All eyes on Oil Search now

Good news for shareholders as the PNG LNG Project moves forward.

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.

The oil and gas sector looks to be heating up with Woodside Petroleum (ASX: WPL), Beach Energy (ASX: BPT) and USA-focussed explorer Aurora Oil & Gas (ASX: AUT) all leveraged to improving sentiment.

Foolish takeaway

With exploration and early-stage development projects looking more and more likely to get canned, producing assets are set to benefit.

With limited oil supply and growing demand oil prices are likely to rise over time. Position yourself to profit from this trend now, with The Motley Fool’s brand-new FREE research report, “3 Oil Stocks to Send Your Portfolio Gushing Higher”.

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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