January 28, 2020 / 12:29 AM / a month ago

UPDATE 1-Oil Search revenue declines 11% in Q4, P'nyang agreement talks ongoing

(Adds details on P’nyang agreement, outlook)

Jan 28 (Reuters) - Papua New Guinea-focused Oil Search Ltd on Tuesday reported an 11% drop in quarterly revenue, hurt by lower liquefied natural gas (LNG) prices, and said talks on the development of the P’nyang gas field had restarted.

For the full year, total production rose 11% to 27.95 million barrels of oil equivalent (mmboe), the oil and gas producer said in its quarterly report. It forecast production in fiscal 2020 at between 27.5 mmboe and 29.5 mmboe.

Average realised LNG and gas prices for 2019 were 5% lower than 2018, Oil Search said. Global LNG prices came under pressure last year due to an oversupply as several large scale projects came online.

Meanwhile, Oil Search said talks between the Papua New Guinea government and Exxon Mobil Corp are continuing over the planned development of the P’nyang gas field.

In November, the PNG government said Exxon was unwilling to negotiate on the country’s terms, adding it would suspend talks until the U.S. oil giant was willing to give it its “fair share” of the deal.

Oil Search said on Tuesday that talks had recommenced early 2020 and were still ongoing.

The P’nyang agreement forms one of two pacts needed by Exxon and its partners, among which are Total SA, Oil Search and Santos, for their $13 billion plan to double the country’s LNG exports.

For the quarter, revenue fell to $446.7 million from $503.1 million a year ago, while production was 5.8% lower at 7.01 mmboe following damage to a mooring chain.

The result was just below a forecast for production of 7.3 mmboe and revenue at $478 million by RBC Capital Markets analysts. Fourth quarter production was still up 3% from the third quarter, while revenue was up 24%.

Reporting by Shreya Mariam Job, Rashmi Ashok and Nikhil Kurian Nainan in Bengaluru; Editing by Richard Pullin

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