The Oil Search Limited (ASX: OSH) share price is backing away from its four-month high even after the energy producer posted double-digit profit growth this morning.
The OSH share price slipped 1% to $8.08 at the time of writing as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index inched up 0.3%.
In contrast, the Woodside Petroleum Limited (ASX: WPL) share price is up 0.5% at $37.09 and the Santos Ltd (ASX: STO) share price is 0.2% stronger at $6.80.
Earnings details
The devastating earthquake in the PNG Highlands impacted Oil Search's production but that didn't stop management from delivering a 13% improvement to net profit to US$341 million in 2018 (its financial year is the same as the calendar year).
A strong recovery in the second half of the year helped drive the profit growth with production from its PNG LNG plant hitting a record rate over the period of 8.8 MTPA.
The company also increased its final dividend by 55% to US8.5 cents per share although Oil Search won't be seen as much of an income stock given its sub 2% yield.
Luckily, the company is promising strong growth for 2019 as it made significant upgrades to its reserves and resources.
Outlook
"With the PNG LNG Project operating at record rates and operated production progressively returning to pre-earthquake levels, Oil Search's production is expected to rebound in 2019, to 28.0 – 31.5 mmboe," said Oil Search's managing director Peter Botten.
"While clearly highly dependent on oil prices, we anticipate generating operating cash flows of approximately US$1 billion annually."
This should leave it lots of cash to fund its share of the development costs for expanding its PNG LNG project, the Pikka Unit development in Alaska and its exploration and appraisal programme.
Oil Search produced 25.2 mmboe in 2018 and the company is forecasting a 15% to 20% drop in production costs in the current year to between US$9 and US$10 per barrel of oil equivalent.
Foolish takeaway
It looks like a decent result to me although my preference is for Santos due to its valuation upside potential.
Still, I don't think Oil Search's share price weakness is a sign of something more sinister than profit taking.
But if you are looking for alternative growth stocks for 2019, you should follow the free link below to find out what the experts at the Motley Fool are tipping as their favourites for the year ahead.
