oil Search Limited (ASX: OSH) has today released its first half results for the six-months ending June 30 2015. As I recently noted here, the violent plunge in the price of oil and oil-related stocks has led to the unusual situation where Oil Search's market capitalisation is greater than the under-pressure Santos Ltd (ASX: STO) and on par with the giant Origin Energy Ltd (ASX: ORG).
Here are the key takeaways from today's results release:
- Total production soared 167% to 14.32 million barrels of oil equivalent (mmboe)
- Total sales leapt 205% to 14.45 mmboe
- Total revenue increased 69% to US$863.8 million
- Net profit after tax up 49% to US$227.5 million
- Operating cash flow up 102% to US$516.8 million
- Net debt was flat at $3.4 billion
- Dividend of 6 US cents per share unfranked. Ex-dividend September 4 and pay day September 29
Buy, Hold, or Sell?
Management has provided guidance for the full-year ending December 31 2015 for total production of between 27 and 29 mmboe and for operating costs per barrel at below the current oil price per barrel.
Despite enduring materially lower average oil and gas prices, Oil Search managed to produce a stellar result thanks to a three-fold increase in oil, condensate, gas and LNG sales, thanks largely to the benefits of a full production period and sales from the massive PNG LNG Project.
Oil Search also successfully reduced its unit production costs by 43%, once again largely thanks to leveraging the low cost production from PNG LNG.
With the oil price at multi-year lows, and the share price of Oil Search down around 40% in the past 12 months, the current lows could offer investors a bottom of the cycle opportunity to buy into one of the ASX's leading energy producers.
