At US$91.2 million, revenue from operations was 8% below the extremely strong second quarter figures. But Oil Search managing director Peter Botten said this was due to unusual circumstances and the company’s balance sheet had continued to improve during the third quarter.
Three appraisal/development wells drilled in Papua New Guinea during the quarter were all successful and progress continued to be made on new oil field developments.
Shortly after the end of the quarter, Oil Search and the other Highlands Gas Project sponsors signed two new conditional gas sales contracts and decided to move the project into the front-end engineering and design phase.
Oil Search was now net debt-free and in its strongest ever financial position Botten told a Merrill Lynch Australia & New Zealand Investor Conference in Manhattan earlier this month.
“We do have strong production growth driven by a highly profitable barrel of oil and we therefore see the financial performance in this company being very strong in the coming two years,” Botten said.
“We now have a growing production base. We have two new developments – North-west Moran and South-east Mananda [in PNG] and potential development at Nabrajah [Yemen].”
In the Yemen project, Nabrajah-3 was spudded last week. This the second well in an appraisal drilling program being conducted to determine the size and commercial viability of the Nabrajah discovery after Nabrajah-1 located good quantities of oil and gas.
At Nabrajah-1 the interval flowed at a stabilised rate of 1,973 barrels per day of 25.3 degree API oil, 2.420 MMscf/d of gas and 375 barrels of water per day.
DST-3 confirmed the presence of an oil column in the Qishn S2 Sandstone reservoir, while DST-2 also flowed oil at an average rate of 544 barrels per day of 24 degree API oil, with 7,074 barrels per day of water and 0.23 MMscf/d gas during a nine-hour flow period.
Nabrajah-2 was located about one kilometre northwest of Nabrajah-1 and intended to evaluate the lateral extent of the oil column found in the Qishn S2 reservoir. At this well DST#4 over the Qishn S2 Sandstones flowed oil at 1,427 barrels per day with minimal gas and no water production.
The Qishn S2 sandstone was re-tested due to excessive water production during DST#2 and DST#3. This was related to poor cement isolation from deeper water-bearing Lower Qishn sandstones.
Nabrajah-2 was suspended and the rig was moved to the Nabrajah-1 surface location from where the Nabrajah-3 appraisal well is being drilled, with a bottom hole location 1.1 kilometres north-east of the Nabrajah-1 bottom hole location.
Participants in Nabrajah-3 are DNO ASA 56.67%, Oil Search (Yemen) Limited 28.33% and The Yemen Company 15% (carried).
