Oil Search First-Half Profit Jumps on Gain From Sale

By Angela Macdonald-Smith

Aug. 19 (Bloomberg) -- Oil Search Ltd., Papua New Guinea's biggest oil producer, said first-half profit increased more than fivefold, buoyed by a gain on the sale of fields in the Middle East and North Africa.

Net income rose to $264.4 million, or 23.4 cents a share, in the six months ended June 30, from $46.9 million, or 4.17 cents, a year earlier, Port Moresby-based Oil Search said today in a statement. Excluding the gain, profit almost tripled to a record $133.3 million, beating a median estimate of $126 million of four analysts surveyed by Bloomberg.

Oil Search agreed in April to sell interests in ventures in Egypt and Yemen to Kuwait Energy Co. for $200 million to help raise funds for its share of Exxon Mobil Corp.'s proposed $11 billion liquefied natural gas project. A 63 percent increase in the average price Oil Search earned for its oil in the half outweighed the effect of a 9 percent slide in output.

``Production in the second half of the year is expected to be similar to first-half levels,'' Managing Director Peter Botten said in the statement, sent to the Australian stock exchange. The company reiterated a reduced full-year output forecast of 8.5 million and 9 million barrels of oil equivalent after cutting the target last month following the asset sale.

Oil Search fell as much as 19 cents, or 3.7 percent, to A$4.96 in Sydney trading, lagging behind a drop of as much as 2 percent in the exchange's benchmark energy index. The shares were at A$5.06 at 10:49 a.m. local time.

The company increased the size of a planned refinancing of its oil business to $450 million from $400 million after receiving a ``very favorable response'' from more than 15 banks.

``The pricing and other key terms offered on the new facility represent an improvement on the existing facility,'' Botten said. The debt will provide some funding for Oil Search's share of the LNG project cost, he said.

Sales advanced 53 percent to $466.7 million. Oil Search declared a first-half dividend of 4 cents a share.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net.