Oil Search flags US$400 million hit due to falling oil and gas prices

The largest oil and gas exploration company operating in Papua New Guinea has signalled USD $400 million in write-offs attributed to the dire outlook for oil and gas prices.

In a statement to investors yesterday, Oil Search said the significant impairment estimate was based on “the potential longer-term impact of prevailing economic conditions” and relate mostly to gas-to-power projects in the Pacific nation.

“As part of the Strategic Review currently underway and in line with the Company’s commitment to prioritising capital allocation, a number of exploration and evaluation assets in PNG have been identified as being of reduced priority due to lower prospectivity or sub-optimal economics,” the company said.

Oil Search also hold gas exploration leases in Alaska – which they had planned to relinquish, that they have now also flagged as likely to result in losses.

The suspension of gold mining activities at the jointly run Porgera Project over a leasing dispute between the overseeing companies and the PNG government has also had a financial impact.

Oil Search has said it will have a clearer financial outlook when it releases its half yearly results on August 25.

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