OIL Search is the latest oil and gas company to brace for a prolonged slump in crude prices by slashing its spending to preserve cash, which it will direct to the $US11 billion ($A17 billion) Papua New Guinea liquefied natural gas project.
The Sydney-based oil company yesterday said it would cut spending on exploration by 60 per cent, from $US176 to $US70 million in 2008, as it unveiled a 70 per cent jump in profits to $US240 million, from $US140.8 million.
The spending cuts follow a spate of similar moves last week from fellow oil companies Woodside and Santos, who are also directing available funds to major LNG projects.
As a further means to conserve capital, the Oil Search board also announced a dividend reinvestment plan to reduce cash and capital outflows in early 2009 by $US45 million.
The PNG LNG project is the main influence on the company's long-term growth, and it is due to make a final investment decision on the project later this year.
Oil Search managing director Peter Botten said he expected crude prices to remain around the $US40 mark in the short term, but this was not deterring potential buyers of LNG. Interest remained strong, he said.
