Papua New Guinea-based oil and gas explorer Oil Search (ASX: OSH) has this week released its first-quarter production figures and progress report. A highlight of the release was confirmation that the long awaited US$19 billion PNG LNG Project in which Oil Search has a 29% share “was over 80% complete and on track for first sales in 2014”.
The PNG LNG Project is the main growth asset of the company, with Oil Search’s share of proven and probable reserves estimated at 503.8 mmboe. With production literally just months away now, it is definitely a time to be keeping an eye on Oil Search.
Driving home the point, in the release Managing Director Mr Peter Botten stated:
“At the PNG LNG plant, engineering & procurement are substantially complete & preparations for commissioning various components of the process trains & utilities have commenced. The construction of the LNG storage tanks, jetty & the offshore pipeline has been completed. 258 kilometres of the onshore pipeline has been welded & progress has also been made with construction activities at the Hides Gas Conditioning Plant (HGCP), with most of the structural steel for the pipeline compressors erected.”
So the future growth prospects are looking good for Oil Search. At the same time, producing assets continue to deliver reasonable results. The company reported that it achieved a higher average oil price over the quarter at US$114 per barrel, compared with US$111 per barrel in the previous quarter. This is a solid result given that its base operating costs in 2012 were under US$25 per barrel.
With exploration and early-stage development projects looking more and more likely to get canned, producing assets are set to benefit.
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