Exxon Partner Oil Search to Decide on LNG Expansion by End 2016

2014-10-23 04:03:13.326 GMT

By James Paton

     Oct. 23 (Bloomberg) -- Oil Search Ltd. plans to decide on

adding new liquefied natural gas processing plants by the end of

2016, as the Papua New Guinea-focused company outlined plans

that may double output by early next decade.

     Oil Search also will return as much as half of its profit

to shareholders in dividends after the start earlier this year

of a $19 billion LNG project in Papua New Guinea, the Port

Moresby-based company said today in a statement.

     The Exxon Mobil Corp.-led LNG project will also allow Oil

Search to fund expansion, the company said following a review of

its strategy. Oil Search said it expects two or three more LNG

production units to be built in the country with the development

of InterOil Corp.’s Elk and Antelope discoveries.

     “New LNG development in PNG will be among the most

competitive in the region,” Neil Beveridge, a Hong Kong-based

analyst at Sanford C. Bernstein & Co., wrote today in a note.

     Oil Search fell 1.6 percent to A$8.58 as of 2:31 p.m.

Sydney time, while the benchmark index dropped 0.2 percent.

     Oil Search sees “significant upside potential” within

existing assets in Papua New Guinea and estimates there is more

than 20 trillion cubic feet of discovered gas in the country,

with only 9 trillion cubic feet under development and committed

to the PNG LNG project, it said today. Oil Search will actively

seek oil assets internationally, according to the statement.

     Oil Search will pay 35 percent to 50 percent of net income

to investors, starting with the final 2014 dividend, it said.

     “The payment of a materially higher dividend will be our

highest priority,” it said said as its third-quarter sales more

than tripled to $538.2 million. In August, it said it would pay

an unchanged first-half dividend of 2 cents a share.

     The dividend announced today is in line with expectations,

Mark Wiseman, a Sydney-based analyst at Goldman Sachs Group

Inc., wrote today in a note.