Oil Search keeps focus on costs
Summary: Oil and gas producer Oil Search will continue to focus on cost controls and maintaining a strong financial position to counter any weakness in oil prices.....
Papua New Guinea-focused Oil Search says it will continue to focus on controlling costs and maintaining a strong financial position in order to counter weak oil prices.
"With prices appearing to have stabilised in the $US50-55 per barrel range, the board and management still believe it is sensible to follow a 'plan for the worst, hope for the best' approach," chairman Richard Lee told shareholders on Friday.
Oil Search has ample capacity to fund all committed expenditures, scheduled debt repayments and dividends even if oil and gas prices remain constrained in the short-term, he said at the company's annual general meeting in Port Moresby.
The oil and gas producer swung to a net profit of $US89.8 million in 2016, helped by a lift in sales, lower costs and gains from a break fee it received from ExxonMobil after losing a bidding war over InterOil.
It owns a 29 per cent stake in the ExxonMobil-operated PNG LNG project, and a stake in the Elk-Antelope gas fields that will supply gas to the project, as well as to the neighbouring, under-development Papua LNG project run by France's Total.
On Friday, the company reaffirmed its full-year production guidance for 2017 at 28.5 to 30.5 million barrels of oil equivalent (mmboe).
The company also faced two resolutions - one related to climate change disclosures and the other to human rights compliance - from shareholders.
The resolution relating to climate change disclosures was withdrawn, with Mr Lee saying the reporting requirements are already addressed in its current and planned approach.
These include reporting business scenarios on the impact of different levels of global warming and implementing recommendations from the multi-lateral Task Force on Climate Related Financial Disclosures.
The resolution on human rights disclosures was defeated in a shareholder vote.
Oil Search said it has been an been an active signatory to the UN Global Compact for a number of years and in December 2016 became a corporate participant in the Voluntary Principles on Security and Human Rights in December 2016.
It said is developing a multi-year human rights plans and has also committed to an annual reporting against plan, with the first report due in early 2018.
At 1400 AEST, Oil Search shares were down 0.8 per cent at $7.21 each in a weak Australian market.