As a result of the above two announcements, investor confidence in the PNG-focused company has been seriously eroded, with a resultant slide in share price. Currently, the share price is trading at 79 cents.
The loss of the Queensland Government tender was perceived by many in the investment community as vote of no confidence in the PNG-Queensland gas pipeline, which may have killed off the pipeline's short term prospects.
"The award to a competitor of a key gas contract in Queensland appears to have reduced the chance of the PNG gas project proceeding," according to investment bankers Merrill Lynch.
"While we believe the share price reflected no value for the project, the negative impact in sentiment is inescapable."
In another sign of the pressure Oil Search is coming under, Merrill Lynch also increased the company's risk rating from above average to high, potentially warding off many new investors.
On the upside, industry observers believe the recent merger with Orogen should result in stronger cash flow and substantial savings in its PNG operations. In addition, despite the disappointment of the Moran-7 well, exploration at the Moran and Saunders fields should add to the company's reserves.
