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.