Oil Search has posted a near 10 per cent drop in first-quarter revenue but sharply beat estimates, and said it was aiming to lower production costs in a bid to weather an oil price crash.
The Papua New Guinea-focused oil and gas producer’s revenue for the quarter ended March 31 came in at $359.4 million, lower than the $398.1 million for the same period last year, but higher than a UBS estimate of $252 million.
Earlier this month, Oil Search slashed planned spending for 2020 and launched a $700 million equity raising, strengthening its balance sheet to prepare for a prolonged period of low oil prices.
Oil Search said on Tuesday it was now trying to further drive down break even costs, targeting a reduction in production costs of $1-$2 per barrel of oil equivalent in 2020.
The virus outbreak has hit oil and gas firms particularly hard, with demand decimated as global lockdowns and travel curbs brought economic activity to a virtual halt. Prices plunged further in March after Russia and Saudi Arabia failed to reach a new deal to curb output, fought a price war and pumped more.
On Monday, US crude oil futures collapsed below $0 for the first time in history, ending the day at a stunning minus $37.63 a barrel as desperate traders paid to get rid of oil.
Oil Search’s realised oil and condensate prices were down 20.6 per cent for the quarter, while realised liquefied natural gas (LNG) prices dropped 10.5 per cent from a year ago.
Total production was steady at 7.37 million barrels of oil equivalent, 1.7 per cent higher than a year ago.