The Oil Search Ltd (ASX: OSH) share price is pushing upwards today following a positive update by the energy producer.
At the time of writing, Oil Search shares are up 0.7% trading at $4.34.
What did Oil Search announce?
In today’s statement, Oil Search advised it has reached a commercial agreement with its joint venture partners in the PNG LNG project. This is in relation to the redetermination of participating interests.
Currently, the PNG LNG project participants include ExxonMobil (33.2% interest), Oil Search (29% interest), Kumul Petroleum (PNG government) (16.8% interest), Santos (13.5% interest), JX Nippon (4.7% interest), and MRDC (PNG landowners, 2.8% interest).
Following its December 2020 initiation, the parties agreed that the current redetermination process would be discontinued and no adjustment made to the participating interests in the PNG LNG project. In addition, they agreed to cancel all future redeterminations provided for under the PNG LNG Coordinated Development and Operating
Oil Search said it would be entitled to a carried interest of US$176 million as part of the agreement. This will come from particular non-PNG state joint venture partners over the calendar years ending 2022 to 2024.
However, after 31 December 2024, the interest may be reduced or increased depending on the results of future drilling activities.
More on the PNG LNG Project
Since going online in 2014, the project has become a world-class liquefied natural gas development.
Operated by ExxonMobil, the PNG LNG project has consistently operated above its nameplate capacity of 6.9 million tonnes per annum (MTPA). In fact, in 2019, the project recorded its highest annual production of 8.5 MT, 23% above nameplate capacity.
The gas is conditioned in the PNG Highlands and then transported by a gas pipeline to the LNG plant located near Port Moresby. The gas is then liquefied at the LNG plant before being loaded onto tankers and shipped to Asian gas customers.
Approximately 7.9 MTPA of LNG from the project is currently sold under long and medium-term contracts. This represents more than 90% of LNG production from the project, reducing exposure to the weak LNG spot market.
About the Oil Search share price
Over the past 12 months, Oil Search shares have gained more than 60%, with year-to-date hovering close to 20%.
Based on today’s price, Oil Search presides a market capitalisation of roughly $8.96 billion and has 2 billion shares outstanding.