Total output sliding 0.5 pet joules (PJe) to 37PJe from 37.5PJe a quarter ago, which saw revenues down $26 million from $306 million to $280.6 million as production dropped to 39.5PJe from 41PJe quarter-on-quarter. This is despite the fact that major competitors Santos and Beach Energy saw record prices and improving production over the same quarter.
The company is putting the softer read down to seasonal issues at its Kupe field which was partly offset by better numbers from its Otway basin and softer average gas price over the period. Yet again Santos and Beach saw prices increasing.
However what is slightly more concerning is the fact that total CAPEX excluding its Asia-Pacific LNG project hit $116 million from 88 million last quarter as exploration costs hit the top end of expectations – this will squeeze margins further.
What is pleasing is the APLNG update that showed the upstream component is now 59% complete and drilling continues to see solid field size over the 564 wells now added. There was no guidance given on budget however the report was upbeat that the project will be delivered on time. We will look to see if this is indeed the case.
This report is likely to be seen as a disappointment by the market. Look for a slight pull back after having seen ORG rally solidly from the December low. However, more detail is needed from an earnings and profit perspective and the market will await further details at the February 20 half yearly update.