PNG OIL COMPANY PAYS STATE $8 MILLION DIVIDEND

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, April 4) - Recent successes at Papua New Guinea oil fields operated by Oil Search Limited has seen the company increase its daily oil production by up to 50,000 barrels per day.

[PIR editor’s note: According to their website, Oil Search Limited is an oil and gas exploration and development company that has been operating in Papua New Guinea since 1929 and is Papua New Guinea's largest oil and gas producer—the company operates all Papua New Guinea's producing oil and gas fields.]

According to Papua New Guinea general manager Gerea Aopi, this trend is likely to continue for the next three years. Increased production together with high oil prices has seen Oil Search shareholders reaping the benefits of the company’s impressive performance and strong annual profit growth over the last five years.

Major shareholder – the State – yesterday received its share of the windfall, a check of PGK24 million [US$8 million] as the final dividend payment for its 18 percent interest in Oil Search. Yesterday’s payment brings total dividend paid to the State in 2006 to PGK48 million [US$16.8 million], compared to PGK42.5 million in 2005. The interim dividend was paid in October. Mr. Aopi thanked the Government for its continued support towards Oil Search’s operations both in Papua New Guinea and internationally.

Oil Search recorded a profit after tax of US$410 million (PGK1.2 billion) last year, a record for the company in its 77-year history. This was achieved despite lower production, following the sale of producing assets to AGL, earlier in the year.

Aopi said the key drivers for this profit increase were continued strong oil prices, combined with tight control in a difficult operating environment.

Oil Search Limited has continuously paid dividends to the State since 2003, totaling more than PGK100 million [US$35 million]. "The key achievement from an operation perspective has been the turnaround in the production from our mature Papua New Guinea fields," Aopi said. "Since taking over as operator of Papua New Guinea’s producing oil fields in 2002, focused field management of mature field assets has again been successful, with gross oil production rising 5 percent.

"This is the third successive year in which oil production from Papua New Guinea has increased. Since then, an additional 34 million barrels of oil have been produced from these fields, over and above the forecasts of the previous operator.

Close scrutiny of production opportunities, including recent success in the Usano field, indicates that it is likely that PNG production can continue at around current levels (50,000 barrels of oil per day) for at least a further three years. "These may be further increased through exploration success, not presently included in our forecasts." State Enterprises, Information and Development Cooperation Minister and Angoram MP Arthur Somare said the payment of dividends by Oil Search showed the company’s growing performance and expressed the Government’s confidence in the company’s continuing support and commitment to the country’s oil and gas industry.

"The company has been and continued to be a strong partner in the development aspirations of this nation," Mr. Somare said.

"Since Oil Search assumed operational controls of the oil fields in 2002, over 40 million barrels of oil have been added to the reserves in various fields. "

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