Exxon partner Oil Search to decide on PNG LNG expansion by end-2016

By JAMES PATON
Bloomberg

Oil Search plans to decide on adding new liquefied natural gas (LNG) processing plants by the end of 2016, as the Papua New Guinea-focused company outlined plans that may double output by early next decade.

Oil Search also will return as much as half of its profit to shareholders in dividends after the start earlier this year of a $19 billion LNG project in Papua New Guinea, the Port Moresby-based company said in a statement.

The ExxonMobil-led LNG project will also allow Oil Search to fund expansion, the company said following a review of its strategy. Oil Search said it expects two or three more LNG production units to be built in the country with the development of InterOil Corp.’s Elk and Antelope discoveries.

“New LNG development in PNG will be among the most competitive in the region,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote today in a note.

Oil Search sees “significant upside potential” within existing assets in Papua New Guinea and estimates there is more than 20 trillion cubic feet of discovered gas in the country, with only 9 trillion cubic feet under development and committed to the PNG LNG project, it said. Oil Search will actively seek oil assets internationally, according to the statement.

Oil Search will pay 35% to 50% of net income to investors, starting with the final 2014 dividend, it said.

“The payment of a materially higher dividend will be our highest priority,” it said as its third-quarter sales more than tripled to $538.2 million. In August, it said it would pay an unchanged first-half dividend of 2 cents/share.

The dividend announced Thursday is in line with expectations, Mark Wiseman, a Sydney-based analyst at Goldman Sachs Group, wrote in a note.

• Most Read
• Most Commented