Oil Search (ASX:OSH) tightens guidance with revenue up 12%

Energy giant Oil Search (ASX:OSH) recorded revenue of US$409 million ($546 million) for the September quarter, up 12 per cent from the prior quarter while the company also tightened its full year production guidance.

The company said that the increase in revenue was supported by strong growth in oil prices. Gas and liquified natural gas (LNG) prices increased 16 per cent from the prior quarter and total production of 6.9 million barrels of oil equivalent (boe) increased 5 per cent from the prior quarter, “demonstrating resilience and sustained commitment.” 

The oil and gas producer tightened its full-year production guidance to between 26 million boe and 28 million boe, compared to between 25.5 million boe and 28.5 million boe. Calendar 2021 investment expenditure guidance was lowered to between $US185 million and $US275 million, from $US250 million to $US350 million. According to the company, this was offset by reduced contractor mobility into Papua New Guinea due to Covid-19 restrictions and deferral of various capital projects.

Oil Search and Santos signed a merger implementation deed on September 10, following mutual due diligence. Next steps include first court hearing in Papua New Guinea and despatch of documents related to the scheme to Oil Search shareholders.

“Our outlook for the 2021 full year remains positive as we tighten our production guidance and maintain our operating cost guidance despite the additional costs associated with the management of the impact of Covid-19. Both LNG and oil markets remain strong, with spot LNG markets continuing to exhibit high volatility and record highs which is a supportive environment for market soundings in respect of new medium-and-longer term LNG sales contracts,” said CEO Peter Fredricson.

“While our focus remains on mitigating the risk to our people and operations through strict adherence to Covid-19 protocols and the promotion of vaccination uptake in our workforce, Oil Search will also continue to play its part in PNG’s fight against Covid-19 through the provision of community vaccination and logistical support.”

Shares in Oil Search (ASX:OSH) are trading 0.7 per cent higher at $4.51.