Higher oil production and stronger oil prices were the main drivers behind the company’s fourth consecutive year of strong annual profit growth, Oil Search said.

Last year, Oil Search recorded an oil and gas production of 12.17 million barrels of oil equivalent (mmboe), compared with 2004’s 11.05 mmboe output.

Total operating revenue of $US664 million was based on sales of 10.84 million barrels (9.39 million barrels in 2004), sold at an average price of US$58.06 per barrel. This was 39% higher than the previous year.

At the end of December last year, the company had cash reserves of $US212.2 million and debt of $US126.0 million, having repaid US$42 million from its debt facility over the year.

Despite the good result, Oil Search managing director Peter Botten said 2005 had its problems.

“Early in the year, necessary repairs on the Kumul loading terminal in the Gulf of Papua meant that production was shut-in for up to four weeks,” Botten said.

“Despite this, Oil Search was able to meet its full-year production targets through the optimisation of wells and operating facilities, and the identification and exploitation of new production opportunities.

“In addition, like all companies in the oil and gas industry, we have been affected this year by the higher cost of oil field services and equipment, and much increased competition and demand for personnel.”

Botten added that the company’s key operational achievement was the turnaround in production from its mature Papua New Guinea oil fields.

Gross daily production rates from the Kutubu and SE Gobe fields rose 9% and 2%, respectively, compared with the 20% historic decline rate.

After underperforming for several years, the Moran field is now producing more than 20,000 barrels of oil per day.