RELIEF at progress on the giant $US19 billion PNG LNG project pushed up shares in Oil Search, which on Tuesday reported production of 1.8 million barrels of oil equivalent (boe) in the December quarter.
Oil Search said the Exxon Mobil-led project was 70 per cent complete and on track for first LNG sales in 2014. The project budget remained intact, after a 21 per cent blowout last year blamed mainly on the high Australian dollar.
CBA energy analyst Luke Smith said investors were relieved that Oil Search played down reports of a landslip at the Komo airstrip, which was key to the timing of the project. "The company confirmed soil subsidence took place in mid-January," he told clients, "though it wasn't near completed sections and Exxon has confirmed it hasn't impacted operations, and the runway will be operational by early 2013."
Oil Search said it was continuing to explore growth options including a third train at PNG LNG, and completed the farm-down of its Gulf of Papua exploration acreage to French major Total. Oil Search reported operating revenue for the quarter of $US218.2 million, at an average oil price of $US111.09 per barrel. Its shares closed up 9¢ at $7.20
Shares in Beach Energy also rose on Tuesday, closing up 2¢ at $1.40, recovering some of the ground lost last week when it fell 8.6 per cent after reporting a disappointing gas flow from its Moonta shale well in the Cooper Basin.
CBA's Mr Smith said last week's selling was overdone and there was longer-term upside from commercialising the Cooper Basin's unconventional resources. "Initial Cooper shale results have been encouraging, with the company booking a material contingent resource," he wrote.