"Buoyant production could not have been achieved at a better time, with oil prices, particularly for our grade of light, sweet crudes, continuing to rise," said managing director Peter Botten.

During the first half, production of oil and gas was 5.544 million barrels of oil equivalent, 1% lower than the record level in the previous first half.

Production in the first half was disrupted by the Kumul terminal being closed for repairs for four weeks.

Sales revenue was up 37% to $US233.4 million in the six months to June 30, 2005.

"The outlook for the company in terms of production and revenues, based on current oil prices, is strong," Oil Search said.

"It is anticipated that the production and liftings imbalance during the first half of the year will be largely unwound by the end of 2005, thus leading to a strong year end result."

Oil Search said it would be fast-tracking its drilling developments during the second half to take advantage of the current high oil price environment.

Drilling activities planned for the next few months in Papua New Guinea include the Moran-11 development well, the up to three SE Gobe wedge development wells and three new SE Mananda development wells. Oil Search is also active in Yemen.

Botten said the highlight of the first half was the progress made by the PNG Gas Project.

"Our largest hurdle has always been securing sufficient gas markets in Australia," Botten said.

"The two new conditional contracts, with AGL and Alcan at Gove... when converted into firm commitments, will significantly underwrite the volumes necessary to sanction the project."