Oil Search has more than doubled its first half net profit due to higher oil prices, and has reiterated its full year production guidance.
The Papua New Guinea-focused oil and gas producer also on Tuesday said it was in talks with Royal Dutch Shell about jointly exploring areas offshore PNG for gas.
Oil Search booked a net profit for the six months to June 30 of $110.868 million, up 117 per cent compared to the prior first half.
“The primary driver of this result was the oil price, with the company realising an average price of $US116.89 per barrel, 53 per cent above the corresponding period of 2010,” managing director Peter Botten said in a statement.
Strong earnings were achieved despite a 10 per cent fall in oil and gas production to 3.56 million barrels of oil equivalent (mmboe).
“This was a satisfactory result, given the maturity of the PNG oil fields, with production benefiting from infield development activity and field optimisation,” Mr Botten said.
While the company expected lower production in the second half of the year due to a two-week planned shutdown of processing facilities, it reiterated its full year production target of between 6.2 and 6.7 mmboe.
Oil Search said spending was increasing at the ExxonMobil-led, $US15 billion ($A14.45 billion) PNG liquefied natural gas (LNG) project, which is in its early construction phase.
ExxonMobil had confirmed it continued to make good progress towards first production in 2014, Oil Search said.
Mr Botten told a teleconference that Oil Search would know by the end of 2012, after extensive onshore drilling, whether it had enough gas in PNG to underpin a third processing “train” at the PNG LNG project or for a greenfields LNG project.
Oil Search is also eyeing its gas licenses in the Gulf of Papua, its second most important gas exploration area, for volumes to support an expansion of the PNG LNG project or as the foundation for another LNG hub.
Mr Botten said Oil Search was in talks with Shell about becoming a partner in the Gulf of Papua gas licenses.
He also said the company had “fruitful and constructive dialogue” with the new PNG government and was hopeful the relationship would be positive.
“At this stage, I don’t expect it will be anything other than an ongoing dialogue that will allow us to develop our business in a predictable way.”
Beyond PNG, its assets in Kurdistan and Tunisia had “some material upside” that would be explored next year, Mr Botten said.
Oil Search declared an interim dividend of two US cents, the same amount paid for the prior corresponding period.
Shares in the company closed up four cents at $6.04 after reaching an earlier high of $6.18.
