July 21, 2020 / 12:33 AM / a month ago

Oil Search quarterly revenue drops 30% on weak prices, production on track

(Reuters) - Australia-listed Oil Search Ltd on Tuesday reported a 30% drop in second-quarter revenue on plunging oil prices, just below estimates, and said it was on track to meet its 2020 production guidance.

The Papua New Guinea-focused company raised its 2020 forecast for its key PNG liquefied natural gas (LNG) project to 24.5-25.5 million barrels of oil equivalent (mmboe) from 24-25 mmboe previously, helped by a deferment in scheduled maintenance.

The company had said in May that it was mulling cutting its oil production in PNG from July due to weak global prices.

“Oil Search is on track to achieve its production targets in 2020, despite the shut-in of the Hides Gas-to-Electricity (GTE) project during the quarter due to suspension of operations at the Porgera gold mine,” Managing Director Keiran Wulff said in a statement.

Hides supplies gas to the mine, which suspended operations earlier this year amid a dispute with the PNG government.

Average sales prices for its liquefied natural gas (LNG) were 21% lower than in the same period last year, while production climbed 5.6% to 7.3 mmboe.

In a bid to weather the oil price crash, Oil Search has axed a third of its workforce, raised cash in a share sale, deferred key growth projects in Alaska and PNG and written down some assets, like its global peers.

The company recorded a revenue of $266.2 million for the three months ended June, down from $378.9 million a year earlier, compared with a UBS estimate of $267 million.

Production guidance for 2020 of 27.5-29.5 mmboe and production costs of $10.50 per boe before one-off restructuring costs remain unchanged, the company added.

Reporting by Shruti Sonal and A K Pranav in Bengaluru; Editing by Himani Sarkar and Richard Pullin

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