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PORT MORESBY, Papua New Guinea (PNG Post-Courier, May 31) – Papua New Guinea oil company Oil Search Ltd. recorded an after tax profit of US$89.6 million in 2003, the company announced at its annual general meeting.

This was 62 per cent higher than the 2002 results and was a record for the company.

The deputy chairman of Oil Search board Noreo Beangke told shareholders at the company’s annual general meeting in Port Moresby on Friday that 2003 was another year of significant achievement for Oil Search.

It was the year Oil Search bought out the oil fields in Papua New Guinea from ChevronTexaco.

Oil Search now owns and operates over 70 percent of the discovered oil reserves in PNG and more than 50 percent of the gas resources.

The 2003 results, Mr. Beangke said, were reflected in record production of oil and gas of 10.29 million barrels of oil equivalent and higher oil prices.

"I am pleased to say that oil prices have continued to strengthen during 2004. Even with the acquisition of the ChevronTexaco assets, the balance sheet was strengthened with gearing down to just above 10 per cent at the end of the year.

"A healthy cash flow and balance sheet position allows the company to embark on major investments in development and exploration, with accelerated program taking place in 2004 and 2005, as well as providing the financial strength to drive the development of gas through a number of options," Mr. Beangke told shareholders.

"A core focus of the company in 2003 and 2004 is the development of our significant reserves of gas and associated liquids. Our increased operating capabilities and balance sheet strength have put the company in an excellent position to drive gas developments as never before," he said.

Mr. Beangke said earlier this year Oil Search embarked on a deliberate strategy to bring development decisions on gas to a head.

"Specifically we believe that a pipeline export project to Australia is made easier to achieve using improvements in the development scheme, integrating the oil business and reducing project risk. This project also needs to demonstrate greater commitment and provide more certainty to customers that it will happen," he said.

Mr. Beangke said the company had taken the bold decision to move into Front End Engineering and Design (FEED) as soon as possible.

"Our strong preference is to develop the pipeline export project, however if that is not possible, to move to other development options such as liquids cycling, as soon as we can. We, and customers in Australia, need certainty on the way forward," Mr. Beangke said.

May 31, 2004

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