Oil Search to write off some exploration assets in Papua New Guinea

Papua New Guinea (PNG)-focused oil and gas firm Oil Search has unveiled plans to write off around $380m from some exploration assets and a gas-to-power project in PNG.

The company said that it will record an impairment between $360m and $400m in its half-year results. However, the decision would not impact cash earnings.

According to the company, a strategic review found that a number of assets in PNG were now of low priority. This is either due to lower prospectivity or sub-optimal project economics.

Oil Search Limited managing director Keiran Wulff stated: “The impairments that are expected to be recognised largely relate to PNG exploration licences.

“As part of the Strategic Review currently underway and in line with the company’s commitment to prioritising capital allocation, a number of exploration and evaluation assets in PNG have been identified as being of reduced priority due to lower prospectivity or sub-optimal economics.

“As there is no current intention to pursue activities on these assets, the full value of these exploration assets is expected to be written down.”

In February 2018, Oil Search completed the previously announced $400m acquisition of interests in Alaska North Slope assets in the US from Armstrong Energy and GMT Exploration Company.

In November 2017, the company signed an agreement to acquire oil assets in the Alaska North Slope, US, from Armstrong Energy and GMT Exploration Company for $400m.