Papua New Guinea-based energy giant, Oil Search Limited (ASX: OSH), today announced that net profit and revenue both surged 34% for the half year ending 30 June, 2014. The bottom-line bulge reflected the first earnings contribution from the game-changing PNG LNG project, a cash machine that is expected to transform the company's entire outlook.
Notably, Oil Search shares are up more than 13% over the past year compared to a 10% return for the S&P/ASX 200 Index (INDEXASX:XJO). The company said for the half year total oil and gas production rose 68% on the same period over 2013. Crucially, the PNG LNG project also delivered its first cargo of LNG to Japan.
In the half year ending June 2014 the company produced 5.4 million barrels of oil equivalent (mmboe), however in 2015 during the first full year of PNG LNG operations that total is expected to leap to 21 mmboe of oil equivalent.
The Oil Search board announced a US2 cents per share dividend for the half year period and said it is its intention to increase dividends now PNG LNG is operational. The increases are expected to start with the 2014 final payment. The group also forecast higher production and sales to flow through to more profit increases and a stronger balance sheet for further developments.
They don't call oil the black gold for nothing, but Oil Search's real appeal is in its alignment to the development of the burgeoning LNG industry. With demand from energy-hungry Asia expected to rise exponentially over time and Oil Search now positioned as a proven LNG exporter it remains an attractive proposition for forward-thinking investors. Oil Search is one of a number of LNG involved Australian companies including Liquefied Natural Gas Limited (ASX: LNG) and Woodside Petroleum Limited (ASX: WPL).
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