Oil Search to write off some PNG exploration assets, power project

[BENGALURU] Oil Search Ltd said on Monday it plans to write off around US$380 million, mostly on some exploration assets and a gas-to-power project in Papua New Guinea, due to the outlook for oil and gas prices and the shut down of a gold mine.

The Papua New Guinea (PNG)-focused oil and gas company will record a non-cash, pre-tax charge of between US$360 million and US$400 million in its half-year results that would not impact its cash earnings, it said in a statement to the stock exchange.

A strategic review found that a number of assets in PNG were now of low priority either due to lower prospectivity or less than optimum project economics, Oil Search said, and as a result, would not be currently pursued.

Given gas supply uncertainty due to the recent suspension of mining activities at the PNG-based Porgera project, Oil Search's Hides gas-to-electricity operation that supplies power to the project would be fully written off.

Porgera is a gold mine run jointly run by Canada's Barrick Gold and China's Zijin Mining, currently shut down due to a dispute with the PNG government over the country's refusal to extend a mining lease to the companies.

An immaterial impairment charge on some exploration leases in Alaska that are set to be given away will also be recorded, it said.

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Oil Search will release interim results on Aug 25.

REUTERS