But revenue fell 14% in comparison to the fourth quarter last year following the recent sale of a range of various interests in Oil Search assets to AGL, effective January 1, for $395.6 million.

“Oil Search’s net production was negatively impacted by the completion of the asset sale to AGL, which reduced our percentage interest in each of the PNG oil fields,” managing director Peter Botten said.

“However, from a revenue perspective, the drop in production was partially offset by significantly higher realised oil prices. The average oil price realised during the quarter of over $US65 per barrel was 10% higher than in the fourth quarter of 2005 and 29% above the levels achieved a year ago.”

Botten described the performance of the company’s oil fields as pleasing following average daily production for the quarter of 52,000 barrels of oil per day, a 1.5% increase on the level achieved in last year’s fourth quarter.

Total production oil and gas production on an oil equivalent for the quarter was 2.77mmboe, 18% lower than the previous quarter due to the AGL sale.

“Since the end of the quarter, production rates have increased further, and recently exceeded 60,000 bopd, the highest level since August 2001, due to the commencement of production from SE Mananda and continued success in optimising production from our mature fields,” he said.

The company’s exploration expenditure in the March quarter was $16 million, which included its share of costs of PNG Gas Project FEED. Development expenditure for the quarter totalled $49.3 million and was spent mainly on SE Mananda and Moran.

Oil Search also repaid $126 million in debt during the quarter after it restructured its US dollar facility to a revolving facility.