REPORTING SEASON: Oil Search Limited (OSH)
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Figure 1: Oil Search Limited 12 month chart
Oil Search Limited (OSH) Strong LNG result and special dividend for investors
Oil Search Limited (OSH) reported a solid 2014 full year result, thanks to the start of production and sales for its landmark PNG Liquefied Natural Gas (LNG) Project and tighter cost control after the completion of OSH’s strategic review in October 2014.
OSH’s Core profit of US$483 million is broadly in line with consensus and its NPAT of US$353.2 million includes US$180.6million in after tax impairments largely from its exploration expenses. Production hit an all-time high reflecting it PNG Project start-up and solid oil field performances.
Oil Search has restructured its budget to ensure priority activities are supported in the current low oil price environment. OSH said expenditures have been reduced and total 2015 planned capital expenditure (CAPEX) will be cut by around 20% with exploration and evaluation spending down 25%, production CAPEX is to be cut by 20% and corporate CAPEX lowered by around 40%. OSH has also budgeted to reduce 2015 production costs for its operated assets by approximately 20%.
Oil search did not change its production guidance for FY15 of between 26 – 28 Million metric barrels of oil equivalent (Mmboe). OSH expects production will be boosted by a doubling of its LNG output and plans to see production costs falling to US$10-12 per/ Barrel of oil equivalent (boe). Oil Search plans to cut total costs for FY15 down to US$555-685 million from US$1.8 billion in FY14.
OSH will pay an US$0.08 interim dividend to shareholders and a special one off dividend of US$0.04 on 8 April 2015.