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Oil Search CEO a “reasonable pessimist” about oil in next 12-18 months

Oil Search CEO: Oil prices are near the bottom

Oil prices have rallied recently but exploration firm Oil Search wouldn't be loosening its belts.

The company on Tuesday reported a 89 percent drop in half-year profit as its performance was hit by persistently weak oil and natural gas prices.

"It is a difficult market when you've got such a re-calibration of both oil and gas pricing, " the company's CEO Peter Botten told CNBC's "Street Signs ".

"You've got to run your business on a conservative outlook, continue to cut costs and make sure you're maximizing profitability in (this) commodity price regime, " he added.

Botten, who said he was a "reasonable pessimist" about the next 12 to 18 months.

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U.S. light, sweet crude was around $47 a barrel on Tuesday while European Brent was around $49 a barrel.

There's a bit of upside—prices will probably not go significantly lower than where they are now, fluctuating in the $45-$55 a barrel range, he added.

Botten expected oil market rebalancing in the next two to three years.

"At the end of the day, the oil business per se is adjusting to a different, revised environment," he said.

Still, the oil market will recover faster than the substantially oversupplied liquefied natural gas market, which is likely to see a turnaround only early next decade, he added.

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