OIL SEARCH 2016 HALF YEAR UPDATE
Letter to shareholders
FROM THE MANAGING DIRECTOR
Oil Search achieved a strong operational start to 2016, reporting near-record half year production.
The PNG LNG Project continued to produce at rates well above nameplate capacity, averaging
7.7 MTPA during the first half, while the measures implemented to improve productivity and optimise production in our operated oil fields
were very successful. However, profitability was impacted by the sharp fall in global oil and gas prices, with realised prices down 27% and 40% respectively, leading to a substantial reduction in reported net profit. The Board declared a dividend of one US cent per share, representing a dividend payout ratio of 60%, slightly above our stated policy to distribute between 35% and 50% of net profits.
A key focus for the Company during the first half was our bid for InterOil and the subsequent superior offer from ExxonMobil. Following much deliberation, the Oil Search Board decided that it was not in the best interests of shareholders to increase our offer. One of the key drivers for our InterOil bid was to facilitate cooperation/integration between Papua New Guinea's two LNG growth opportunities, the potential expansion of PNG LNG and the development of Papua LNG, both in which Oil Search holds material positions. We believe the bid for InterOil by ExxonMobil significantly increases the likelihood of this occurring and that
ExxonMobil's offer highlights the quality of our LNG assets in PNG and the potential value that would be created by cooperation between PNG's two world-class LNG projects.
We have recently commenced a Strategy Refresh, with a focus on determining the most value accretive options for cooperation between the PNG LNG and Papua LNG projects and the other activities required to underpin the next phase of LNG growth in PNG. In addition, we are replenishing our exploration portfolio in PNG and have identified a number of highly prospective areas
with material gas upside potential that can drive long term growth.
Our liquidity position remains strong and we are well placed to support continued investment in our growth opportunities, which are among the most competitive in the region and have the potential to almost double our high-returning production base by early next decade.
Peter Botten, CBE, BSc, ARSM, Managing Director
US$581
MILLION
Total sales revenue
14.9MMBOE
Total production, the second highest half year in the
Company's history
7.7MTPA
PNG LNG Project annualised production rate
significantly above nameplate capacity
53LNG cargoes shipped
1.0US CENT PER SHARE
Interim dividend payout representing a
60% payout ratio
HIGHLIGHTS
2016 Half Year
US$26
MILLION
Net profit after tax
8%Unit production costs
reduced to US$8.21/boe from US$8.90/boe
6.4TCF
Estimated Elk-Antelope 2C resources from
completed field certification
SAFETY IMPROVEMENT
Plan introduced
US$56
MILLION
Committed to the
Oil Search Foundation over the next 5 years
Half Year
PERFORMANCE SUMMARYSix months to | Jun 2014 | Dec 2014 | Jun 2015 | Dec 2015 | Jun 2016 |
Total production (mmboe) | 5.37 | 13.91 | 14.32 | 14.93 | 14.89 |
Total sales (mmboe) | 4.74 | 13.03 | 14.45 | 14.31 | 15.17 |
Realised oil & condensate price (US$/bbl) | 111.57 | 87.07 | 56.64 | 46.4 | 41.61 |
Total revenue (US$m) | 510.0 | 1,100.4 | 863.8 | 721.9 | 580.8 |
EBITDAX (US$m)* | 393.9 | 863.1 | 644.1 | 507.2 | 377.4 |
Net profit after tax (US$m) | 152.5 | 200.7 | 227.5 | (266.9) | 25.6 |
Core profit (US$m)* | 152.5 | 381.3 | 227.5 | 132.4 | 25.6 |
EPS (US cents) | 10.6 | 22.0 | 14.9 | 8.7 | 1.7 |
DPS (US cents) | 2.0 | 12.0 | 6.0 | 4.0 | 1.0 |
Operating cash flow (US$m) | 255.4 | 736.9 | 516.8 | 435.9 | 239.2 |
Net debt (US$m) | 3,766 | 3,452 | 3,443 | 3,318 | 3,304 |
* EBITDAX (earnings before interest, tax, depreciation/amortisation, impairment and exploration) and core profit (net profit after tax before significant items) are non-IFRS measures that are presented to provide a more meaningful understanding of the performance of Oil Search's operations. The non-IFRS financial information is unaudited but is derived from the financial statements which have been subject to review or audit by the Company's auditor.
SHARE PRICE PERFORMANCE SINCE 2010 RELATIVE TO BRENT OIL PRICE AND THE AUSTRALIAN ENERGY INDEX
180
160
140
REBASED TO 100
120
100
80
60 OIL SEARCH
40 BRENT OIL PRICE ASX 200 ENERGY
20
2010 2011 2012 2013 2014 2015 2016
Oil Search Limited published this content on 26 September 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 26 September 2016 22:20:03 UTC.
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