OSH comments from earnings release

[Palm]

From today's OSH earnings release:

"The PRL 15 Joint Venture began preparations to drill two appraisal wells on the Elk/Antelope field as well as a possible high potential exploration well. Preliminary work on concept selection studies to define the optimum LNG development for the resource also commenced.  Meanwhile the arbitration process in which Oil Search is disputing the validity of the sale by an Interoil subsidiary of a stake in PRL 15 to a subsidiary of Total SA Group, remains ongoing"

"Work continues on aggregating gas to support a potential expansion of png LNG as well as a potential LNG development based on the Elk/Antelope gas fields."

They also expand on the potential of EA and Ant Deep saying Ant 4 and 5 will likely spud in Q3 of 2014 and Ant Deep Q1 of 2015.

On arbitration they state that it is proceeding to a hearing in London in late November of 2014 with a decision expected in Q1 of 2015.

[jft310]

In my opinion if Oil Search were to prevail with their new ownership percentage they would direct E/A gas to an Exxon expansion. Thus their talk about portential LNG development vs the AFR based comment that Total committed to build an LNG plant for Interoil and thus won the bidding. Could easily mean earlier monetization cash flow from E/A if Oil Search prevailed but the LNG participation rate might change. Or we might see both Exxon expansion and our own LNG plant.

[Tree]

In my opinion if Oil Search were to prevail with their new ownership percentage they would direct E/A gas to an Exxon expansion. Thus their talk about portential LNG development vs the AFR based comment that Total committed to build an LNG plant for Interoil and thus won the bidding. Could easily mean earlier monetization cash flow from E/A if Oil Search prevailed but the LNG participation rate might change. Or we might see both Exxon expansion and our own LNG plant.

Oil Search cheers PNG LNG revenue boost

Josh Lewis 

 22 July 2014 01:23 GMT

Australia-listed Oil Search almost doubled its revenue during the second quarter of the year as the start up of the Papua New Guinea liquefied natural gas project (PNG LNG) caused a surge in revenue.

The company generated $339.7 million during the second quarter of the year, up from $170.2 million during the first quarter of 2014.

The rise in revenue came as production rose 120%, quarter-on-quarter, from 1.7 million barrels of oil equivalent to 3.7 million boe.

The majority of the increase was attributable to the start-up of the PNG LNG project, which contributed nearly 1.9 million boe to production, while the company’s base Papua New Guinea business contributed 1.8 million boe, which was up 8% on the first quarter.

Oil Search managing director Peter Botten said the start-up of the PNG LNG project in April was the highlight of the quarter.

“It marked the completion of the country’s largest resource project, which is expected to more than double PNG’s gross domestic product and transform the country into a significant supplier of LNG to key neighbouring Asian markets,” he said.

“Operations at the LNG plant site and the Hides gas commissioning plant are now focused on an incident-free ramp-up to full capacity. Based on current progress, Oil Search expects the LNG project to reach annual plateau production, of approximately 21 million boe (net to Oil Search), by the end of 2014.”

The ExxonMobil-led PNG LNG joint venture is already carrying out work on the potential expansion of the project.

Botten noted that plans for the submission of a development licence application for the P’nyang gas field in PRL 3, as an underwriting gas resource for the potential expansion, were further matured during the quarter, while drilling is underway at the Hides field which will assist in defining the reserves potential of the field.

On Tuesday, Oil Search maintained that it remained on track to deliver 2014 production within its recently upgraded 17 million to 20 million boe guidance range.

[jft310]

If Antelope 4 and 5 start drilling this quarter results expect by First quarter of 2015. If they are both successful would you declare victory and declare recertification payment time. If both fail certainly one would drill number 6 hoping. Does Antelope Deep need to be included in the recertification or is it a separate event ?If it's connected it should be included what ever the odds pre drill it's connected or not. The payment for Antelope Deep is set connected or not.
I would think if they wait for Antelope Deep it improves the odds they think it's connected wells and move a rig, will Oil Search provide a rig as they stated in a prior presentation or will Interoil contract the second High Arctic rig now in country.
Lots of drilling is quite positive for sure. Odds improve with more drilling of confirming more assets.

[jft310]

[quote='jft310' pid='47566' dateline='1406030469'] In my opinion if Oil Search were to prevail with their new ownership percentage they would direct E/A gas to an Exxon expansion. Thus their talk about portential LNG development vs the AFR based comment that Total committed to build an LNG plant for Interoil and thus won the bidding. Could easily mean earlier monetization cash flow from E/A if Oil Search prevailed but the LNG participation rate might change. Or we might see both Exxon expansion and our own LNG plant.

Oil Search cheers PNG LNG revenue boost

Josh Lewis 

 22 July 2014 01:23 GMT

Australia-listed Oil Search almost doubled its revenue during the second quarter of the year as the start up of the Papua New Guinea liquefied natural gas project (PNG LNG) caused a surge in revenue.

The company generated $339.7 million during the second quarter of the year, up from $170.2 million during the first quarter of 2014.

The rise in revenue came as production rose 120%, quarter-on-quarter, from 1.7 million barrels of oil equivalent to 3.7 million boe.

The majority of the increase was attributable to the start-up of the PNG LNG project, which contributed nearly 1.9 million boe to production, while the company’s base Papua New Guinea business contributed 1.8 million boe, which was up 8% on the first quarter.

Oil Search managing director Peter Botten said the start-up of the PNG LNG project in April was the highlight of the quarter.

“It marked the completion of the country’s largest resource project, which is expected to more than double PNG’s gross domestic product and transform the country into a significant supplier of LNG to key neighbouring Asian markets,” he said.

“Operations at the LNG plant site and the Hides gas commissioning plant are now focused on an incident-free ramp-up to full capacity. Based on current progress, Oil Search expects the LNG project to reach annual plateau production, of approximately 21 million boe (net to Oil Search), by the end of 2014.”

The ExxonMobil-led PNG LNG joint venture is already carrying out work on the potential expansion of the project.

Botten noted that plans for the submission of a development licence application for the P’nyang gas field in PRL 3, as an underwriting gas resource for the potential expansion, were further matured during the quarter, while drilling is underway at the Hides field which will assist in defining the reserves potential of the field.

On Tuesday, Oil Search maintained that it remained on track to deliver 2014 production within its recently upgraded 17 million to 20 million boe guidance range.

Based on Trees find Oil Search wants to use P'nyang as a source for the third train. The next question is how many trains does Exxon want to develop? Is the size to be 8 trains or a different number. . .Looking back the talk has been 8 trains at one time or they would need 5 more trains to reach 8 . Where is that gas sourced?no answers just questions.

[sydbod]

The original plans were always 5 trains.
OSH believes there will be enough gas for a train 3.
There is speculation that there might even be enough gas for a potential train 4 should hides deep prove successful.
http://www.oilsearch.com/Media/docs/1407...3a0e-0.pdf
Pg 10 :
"In June, the Minister for Petroleum and Energy offered a new exploration licence, PPL 464 in the Hela
Province, to Oil Search in a 50:50 partnership with ExxonMobil."
and
"In addition, Oil Search has entered into a conditional agreement with Strike Oil Limited to
acquire a 100% interest in exploration licence PPL 402, located adjacent to the Hides and Juha gas fields in
an area believed to be prospective for gas."

This looks like they are trying to prove up either enough gas for train 4 should there still not be enough, or prove up enough to get the train 5.

It is starting to look like the E/A gas will in all probability go to a new LNG plant if one was just going by the numbers and the new news.

[jft310]

SYD -Looks that way. The plus per the Dec 6th CC with Hession is the LNG participation rate for Interoil with Total is to be 30% .The negative is the increased time to build our own LNG plant.I can't see how we were ever going to get 30% LNG rate from Exxon and partners.Analyst research reports on OSH talk of 8 train at PNGLNG. Today we have 2.

[Getitrt2]

The original plans were always 5 trains. OSH believes there will be enough gas for a train 3. There is speculation that there might even be enough gas for a potential train 4 should hides deep prove successful. http://www.oilsearch.com/Media/docs/1407...3a0e-0.pdf Pg 10 : "In June, the Minister for Petroleum and Energy offered a new exploration licence, PPL 464 in the Hela Province, to Oil Search in a 50:50 partnership with ExxonMobil." and "In addition, Oil Search has entered into a conditional agreement with Strike Oil Limited to acquire a 100% interest in exploration licence PPL 402, located adjacent to the Hides and Juha gas fields in an area believed to be prospective for gas." This looks like they are trying to prove up either enough gas for train 4 should there still not be enough, or prove up enough to get the train 5. It is starting to look like the E/A gas will in all probability go to a new LNG plant if one was just going by the numbers and the new news.

"STARTING to look like the E/A gas will in all probability go to a new LNG plant"???  It's been looking almost certainly like that almost  ALL YEAR, as I have been saying consistently, against very aggressive opposition until recently.