It’s been a tough ride for oil companies during the pandemic and Oil Search Ltd [ASX:OSH] is no different.
Today the company released their half-year results. While both production (4%) and sales (2%) were up from the same period last year, the company reported a net loss after tax of US$266.2 million (around AU$371 million).
This is quite a difference from the US$161.9 million in profit they had this time last year.
Total revenue was also down by 19% to US$625.6 million and core profit after tax decreased by 85% to US$24.7 million.
The hit came from a double whammy of low oil prices and higher exploration expenses.
The company got a realised average oil price of US$35.91, which is 45% less than the US$65.26 they were getting this same time last year. Average LNG and gas prices also dropped by 15%.
Oil demand has taken a hit during the pandemic
Oil demand fell in April with the pandemic lockdowns, causing oil prices to collapse.
With the future of oil and gas prices looking bleak, Oil Search announced an asset write-down of between US$360 million and US$400 million before tax this year. The final impairment was US$374.2 million before tax, US$260.2 million after tax.
Oil Search has also cut a third of their workforce and went on to raise US$700 million from investors to increase liquidity.
Oil Search is on the green today
Even with all the bad news, The OSH share price has pushed 1.8% higher today. At time of writing, Oil Search is trading at $3.06.
Even so, the company has had an over 55% fall in their share price since the beginning of the year when shares were trading above the $7 mark.
In a move to preserve capital and because of the uncertainty in oil prices, Oil Search has decided to cancel the dividend for the first half of 2020. Though the board has promised to take another look at dividends at the end of the year.
For the same period last year Oil Search paid investors a 5-cent dividend per share. It just goes to show that because a company has paid dividends in the past, they’re not always guaranteed.
If you are interested in dividend plays you can check out editor Greg Canavan’s free report ‘Five Dividend Stocks set to Thrive in the Post-Pandemic Era’.
You can access it here.