The company has posted record production levels and increased revenues in the last quarter, giving it strong first-half results regardless of the Kumul setback.

Oil Search has also made significant progress in its PNG Gas Project and pipeline in the last few months.

Net production for the quarter reached 3.23 million boe with total gross oil production rates from its Papua New Guinea oil fields exceeding 50,000 bopd for the quarter, the highest rates in more than three years.

Second quarter total operating revenue was $US148.4 million, 76%t higher than in the preceding quarter 50% higher than in the corresponding period of 2004. This took 2005 first half revenues to $US232.8 million, compared to $US170.1 million in the first half of 2004.

In addition, Material progress towards securing the PNG Gas Project was achieved during the quarter and in July with the signing of two substantial conditional gas sales agreements with Alcan and AGL. Oil Search also reached a conditional agreement with AGL in which the gas company will take a 10% stake in the PNG Gas Project, buying equity in the Kutubu and Gobe licences from Oil Search.

The PNG Gas Project now has about 200 petajoules a year of conditional gas sales signed with various customers and is targeting other customers.

The FEED program remains on schedule to have all key data available by the end of 2005 to allow the project partners to make a next year, according to Oil Search.

FEED activities continued during the second quarter with a workforce of about 200 in Australia and more than 200 in PNG, said managing director Peter Botten.

“The new gas purchase arrangements will materially underwrite the volumes necessary for project sanction, which is expected to take place, subject to the successful completion of other FEED activities, in the first quarter of 2006,” Botten said

“The associated equity sale agreement with AGL introduces a new partner into the project upstream. Oil Search is delighted to have been able to facilitate AGL’s entry, and expects that its extensive experience in the Australian gas industry will add considerable value to the project.

“Despite the asset sale, Oil Search will remain the largest participant in the PNG Gas Project and will maintain operatorship of all PNG’s oil fields, a core area of Oil Search’s expertise. The cash raised by the asset sale will be used to help fund our share of PNG Gas Project costs.”