The Oil Search Limited (ASX: OSH) share price has declined by 2.44% today (at the time of writing) following the release of the company's full-year FY19 results.
What did Oil Search announce?
For the full-year, Oil Search's net profit after tax came in at US$312.4 million, which was 8% lower than in 2018. This fall was largely driven by weaker global energy prices.
This net profit result included an 11% increase in hydrocarbon sales, with 2018 production impacted by the Highlands earthquake. In addition, there was an 11% decline in realised oil and condensate prices as well as 5% lower realised liquefied natural gas (LNG) and gas prices during the period.
Operating cash flow for the company came in at US$752.4 million for the full-year. These flows were used to help fund the company's Papua New Guinea LNG project debt repayments and dividends. In addition, the cash flow was utilised for appraisal and pre-FEED (front-end engineering and design) activities for the company's growth projects in Papua New Guinea and Alaska.
At the end of calendar year 2019, Oil Search was in a US$1.15 billion liquidity position. This comprised of US$396 million in cash and US$756 million in undrawn credit facilities. With this, the company's net debt amounted to US$2.98 billion.
The company announced a final dividend of 4.5 US cents per share, taking full-year dividends to 9.5 US cents per share. This represented a 46% payout ratio and was 1 US cent per share lower than in the prior year.
Update on major projects
Oil Search reported that good progress was made during 2019 on the proposed three-train LNG expansion in Papua New Guinea and on the Papua LNG Gas Agreement. However, the parties involved could not agree on appropriate terms and as a result, discussions were suspended on 31 January 2020.
Significant progress was made in Alaska over 2019 across all areas of activities, with a 46% increase in gross 2C oil resources.
Guidance and outlook for FY20
Oil Search commented that its capital expenditure for 2020 is highly dependent on whether a P'nyang Gas Agreement is signed. It will also depend on the timeframe to enter FEED on the three-train integrated LNG development currently underway in Papua New Guinea.
The company added that capital costs are expected to be in the range of US$710 million to US$845 million, however, only on the basis that FEED entry occurs in 2020.
Oil Search further noted that its production and operating cost guidance remains unchanged.
