Oil and gas exploration and development company Oil Search Limited (ASX: OSH) is set to boost its dividend payout by nearly 700% next year when the group's stake in the massive PNG LNG project ramps up to full production.
Oil Search recently reiterated plans to distribute up to 50% of profits; meaning a payout of up to 30 cents per share could be returned in the 2015 financial year (Oil Search's financial year is the same as the calendar year).
At the current share price of $8.61; a ramp up from 4.4 cents to 30 cents per share would put Oil Search on an unfranked dividend yield of 3.5%. This isn't huge compared to the yield produced by rival Woodside Petroleum Limited (ASX: WPL), but Oil Search has another large project on the horizon that could see far larger returns to shareholders over time.
Gamechanger
The long-term goal for the company is to develop another LNG field in PNG, named Elk or Antelope. An investment decision for the low-cost field is expected in the next two years and over the next 5 to 10 years could see dividend returns to shareholder skyrocket, especially against the current share price.
