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UPDATE 1-Oil Search sees 'another challenging year', lower output in 2021

(Recasts with outlook, adds executive comment, quarterly output)

Jan 27 (Reuters) - Papua New Guinea-focused Oil Search Ltd said on Wednesday it expects 2021 to be another challenging year and forecast lower annual output due to planned maintenance activity at the PNG liquefied natural gas (LNG) plant.

The Australia-listed company said it expects annual production of between 25.5 million barrels of oil equivalent (mmboe) and 28.5 mmboe, lower than the 29 mmboe it churned out in 2020.

“We expect that 2021 will continue to be another challenging year,” Managing Director Keiran Wulff said, adding that the company will maintain operational discipline despite the difficult conditions.

Oil Search, which slashed costs and axed a third of its workforce last year to weather the weakness in oil prices, estimated total investment expenditure for the year between $325 million and $445 million.

Its revenue plunged nearly 42% in the three months ended December to $259.5 million. However, the figure beat an estimate of $246 million from RBC Capital Markets.

Quarterly output inched up to 7.06 mmboe, from 7.01 mmboe a year earlier.

Reporting by Shruti Sonal and Nikhil Subba in Bengaluru; Editing by Aditya Soni

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