Oil Search has earmarked up to half its future net profits for dividend payments, as it reported record production following the start-up of its $19bn Papua New Guinea gas joint venture with ExxonMobil .
The finances of the Australia-listed oil and gas group have been transformed by the LNG project, which came on stream ahead of schedule in April.
The project has swung a spotlight on to the gas reserves of the Pacific nation, where economic growth is forecast to treble next year due to gas exports, according to the Asian Development Bank.
“Oil Search is undergoing a major transformation; the successful start-up of the PNG liquefied natural gas project has already started to provide a material uplift in production, profit and legacy cash flows,” said Peter Botten, Oil Search managing director.
Revenues in the third quarter jumped 58 per cent from the previous three-month period to $538.2m due to the start of production. Oil and gas production was 6.57m barrels of oil equivalent for the third quarter – a record for the company.
Oil Search on Thursday forecast total oil and gas production in 2014 of 18m-20m barrels, of which 11.5m-13.1m barrels would be from its PNG gas project. It has set a target dividend payout ratio of 35-50 per cent of net profits.
In Asia, where governments are seeking cleaner energy sources to complement coal and oil, demand for LNG is growing rapidly. Oil groups ExxonMobil, Total, Osaka Gas, Santos and Horizon are all active in PNG.
In August Chris Finlayson, former chief executive of BG Group, joined New York-listed InterOil, which is developing the Elk and Antelope gasfields in PNG.
“There is a huge amount of interest in PNG due to its large gas resource, the high quality of its gas, which is rich in liquids, and the helpful fiscal region in the country,” said John Hirjee, analyst at Deutsche Bank.