Oil Search production at the upper-end

Quarterly production came in close enough to estimates with the mid-sized oiler producing 1.68 million barrels of oil equivalent (Mmboe) in the first quarter of 2014. 

That’s a 7.7% increase year-on-year, but is 5% weaker than the December quarter, as planned shutdowns at Kutubu Oil has hit productions. Sales were also weak on a consensus and quarter-on-quarter basis at US$170.2 million as the shutdown also hit revenue.

However, the main story of the production report is the PNG LNG start-up project and the Kurdistan fields. The PNG LNG project is now believed to be ahead of schedule and the company expects to see first cargo shipments in the middle of 2014 and has seen the company moving estimates to the upper-end of guidance which remains at 13Mmboe to 16Mmboe.

Exploration in Kurdistan is continuing to trend well and has seen further upgrades to field estimates. However this has yet to materialise into share price appreciation – I believe both assets are catalysts calls for the stock and good news from either should see OSH legging higher.

The company remains one to watch with exciting prospects that the start-up project will set sail or the oil fields will hit a commercial rate of return. Until then however, you are likely to see OSH drifting sideways.

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