Trading Pick of the Day28 January 2005OSH: Record Result & 2005...

Trading Pick of the Day

28 January 2005

OSH: Record Result & 2005 Looks Even Better!

Yesterday Oil Search (OSH) released a record quarterly result ahead of their full year report, due to be release on 22 February. With a number of major projects expected to come on line in 2005 and the potential approval of Highlands Gas Project, Macquarie Research Equities (MRE) are forecasting more short-term upside in OSH shares.


Management gave an update on OSH’s two major developments yesterday:


The SE Mananda project (OSH 84.7%): has been approved for development following the agreement with PNG government over fiscal terms. First oil is scheduled for the third quarter of 2005. This is ahead of MRE’s expectations and therefore has resulted in an upgrade in 2005 production and earnings.


The Nabrajah oil field (OSH 28.33%): in Yemen has been approved with first oil scheduled for the third quarter of 2005. This has also generated an uplift in MRE’s earnings forecasts.


MRE have upgraded 2005 earnings forecasts by 10% to US$157m.


MRE expect OSH shares to Outperform over the next 12 months due to continued oil price/earnings upgrades into 2005, drilling and development activity in Yemen and more progress on the Highlands Gas Project.


MRE maintain a short-term Outperform recommendation on OSH and a 12-month  share price target of $2.21.