By Sarah Byrne

OIL SEARCH fought back against the oil price slump, reporting an increase by 72 per cent in net profit for 2014 with the successful start-up of PNG LNG to thank.

Net profit after tax for 2014 was US$353.2 million, the highest profit in the company’s 86 year history.

In a statement, Oil Search said net profit of US$353.2 million included a US$129.6 million after-tax impairment charge, which largely related to the impact of lower oil prices on the carrying value of exploration and evaluation assets.

Oil Search’s core profit, excluding impairments, was US$482.8 million, 135% higher than the previous year.

On a conference call, Oil Search managing director Peter Botten said the successful start-up of PNG LNG in April last year resulted in an outstanding year for the company, with record production, record revenue, resulting in record profit for the company.

Production increased by 186% to 19.3 million barrels of oil equivalent for the year, Mr Botten said this result reflected the delivery of PNG LNG and continued performance from existing oil fields.

Sales bumped up 164% on 2013, with Oil Search reporting 17.76 million barrels of oil equivalent in total sales for the 12 month period.

Shareholders were rewarded with a big increase to dividends as a result of the company’s strong full-year results.

Oil Search announced a 2014 final unfranked dividend of eight US cents per share and an additional unfranked four US cents per share as a special dividend.

Mr Botten said he was confident in how Oil Search will manage in the low oil price environment, but acknowledged the need for collaboration and coordination of projects to reduce cost and avoid expensive overlaps in timing.

“We are in great shape- good shape at least – to manage the low oil and gas price environment. We need to be prudent, we certainly don’t need to panic,” Mr Botten said in relation to cutting costs in 2015.

A reduction of about 20% in the company’s 2015 capital expenditure budget was announced in response to the fall in oil prices.

Exploration and evaluation costs are reduced by 25%, production capex down 20% and corporate capex cut by 40%, Oil Search announced in a statement.

Mr Botten said the company has a strong balance sheet and liquidity position which will help deliver future projects, with the focus being on supporting the high returning LNG expansion and development projects.