You could say the sell off yesterday was a tad over the top, but you come to expect that when crowd/sheep mentality is involved. Bring on the oil discovery please.
PNG-based oil and gas producer Oil Search Ltd said today it is on track to deliver another year of strong profits in 2004, despite a fall in first quarter production and revenue compared to the December quarter 2003.
Oil Search reported total operating revenue of $US66.9 million ($A88.8 million) for the first quarter of 2004, which it said was 34 per cent below the fourth quarter of 2003.
The company said this was primarily because of a 38 per cent drop in oil liftings, because of the timing of export cargoes.
"It is expected that this imbalance will be equalised during the second quarter," Oil Search said.
It added that revenue was also impacted by the sale of the company's interest in the Porgera Gold Mine in PNG in November 2003.
Oil Search's oil and gas production in the first quarter of calendar 2004 was marginally lower than in the fourth quarter at 2.839 million barrels of oil equivalent (mmboe).
However it was 13 per cent higher than in the corresponding period of 2003, reflecting the impact of the purchase of ChevronTexaco's PNG assets in October 2003.
Lower oil sales were partly offset by a higher realised oil price, of $US35.18 per barrel, compared with $US30.89 in the fourth quarter of 2003 and $US32.95 per barrel in the previous corresponding period of 2003.
Oil Search managing director Peter Botten said 2004 was an important year for Oil Search, with the company intending to capitalise on the significant achievements of 2003.
He said the three core objectives for the year were optimising the value of existing operations, increasing the level of exploration activity and making substantive progress in commercialising the company's gas resources.
"Our extremely strong financial position provides an excellent platform from which to drive these activities," he said.
Mr Botten said the outlook for 2004 full year production remains strong, despite the small production decline in the first quarter.
"Our expectation for oil production for the year is currently approximately 10.5 million barrels, compared to 9.3 million barrels in 2003," he said.
"This, of course, is dependent on final field performance, and the timing of well-workovers.
"While sales revenue in the first quarter of 2004 was down on the previous quarter, this largely reflected a mismatch between production and sales due to the timing of liftings of oil cargoes.
"This situation will even itself out over the year."
Mr Botten said oil prices remained high and, because of its low level of hedging, Oil Search was almost fully exposed to this pricing strength.
"Based on continued oil price strength, Oil Search is on track to deliver another year of strong profits in 2004," he said.
Oil Search reported a net profit of $131.3 million for calendar 2003.
OSH Price at posting:
0.0¢ Sentiment: None Disclosure: Held
