By Ross Kelly
SYDNEY--Australia's Oil Search Ltd. (OSH.AU) said Friday it will
immediately receive a US$807 million cash windfall as a result of
its gas-export joint venture with Exxon Mobil Corp. (XOM) in Papua
New Guinea reaching "final" completion, a technical milestone.
The company has said previously it would consider boosting
dividend payments to shareholders once the cash starts rolling in.
But like many rivals grappling with tumbling oil prices, it faces a
tricky decision determining how much cash to conserve for growth
projects and how much to return to shareholders.
Reaching the milestone means Oil Search gets US$700 million of
the giant liquefied-natural-gas project's first distribution to its
joint-venture partners, which also include Santos Ltd. (STO.AU).
Oil Search will also get an extra US$107 million of cash held in
escrow to supports its obligations to lenders during the
construction phase.
"The cash released will be used to help fund our growth
activities, in particular, LNG expansion and development, which
remains attractive based on the current oil price outlook," Oil
Search said.
The PNG LNG project shipped its first cargo in May and the joint
venture partners are looking for more natural gas to potentially
underpin a 50% increase in its size that will cost billions more
dollars to execute.
Write to Ross Kelly at ross.kelly@wsj.com
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