The Oil Search Ltd (ASX: OSH) share price is rising on Tuesday morning.
At the time of writing, the energy producer's shares are up 1% to $3.99.
Why is the Oil Search share price rising?
Investors have been bidding the Oil Search share price higher today following the release of its second quarter update.
According to the release, Oil Search recorded a 4% quarter on quarter decline in total production to 6,589 mmboe. This was driven by weaker PNG LNG project production which offset increases in its oil production during the period.
However, thanks to stronger pricing, the company reported a 21.5% quarter on quarter increase in operating revenue to US$366.2 million. This brought its half year operating revenue to US$667.7 million, up 6.7% on the prior corresponding period.
This underpinned strong operating cashflows, allowing the company to reduce its debt by 5.3% over the three months to US$2,122.2 million.
FY 2021 guidance
Oil Search has reaffirmed its FY 2021 production, operating costs, and capital expenditure guidance.
Production is expected in the range of 25.55 mmboe to 28.5 mmboe. Whereas unit product costs are expected to be US$10.50 to US$11.50 per boe and capex is forecast to be in the range of US$250 million to US$350 million.
Oil Search's Acting Chief Executive Officer, Peter Fredricson, said: "Oil Search delivered strong production in the latest quarter, supported by the safe completion of the major planned maintenance campaign at PNG LNG by the operator, ExxonMobil."
"The macro environment helped drive an increase in revenue despite the planned rate reduction at PNG LNG during the quarter. Sales volumes were broadly similar to the first quarter due to careful inventory management and flexibility from using the spot market," he added.
Mr Fredricson concluded: "While the COVID-19 outbreak continues to impact Papua New Guinea, strict operating procedures and logistical measures have ensured continued safe and reliable production with no impacts to Oil Search or ExxonMobil operated production facilities. Pleasingly, there has been strong uptake of the COVID-19 vaccine in the Port Moresby office, which has allowed nearly all staff to return to work there."
