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Oil Search FY18 Profit Climbs On Higher Prices, Production Weak; Lifts Dividend

Australia-based Oil Search Limited (OSH.AX) reported that its fiscal 2018 net profit after tax increased 13% to $341.2 million from $302.1 million a year ago.

The results reflected stronger global oil and gas prices. This more than offset a 17% decline in production and sales volumes resulting from the temporary shut-in of production, following the February earthquake in PNG.

Revenues grew 6% to $1.54 billion from last year's $1.45 billion.

Total production dropped 17 percent to 25.2 million barrels of oil equivalent or mmboe from 30.3 mmboe last year. Total sales declined 17 percent to 25 mmboe.

Average realised oil and condensate price climbed 27 percent to $70.65 per barrel from $55.68 per barrel last year. Average realised LNG and gas price grew 31 percent to $10.06 per mmBtu.

Further, the Board has approved the payment of a final unfranked dividend of 8.5 US cents per share, compared to the 2017 final dividend of 5.5 US cents per share. The total dividend payment for the year, of 10.5 US cents per share, is 11% higher than in 2017 and represents a dividend payout ratio of 47%,

Looking ahead, the company noted that in 2019, production is expected to be back at pre-earthquake levels, while unit production costs are forecast to be 15 - 20% lower than in 2018, reflecting lower earthquake-related remediation work and higher production. 2019 capital costs are forecast to increase from 2018 levels, as Oil Search enters the FEED phase of the LNG developments in PNG and the Pikka oil field development in Alaska.

Further, the company said growth projects have the potential to double production by the mid-2020s.

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