shareholdersunite.com

Ops – “Ma” at work again.

Ken-san, thanks for the mention.

Cheer’s

Tusk

Will be interesting to see whether they are one of the bidders. Tough spot for them because it’s a little admitting defeat. Their exploration partner OSH is supposed to know what they are doing and finding these sources for future expansion, and they can’t come close to finding an E/A (and hopefully T2). It has to eat at them knowing that just EA would give them what they need.

I agree XOM would not like doing that, but they are realists, and they have a lot at stake. They simply need more NG… a lot more.
XOM coughed up big bucks to buy XTO, in order to get all its NG in the US. That was not even a good deal at the time, too much premium over market PPS and at the peak of US NG prices. It is certainly much less of a “deal” now that US NG is near $2.50/MCF.
Such recollections must create tender feelings in the XOM executive suites. However XOM is the company most likely to position itself long term, as it has all the resources to pay up when needed to get major assets. Buying XTO made it #1 in US NG, which is what they wanted long term.
Doing the same with IOC in PNG seems quite possible to me. An ego or two might be bruised in doing so, but they could handle that.

If OSH drilling activities have attracted interest from Majors, one would think Majors would have ‘check out ennerOle’s String of Pearls’ in their ‘to do’ list.
T-2 comes in as planned and Katie bar the door.

**********

Gas majors eye off Oil Search drilling
Greg Roberts
February 21, 2012 – 6:14PM

Oil Search says its drilling activities in the Gulf of Papua have attracted interest from major energy companies that believe it will find large gas reserves.

One of Australia’s largest oil and gas companies said on Tuesday that it had started the largest drilling program in its history.

It will spend more than $US2.2 billion ($A2.05 billion) this year on exploration and activities related to its key growth project, the $15.7 billion PNG LNG (liquefied natural gas) development in which it is a joint venture partner.

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The oil producer lifted its full year net profit by nine per cent to $196.2 million but analysts were more excited about its drilling activities, with the potential for a new major project to add to PNG LNG.

Three offshore discoveries have already been made in the gulf and while the resource could be incorporated into an expanded PNG LNG, Oil Search’s managing director Peter Botten named Talisman Energy and Shell as potential farm-in partners.

“We’re not an LNG operator per se so, to add credibility to a joint venture, we are in discussions with a number of highly credible experienced LNG operators,” Mr Botten told reporters.

“Exxon Mobil, Talisman, Shell and a range of other very credible LNG players are looking at PNG, which at the moment is seen to be pretty attractive to review.

“Hopefully a number of these commit to come into the country and explore.”

Three other wells including P’nyang South, Trapia and Hides Gas Water Contact have provided encouraging results with the potential for, optimistically, more than 10 trillion cubic feet of gas reserves.

Extra gas discoveries would support a third 3.3 million tonne train for the PNG LNG project, which Oil Search says could double PNG’s gross domestic product.

Oil Search says it is the largest single investor in PNG this year.

UBS analyst Gordon Ramsay said the involvement of major LNG players gave a vote of confidence in the potential technical credentials of the area.

Energy giant Exxon Mobil is operating the project, which is two years into a four-year construction schedule and on track to achieve first LNG sales in 2014, following a recent $700 million cost blow-out related to the exchange rate.

Exxon Mobil’s ability to manage projects combined with Oil Search’s 83-year knowledge of doing business in PNG was an effective partnership, Mr Ramsay said.

“The investment community and analysts give Exxon Mobil credit for being a stand-out in project management delivery,” Mr Ramsay told AAP.

The increased net profit was driven by higher realised oil prices and lower exploration expense.

Those factors more than offset a decline in oil sales volumes and ongoing cost pressures at PNG LNG.

Production in 2011 of 6.69 million barrels of oil equivalent was 12.7 per cent lower than in 2010, related to field declines and a two-week facilities shutdown for PNG LNG Project tie-in work.

The company, which is among Australia’s 30 biggest by market capitalisation, will pay a two US cents per share dividend, following an interim dividend of two US cents per share.

The average realised oil price for the year was $US116.09 ($A108.37) per barrel, 44.8 per cent higher than the average price realised in 2010 of $US80.19 per barrel.

The company’s shares closed up 17 cents, or 2.6 per cent, at $6.72.

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_I/threadview?bn=26290&tid=288080&mid=288086

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_I/threadview?bn=26290&tid=286029&mid=286031

This article sheds a few different tidbits into OSH’s plans. They are seekng LNG Opertors to JV with for PNG LNG expansion. Wonder where XOM is headed—–> PPL 236???

“Three offshore discoveries have already been made in the gulf and while the resource could be incorporated into an expanded PNG LNG, Oil Search’s managing director Peter Botten named Talisman Energy and Shell as potential farm-in partners.

“We’re not an LNG operator per se so, to add credibility to a joint venture, we are in discussions with a number of highly credible experienced LNG operators,” Mr Botten told reporters.”

**********

Oil Search searches for LNG partners
Published 6:12 PM, 21 Feb 2012

Oil Search says its drilling activities in the Gulf of Papua have attracted interest from major energy companies that believe it will find large gas reserves.

One of Australia’s largest oil and gas companies said on Tuesday that it had started the largest drilling program in its history.

It will spend more than $US2.2 billion ($A2.05 billion) this year on exploration and activities related to its key growth project, the $15.7 billion PNG LNG (liquefied natural gas) development in which it is a joint venture partner.

The oil producer lifted its full year net profit by nine per cent to $196.2 million but analysts were more excited about its drilling activities, with the potential for a new major project to add to PNG LNG.

Three offshore discoveries have already been made in the gulf and while the resource could be incorporated into an expanded PNG LNG, Oil Search’s managing director Peter Botten named Talisman Energy and Shell as potential farm-in partners.

“We’re not an LNG operator per se so, to add credibility to a joint venture, we are in discussions with a number of highly credible experienced LNG operators,” Mr Botten told reporters.

“Exxon Mobil, Talisman, Shell and a range of other very credible LNG players are looking at PNG, which at the moment is seen to be pretty attractive to review.

“Hopefully a number of these commit to come into the country and explore.”

Three other wells including P’nyang South, Trapia and Hides Gas Water Contact have provided encouraging results with the potential for, optimistically, more than 10 trillion cubic feet of gas reserves.

Extra gas discoveries would support a third 3.3 million tonne train for the PNG LNG project, which Oil Search says could double PNG’s gross domestic product.

Oil Search says it is the largest single investor in PNG this year.

UBS analyst Gordon Ramsay said the involvement of major LNG players gave a vote of confidence in the potential technical credentials of the area.

Energy giant Exxon Mobil is operating the project, which is two years into a four-year construction schedule and on track to achieve first LNG sales in 2014, following a recent $700 million cost blow-out related to the exchange rate.

Exxon Mobil’s ability to manage projects combined with Oil Search’s 83-year knowledge of doing business in PNG was an effective partnership, Mr Ramsay said.

“The investment community and analysts give Exxon Mobil credit for being a stand-out in project management delivery,” Mr Ramsay told AAP.

The increased net profit was driven by higher realised oil prices and lower exploration expense.

Those factors more than offset a decline in oil sales volumes and ongoing cost pressures at PNG LNG.

Production in 2011 of 6.69 million barrels of oil equivalent was 12.7 per cent lower than in 2010, related to field declines and a two-week facilities shutdown for PNG LNG Project tie-in work.

The company, which is among Australia’s 30 biggest by market capitalisation, will pay a two US cents per share dividend, following an interim dividend of two US cents per share.

The average realised oil price for the year was $US116.09 ($A108.37) per barrel, 44.8 per cent higher than the average price realised in 2010 of $US80.19 per barrel.

The company’s shares closed up 17 cents, or 2.6 per cent, at $6.72.

If one looks at OSH’s website it’s easy to see that their goals are very much about things beyond PNG LNG. I for one has always just focused on its activities regarding PNG LNG even though I knew that they had operations in other countries. Here is their Strategic Focus from their website:
“1.Optimising the value of the oil and gas operations through the pursuit of near field production opportunities, rigorous cost control and new developments while building long term operating capacity.
2.Maximising the value from the PNG LNG Project, including active management of in-country issues such as benefits distribution.
3.Promoting an early decision on a third LNG train based on existing PNG LNG Project fields and nearby structures.
4.Accumulating gas resources outside existing PNG LNG Project fields, to support a standalone LNG project.
5.Ensuring Oil Search’s sustainability, with an enhanced focus on managing operating risks, promoting transparency and improved external reporting.
6.Actively evaluating international growth opportunities, recognising any transaction must compete for funds with PNG expansion opportunities.
7.Optimising Oil Search’s financial and capital structure through to and beyond first LNG.
8.Aligning the Company to deliver this strategic plan.
A comprehensive plan comprising some 40 major work streams has been developed, which describe in detail what has to be done and in what timeframe. Oil Search’s focus in 2011 and beyond will be on implementing these work programmes to deliver the many value-creating initiatives identified by the Review.”

#4 makes it very clear that they have teamed up with XOM for the PNG LNG project, but they have goals to be involved with another LNG project. Their main role in the PNG LNG project is:
“Oil Search will maintain its role as the Operator of the oil fields producing associated gas and the liquids export system.”

So it makes sens that they would be seeking other partners for additional LNG plants within PNG. It also makes sense that XOM would look to become aligned with IOC to ensure they have the necessary gas. If it can be worked out, they might even join the JKM consortium. JAPEX and Kogas would gain an experienced operator, secure needed LNG, and XOM would gain its necessary gas for full expansion. And when 236 is ready for development, XOM already has their plant, and Napa Napa could be part of any expansion.

This dog could hunt.

Thinking this through, XOM with PM plant and in need of gas can JV with IOC in 236, and double as Gulf LNG ‘Operator nameplate’ in the scheme that exists, while JKM consortium hires a Korean Engineering firm to operate Gulf LNG under XOM.
Think Shell would do that? Not I, as they tried bribing Petromin to render IOC the former owners of their valuable leases. Think XOM fears Shell??? Not a chance. The enemy of my enemy is my friend.

Well,
Resource is much,much cheaper on shore.

Remember, this is the land of the unexpected.

“… always the biggest and the best….”

Hmmm,
Kinda sounds like bigger and broader.

Bring me TD.

Tusk

Beyond PNG LNG and another Gulf Area standalone LNG project. Guess there is ample foreign investment interest in PNG energy. Perhaps OSH will seek more control in their next project, provided they can find gas.

**********

Oil Search looks beyond PNG LNG

Wednesday, 22 February 2012

OIL Search plans to spend $US2.2 billion in Papua New Guinea this year as it hunts for gas to support a possible third train for the PNG LNG project and prepares to launch a separate LNG project in the country.

A forecast $1.65-1.75 billion is destined for Oil Search’s share of costs this year for building the ExxonMobil-led PNG LNG project, while $240-280 million is earmarked for exploration.

The major drilling campaign aims to satisfy separate goals of supporting a possible PNG LNG expansion and starting up a “Gulf Area LNG” project.

In the coming weeks and months there could be some answers to where PNG LNG expansion gas will come from.

The Oil Search-managed P’nyang South 1 appraisal well (petroleum retention licence 3) remains underway in PNG’s Western Province, which will be followed by the ExxonMobil-operated Trapia-1 exploration well in the Southern Highlands.

From midyear there are plans to spud the GWC well in this region to potentially increase resources of the PNG LNG project’s key Hides gas field, while evaluation of drilling targets in associated gas fields is continuing.

Oil Search has stakes in two onshore petroleum prospecting licences in PNG’s Gulf province and stakes in four offshore PPLs in the Gulf of Papua.

Based on seismic results from last year, Oil Search believes this acreage could support “two LNG trains” with more than 30 drilling opportunities already identified.

The first plans are for two, yet to be finalised, offshore wells with the rig to be selected in the June quarter for a first spud in the last quarter of 2012.

The drilling ambitions are independent of ongoing negotiations with potential Gulf area partners according to Oil Search – which is targeting a midyear joint venture deal.

PNG LNG progress and that landslide

On January 24, a severe landslide occurred near the Tumbi limestone quarry used by the PNG LNG project in the Southern Highlands, which claimed dozens of lives and buried homes plus a key road.

While there is some debate over the causes of the landslide – such as whether there were other factors at play aside from high rainfall – Oil Search said the government was expected to undertake an independent investigation.

While most of the PNG LNG project work in the wider area had resumed, Oil Search said road access would be restored soon and the landslide was not expected to impact the schedule of first LNG exports in 2014.

Low-grade aggregate from the quarry was used for the project’s Komo airfield site – an important development which would strengthen logistics in the region.

There was a recent workplace fatality at the site and Oil Search listed the completion of the airfield as the top PNG LNG focus item for this year in its results presentation.

The nearby Hides gas conditioning plant development was second on the list, with the project aiming to complete structural steel erection and mechanical construction of the plant’s major equipment this year.

Other possible project milestones for this year include starting the topside jetty works at the LNG plant near Port Moresby, completion of the offshore pipeline and the onshore Kopi/Kutubu sections of pipeline and the start of development drilling.

Results

The PNG oil producer made $202.5 million in net profit after tax last year, which was slightly above its 2010 result after Oil Search included the recent $33.2 million impairment from losing its 15% stake of the Shakal block licence in Iraq’s Kurdistan region.

Profit for the year rose 9% on 2010, reflecting a 45% rise in the average realised oil price of $116.09 per barrel, which more than offset 10.6% lower sale volumes.

Total oil and gas sales dropped to 6.63 million barrels of oil equivalent in line with a 12.7% drop in production to 6.7MMboe.

Production was lower than in 2010 due to a planned facilities shutdown for the PNG LNG project-related construction work and natural field decline.

Production for 2012 is expected to be 6.2-6.7MMboe.

Managing director Peter Botten said the “solid” 2011 profit result more than offset the decline in sales volumes, ongoing cost pressures in PNG and the impact of the strengthening PNG kina and Australian dollar.

“If significant items are excluded, net profit after tax rose 64%, from $US144.1 million to $235.7 million,” he said.

Revenue from operations jumped 25.6% to $732.9 million, with the impact of lower volumes offset by higher oil prices.

Operating costs for the year rose almost 19% to $132.9 million due to inflationary pressures in PNG and the strength of the kina.

The strengthened Australian dollar relative to the US dollar during the year also put pressure on Oil Search’s Australian denominated expenditures.

Botten said a number of additional costs including the establishment of the Oil Search Health Foundation and non-recurring expenses associated with ensuring the longevity of infrastructure were also incurred during the year.

Analysing the announcements yesterday, Macquarie Private Wealth said Oil Search’s cash reserves of more than $1 billion were $300 million more than it forecast at the time of the financial investment decision for PNG LNG.

“This increasingly strong balance sheet enables management to consider a more aggressive drilling program or even the possible development of a third train,” MPW said in a report on Oil Search.

The investment bank believes the Komo airfield will be completed this year and in the “worst case” will be finished only a couple of months later than originally planned.

“At Komo, the revised plan for a simpler facility should see the first planes arriving by year-end while the capital expenditure phasing means that there is limited remaining exposure to the Australian dollar (although Kina appreciation will remain a more modest concern),” MPW said.

Overall, it said 2012 was shaping up to be a crucial year with more than 30% of the overall $15.7 billion PNG LNG budget due to be spent.

“Get this right and [the] project will be significantly de-risked,” MPW said

OSH has a presentation it did around its annual earnings release that is worth looking at. Nothing earthshattering, but a few interesting slides. They have an updated PNG LNG project slide (numbered slide 21), A photo of the LNG plant site (numbered slide 29) which shows the jetty in progress, a “Gulf Area Opportunity” slide (numbered slide 34) that shows their offshore and onshore prospects, Offshore seismics (numbered slide 35), and a “Gulf Area LNG Opportunity” slide (numbered slide 36) which mentions the data room being opened and several interested “high credentialed” parties. Worth a look:
http://www.oilsearch.com/Media/docs/120221%202011%20Full%20Year%20Results%20Presentation-9f9e3b68-85f9-4b49-a7ca-df4baabe6ff6-0.pdf