Oil Search gets $US807m windfall

OIL Search has received an $US807 million ($A1.03 billion) windfall after its PNG LNG project reached financial completion.

THAT means that the project, which began shipping gas in May, was generating enough cash to reach the technical hurdle that allows it to start repaying financiers and pay distributions.

Oil Search said it would receive more than $US700 million as its share of cash flow and another $US107 million that had been held in escrow while the $US19 billion gas export project was built.

The project is operated by ExxonMobil with Oil Search the second largest stakeholder with a 29 per cent stake.

“The cash released will be used to help fund our growth activities, in particular, LNG expansion and development, which remains attractive based on the current oil price outlook,” Oil Search chief executive Peter Botten said.

The joint venture partners, which include the Papua New Guinea government with a 19 per cent stake, are considering expanding the project by another 50 per cent.

However, in late January, Oil Search warned it planned to cut costs following the recent slide in oil prices and has flagged up to $US200 million in asset writedowns.

Oil Search shares had risen nine cents, or 1.09 per cent, to $8.32 by 1109 AEDT.