Australian upstream company Oil Search said its first half revenue rose 9% to a record US$161.6 million, thanks largely to higher oil and gas prices.

The company had a particularly strong second quarter, with revenue surging 41% to US$94.7 million.

The company said: “This record was achieved without contribution from gold production, following the sale of Oil Search’s interest in the Porgera Gold Mine at the end of 2003. Excluding gold, revenues from oil and gas sales rose 34% from US$120.3 million in the first half of 2003 to US$161.6 million for the corresponding period in 2004.”

Production of oil and gas for the first half of 2004 reached an all time high of 5.61 million barrels of oil equivalent (mmboe), up 13% year-on-year.

The increase, however, masked a second quarter production decline by 2% to 2.78 mmboe compared with the first quarter.

Oil Search said that second quarter oil liftings were 2.56 million barrels, marginally above production of 2.51 million barrels.

The company added that it realised an average oil price of US$36.90 in the second quarter after taking into account hedging costs.

This was 5% higher than the first quarter average of US$35.18 per barrel, and 37% up on the previous corresponding period of 2003.

The average realised oil price for the first half of 2004 was US$36.18 per barrel.

By the end of June 2004, all its remaining hedging had been settled, leaving the company fully unhedged.

Over the period, Oil Search said it continued to generate strong cashflows, with cash rising strongly from US$126.4 million to US$183.3 million at the end of June 2004. Debt was also reduced by US$8 million.

Managing director Peter Botten said:

“Company performance in the first half of 2004 was particularly strong, impacted by rising oil and gas production and strong oil prices. The company is now net debt free, having added nearly US$57 million in cash and having materially strengthened the balance sheet during this period.

“This is especially pleasing following the sale of the Porgera gold asset and the subsequent reduction in revenues, being more than offset by improved oil and gas production and high realised oil prices.

“The company is now in an excellent position to fund the active oil development and exploration programmes being undertaken, along with a number of gas commercialisation opportunities being very actively pursued.

“The North West Moran and South East Mananda projects are on schedule for development, with construction due to start shortly on NW Moran and a development decision due in the third quarter for SE Mananda.

“Appraisal drilling at our Yemen discovery, Nabrajah, has commenced, with active drilling planned to take place over the balance of the year.”