UPDATE 1-Oil Search H1 profit surges on record oil prices

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PERTH, Aug 19 (Reuters) - Oil Search Ltd (OSH.AX), an Australian-listed Papua New Guinea (PNG) oil and gas producer, said on Tuesday its first-half net profit almost tripled on record high oil prices during the period and lower tax rates.

The news failed to lift its share price, which was down 1.9 percent at A$5.05 by 0333 GMT, tracking a further retreat in U.S. crude prices CLc1.

Oil Search, a partner in Exxon Mobil's (XOM.N) proposed 6.3 million tonnes a year liquefied natural gas (LNG) project in PNG, also said Exxon had shortlisted preferred LNG buyers for the project and discussions with those parties had begun.

The Port-Moresby-based company said net profit before one-offs for the six months to June 30 rose to a record $133.3 million, versus $46.9 million a year ago.

That beat forecasts of $126.7 million, according to a Reuters Estimates survey of nine analysts.

Reported net profit jumped to $264.4 million, thanks to a one-off gain of $131.1 million made on the sale of its Middle East and North Africa assets earlier this year.

"It's a very positive set of results and pretty much in line with market expectations," said John Hirjee, an energy analyst from Deutsche Bank in Melbourne.

"There were no surprises in the presentation so I think the share price is largely reacting to the fall in oil prices."

The LNG project, estimated to cost $10-$11 billion, is on schedule for a final investment decision in late 2009 and was also on target for first delivery by 2014, Oil Search said.

Botten said the short-listed parties include buyers from Japan, South Korea and Taiwan, but declined to provide details due to commercial sensitivities.

"The LNG marketing team hopes to secure preliminary commitments based on indicative terms by late 2008 or early 2009 and sign firm offtake agreements by the time of the final investment decision," Botten said at a teleconference.

Botten also said the firm was working to commercialise its remaining 40 percent of resources not committed to an LNG project, with options including expanding the LNG project to have a third processing train.

Oil Search said in July it would consider buying partner AGL Energy Ltd's (AGK.AX) 3 percent stake in the LNG venture in Papua New Guinea, which also includes Santos Ltd (STO.AX).

The partners hold pre-emptive rights over AGL's interest and Oil Search said it would consider its position under these rights once the final sale price is known.

Oil Search in July cut its full-year production forecast to 8.5-9 million barrels following the asset sales, which it said would pare output by 500,000 barrels. ($1=A$1.15) (Reporting by Fayen Wong; Editing by James Thornhill)