Oil Search inks a radical new plan with the PNG government

Oil Search Limited (ASX:OSH): Buy, hold, sell?

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published April 9, 2019 3:47 pm AEST

The Oil Search Limited (ASX: OSH) share price is up 2.4% to $8.16 today after the PNG-based LNG producer announced it has signed a deal with the PNG government for the further development of PNG LNG fields alongside its joint operating partners Total SA and ExxonMobil.

Petter Botten, Oil Search's managing director commented: "This is a major milestone for the Papua LNG Project. We believe the fiscal and other terms of the Gas Agreement equitably allocate Project benefits and returns to the State, the Project participants and other stakeholders."

PNG reportedly sits on some of the world's best LNG fields but is a politically sensitive environment for multi-nationals to operate in as the government demands its share of the riches created.

As such news of new royalty sharing agreements between the private sector and PNG government for future developments is treated positively by the market.

For the six months ending Oil Search posted a US$341 million net profit and is guiding for significantly increased production in the years ahead.

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