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Oil Search Profile
Established in Papua New Guinea (PNG) in 1929 Operates all of PNG’s producing oil and gas fields. Current gross production ~33,500 boepd, net share ~18,500 boepd At December 2011, proven reserves were 330 mmboe, proven and probable 553 mmboe plus 318 mmboe 2C resources, taking 2P reserves and 2C resources to 870 mmboe PNG Government is largest shareholder with 15%. In early 2009, Govt issued exchangeable bonds over shares to IPIC of Abu Dhabi 29% interest in PNG LNG Project, world scale LNG project operated by ExxonMobil. Project in construction, first LNG sales expected 2014 Exploration interests in PNG and Middle East/North Africa Market capitalisation ~US$9 billion. Listed on ASX (Share Code OSH) and POMSOX, plus ADR programme (Share Code OISHY)
2 Key Oil and Gas Fields, PNG
Madang PPL260 Angore
P’nyang PRL3 Porgora Wabag Gold Mine Juha 260 Hides PDL8 Trapia Proposed Juha PDL9 PRL11 Facility PDL1 Mt. Hagan Moran PPL277 6°S Kundiawa PRL02 PDL6 Goroka Kiunga PDL5 PDL7 233 Mendi 233 Agogo Hides Conditioning Plant PPL219 Moro Airport & Komo Airstrip PDL2 Kutubu Mananda 5 PPL339 PRL14 SE Mananda Gobe/SE Gobe Lae 338 339 PDL4 PDL3 339 7°S PRL09 338 Barikewa Elk/Antelope PRL08 338 Kimu 339 Kopi Wharf
PPL338 PNG LNG Project Uramu 339 Gas Resources Kopi Scraper PPL339 100km Station PRL10 PNG LNG Project New Facilities
PPL312 Kerema 339 339 8°S Non PNG LNG Kumul Terminal PPL276 Gas Resources PPL234
Oil Field Exploration Gas Field APPL385 Gas Resources PPL244 Prospect Flinders Oil Pipeline LNG Facility Proposed Gas Pipeline
OSH Facility Daru PRL01 LNG Facility Pandora Major Road Port Moresby 142°E 143°E 144°E 145°E 146°E 147°E
Significant Growth Phase
Top quartile performer for past six years Significant growth opportunities identified, capable of driving future value Largest ever development, appraisal and exploration programme now underway Series of catalysts over next 18 months, with drilling results progressively delivered Activities supported by steady production, strong cash flows and healthy balance sheet 4 Focus on Safety
Total Recordable Injury Frequency Rate of 1.85 in 2011
Australian Companies (APPEA)
International Companies (OGP) TRI / 1,000,000 Hours
Oil Search
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PNG LNG Project progressing well
Remains on track for first sales in 2014
Budget unchanged at US$15.7 billion
2012 peak activity year for Project
PNG LNG T1/2 6 PNG LNG Project
Hides Wabag Wells
Juha Facility Mt. Hagan
6°S Hides Gas Conditioning Plant Kundiawa Goroka Komo Airfield Mendi
Kutubu CPF
Lae Gobe PF
7°S
Kopi Wharf
Onshore pipeline and Infrastructure
Kerema 8°S Oil Field Kumul Terminal
Gas Field Oil Pipeline PNG LNG Gas Pipeline Offshore pipeline OSH Facility
PNG LNG Project Facility 9°S Daru Major Road LNG Facility 100km Port Moresby 143°E 144°E 145°E 146°E 7
PNG LNG Project Overview
6.6 MTPA, 2 train development, operated by ExxonMobil Over its 30-year life, PNG LNG expected to produce more than 9 tcf of gas and 200+ million barrels of associated liquids Initial Equities: ExxonMobil 33.2% Oil Search 29.0% National Petroleum Company of PNG (PNG Government) 16.8% Santos 13.5% Nippon Oil 4.7% MRDC (PNG Landowners) 2.8% Fully contracted to Asian buyers, with continuing strong market interest Sinopec (China) ~2.0 MTPA TEPCO (Japan) ~1.8 MTPA Osaka Gas (Japan) ~1.5 MTPA CPC (Taiwan) ~1.2 MTPA
8 PNG LNG Project Overview
Main EPC contractors: LNG Plant: Chiyoda/JGC Offshore Pipeline Saipem Hides Gas Plant CBI/Clough JV Onshore Pipeline Spiecapag Infrastructure McConnell Dowell/CCC JV Early Works Clough/Curtain JV Associated Gas (OSH only) Jacobs (formerly Aker Solutions) Different labour environment to Australian LNG projects. Workforce of ~16,000, >50% PNG nationals, plus many other different nationalities First LNG sales on track for 2014, capital cost US$15.7 billion
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PNG LNG Plant Site
Plant site Feb 2012
10 PNG LNG Plant Site
Wabag
Mt. Hagan
6°S Kundiawa Goroka Mendi
Lae
7°S
Storage tank LNG Export Jetty
8°S Kerema Kumul Terminal
LNG Facility
9°S Daru
LNG trains 1 & 2 Port Moresby 142°E 143°E 144°E 145°E 146°E 11 PNG LNG Project Offshore Pipeline
Wabag Pipelay barge
Mt. Hagan
6°S Kundiawa Goroka Mendi
Lae
7°S
8°S Kerema Kumul Terminal
Offshore pipeline
9°S Daru
Port Moresby 142°E 143°E 144°E 145°E 146°E 12 PNG LNG Project Onshore Pipeline
Wabag
Mt. Hagan
6°S Kundiawa Goroka Mendi
Kutubu CPF
Onshore pipeline and Infrastructure Lae OnshoreGobe PF pipeline welding
7°S
Kopi Wharf
8°S Kerema Kumul Terminal
9°S Daru
Onshore pipeline welding and burial Port Moresby 142°E 143°E 144°E 145°E 146°E 13
PNG LNG AG Projects
WabagTEG Dehydration Unit installation
Mt. Hagan
6°S Kundiawa Goroka Mendi
Kutubu CPF
Lae Gobe PF
7°S
New CALM Buoy at Kumul
8°S Kumul Terminal Kerema
9°S Daru
Port Moresby 142°E 143°E 144°E 145°E 146°E 14 PNG LNG Project Upstream
Hides Wabag Wells
Hides Gas ConditioningMt. Plant Hagan 6°S Kundiawa Goroka Komo Airfield Mendi
Lae
7°S Rig 702
8°S Kerema Kumul Terminal
9°S Daru
Komo Airfield Hides Gas Conditioning Plant & access road Port Moresby 142°E 143°E 144°E 145°E 146°E 15
Timetable
» Continued early works » Complete AG » Detailed design » Continue onshore » Order long leads and pipe lay place purchase orders » Complete offshore » Open supply routes pipe lay » Contractor mobilisation » Start Hides plant First Gas from » Commence AG installation Train 1, construction » Start Hides drilling then Train 2
2010 2011 2012 2013 2014
» Ongoing procurement Financial » Complete pipe lay Close and mobilisation » Airfield construction » Ongoing drilling » Drilling mobilisation » Complete Hides plant » Start offshore pipeline » Commission LNG plant construction with Kutubu gas » Onshore line clearing and laying » Start LNG equipment installation
16 Gas Maturation, PNG Highlands
Highlands gas growth strategy: Convert existing probable and possible reserves in PNG LNG fields to proven contractable category New exploration activities P’nyang South Trapia exploration well Hides development and appraisal drilling Associated Gas reserves expansion and certification
Angore anticline, PNG Highlands 17
P’nyang South
Juha Hides
P’nyang 6°S South Moran Angore Kutubu P’nyang 1X P’nyang 2X Agogo SE Gobe
P’nyang South 1 ST1
8°S 100km
142°E 144°E
0 10km
P’nyang South 1 discovered 184 metre gas zone in southern fault block Sidetrack, P’nyang South 1 ST1, drilled to define gas:water contact, extended known gas column to ~380 metres Seismic and structural data suggests additional up-dip potential, total gas column >650 metres Result materially increases total estimated 2C gas resources in P’nyang field, potential key underpinning volume for LNG expansion PRL 3: ExxonMobil 49%, Oil Search 38.5%, JX Holdings 12.5% 18 Trapia 1
Trapia exploration well recently spudded PRL 11: Oil Search 52.5%, ExxonMobil 47.5% Series of prospects in area with multi-tcf potential 150 km 2D seismic programme in 2012 to further mature prospects Recent acquisition of adjacent licence, PPL 277, 50:50 with ExxonMobil
NW Angore
Huria
Trapia 1
Tagari
2010 Seismic Survey
2012 Seismic Survey
19 Hides Development and Appraisal Drilling
PDL 1 – Hides Field 10 New Wells Drilling 2012+ GTE PL 1 Hides GTE Plant
Hides Nogoli Camp Drilling Programme: Part of PNG LNG development Two rig programme, with first rig scheduled to PDL 8 – Angore Field commence drilling shortly 2 New Wells Gas:Water Contact (GWC) well planned for early in drilling sequence GWC well has potential to increase overall Hides resource volume significantly PDL 7 – South Hides Drilling timing adjusted to accommodate Project Hides Gas Conditioning Plant critical path optimisation Construction 2012/13
Komo Airstrip
10km
PDL 1 PDL 7 PDL 8 ExxonMobil 36.81% ExxonMobil 36.81% ExxonMobil 36.812% Oil Search 16.66% Oil Search 40.69% Oil Search 40.69% Santos 24.03% PNG Govt 20.50% PNG Govt 20.50% PNG Govt 20.50% Gas Resources Hides No.4 Ltd.(L/O) 2.00% Gas Resources Angore Ltd. (L/O) 2.00% Gas Resources Gigira Ltd.(L/O) 2.00% 20 Further Reserves from Oil Fields
20km Recent discoveries, PPL233 PDL6 PDL5 identification of Mananda 5 PPL219 PPL233 potential new areas Moran SE Mananda of reserves and Kutubu success in gas Agogo conservation ahead PDL2 PPL277 of original prognosis Usano provides further PDL Cobra reserves for PNG 4 PRL LNG 14 Gobe Main PDL PDL Certification of 3 4 SE Gobe Iehi additional reserves 7°S in 2H12 143°E PRL09 144°E Reserves and deliverability review for oil and gas in existing oil fields will provide optimal production management plan post commencement of gas production for PNG LNG Potential upside for both gas and ongoing oil production
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OSH acquired significant Gobe PF 100km equity positions/options Elk/Antelope for high equity in Gulf in 2D Seismic 2010 2011 Lines Major seismic survey acquired in 2011, which Uramu Kerema 8°S identified significant Kumul Terminal
resource potential: New 2012 3D Seismic Over 30 opportunities Region 2011 3D Seismic across multiple play types Regions Potential to support 2 trains 9°S
Additional seismic Pandora recently completed LNG Facility
Port Moresby 144°E 145°E 146°E Semi-sub contracted to drill 2 firm wells + 2 options, commencing 4Q12 Bids from potential farm-in partners under review, farm-down likely mid- year
22 Results of Offshore Core Area
Tadiva
Hagana Lade
Flinders
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Results of Offshore Core Area
Flinders – Late Pliocene Peak Amplitude PSTM A
0 10km
A’
24 Results of Offshore Core Area
25
Moran, SE Mananda, Agogo 6 well site & Agogo Production Facility
26 Oil Search Production Outlook - existing fields
Net Production (mmboe) Gobe Main 10 Hides GTE Moran SE Mananda 9 8.12 Kutubu SE Gobe 8 7.66 7 6.69 6.2-6.7 6 5 4 3 2 1 0 2009 2010 2011 2012 2013 (Forecast)
2012 production guidance of 6.2 – 6.7 mmboe, unchanged from 2011 following success in near-field drilling programme (100% success rate in last 36 development/appraisal wells) Production in 2013 expected to be broadly flat, subject to success of work programmes Rig 103 being mobilised back from P’nyang to PDL 2, optionality to pursue exploration and appraisal opportunities and development programme
27 PNG LNG will transform production picture
Net Production (mmboe) 25
MENA Hides GTE SE Mananda 20 SE Gobe Gobe Main Moran Kutubu 15
10 8.60 8.12 7.66 6.69 6.2-6.7
5
0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Forecast)
28 29 Kurdistan Region of Iraq – Taza PSC
Kor Mor Kurdamir 2-3Tcf ~400mmboe
Jambur ~800 mmbbl Sarqala discovery Taza 9600bpod
Qamar Taza PSC ~200 mmbbl
Highly prospective region with many discoveries in last 4-5 years Taza PSC: OSH 60% (operator), ShaMaran 20%, KRG 20% Taza 1 well to spud shortly Potential mean recoverable resource 200 – 400 mmbbl, depending on recovery factors, phases present On track for June 2012 spud 30 Tunisia – Tajerouine PSC
Semda
Tajerouine PSC: OSH 100% Seismic acquired 2010, additional seismic in late 2011 Well-defined structural closure at proven reservoir levels and deeper levels Potential recoverable resource: shallow oil (50-100mmbl) and deeper gas (100-200bcf) Preparations underway for 4Q12 spud 2 year PSC extension secured
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PNG Issues
Unprecedented political uncertainty in PNG over past year: No impact to operations with continued progress on all projects during this period Election 23 June – 6 July, writs returned by 27 July, with new Government formed in August/September: Preparing to re-engage with new Government Oil Search likely to be PNG’s largest single investor in 2012, with over US$2bn to be spent on development, appraisal, exploration and operations: Significant vote of confidence in quality of assets and ability of Company to work with Government, bureaucrats and community and manage operating and investment risks Future consistency of fiscal terms vital for sustained investment
32 Sustainability Focus
Desire to play a role in long term development and wellbeing of people of PNG Continued push towards improved transparency and governance of benefits distribution, taxes and landowner company payments Investment in community health programmes substantially increased, driven by Oil Search Health Foundation, supported by Global Fund, AusAid, ADB Active community development programmes: Education and training Agriculture Health and sport development
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Summary
2012 transformational year for Oil Search. Unprecedented opportunity to underscore long term value growth from OSH’s portfolio of assets Peak activity year for PNG LNG Project delivery Largest drilling programme ever undertaken by Oil Search underway, will continue through 2012 into 2013 Continued strong oil field production performance and active pursuit of near field opportunities Activities underwritten by strong cash flows, solid balance sheet Remain confident that country risks and challenges can be managed
34 Appendix 1: 2012 Guidance
Production: 6.2 – 6.7 mmboe
Operating costs US$21 - 24/boe (incl. corporate costs) Impacted by: Major workover programme to maximise oil recoveries before gas production FOREX PNG inflation Associated Gas activities Sustainability initiatives
Depreciation, depletion and amortisation: US$7 - 9/boe Future DD&A profile impacted by life extension activities and development drilling opportunities
Investment outlook Exploration (~20-25% MENA): US$240 – 280m (US$145m in 2011) PNG LNG Project (including capitalised interest and fees): US$1,650 – 1,750m (US$1,287m) Production: US$130 –150m (US$129m) Corporate (including rigs): US$10m (US$7m) Business Development: US$7m (US$10m)
Liquidity Liquidity at 31 March 2012 ~US$1.1 billion (US$0.9bn cash plus corporate facility of US$232m) At end March 2012, US$2.01 billion drawn down under PNG LNG project finance facility Company remains well placed to meet existing commitments Expect to replace corporate facility prior to 3Q 2013 expiry
35 Appendix 2: Other Key PNG Players
Talisman Equity Participation NGE & Interoil Equity Participation
NGE Juha Juha Hides & Angore Hides & Angore Interoil 6°S 6°S
Kutubu & Agogo Kutubu & Agogo
Gobe Gobe
8°S 8°S
100km 100km 142°E 146°E Port Moresby 142°E 146°E Port Moresby
Oil Search Equity Participation Talisman/Mitsubishi have significant
Juha acreage in Western Forelands. InterOil Hides & Angore 6°S has strong position in Eastern Forelands Kutubu & Agogo
Gobe OSH strategy focused on core PNG LNG Foldbelt acreage and Gulf - viewed as offering greatest potential for large gas 8°S discoveries
100km 142°E 146°E Port Moresby 36 DISCLAIMER
While every effort is made to provide accurate and complete information, Oil Search Limited does not warrant that the information in this presentation is free from errors or omissions or is suitable for its intended use. Subject to any terms implied by law which cannot be excluded, Oil Search Limited accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice. This presentation also contains forward-looking statements which are subject to particular risks associated with the oil and gas industry. Oil Search Limited believes there are reasonable grounds for the expectations on which the statements are based. However actual outcomes could differ materially due to a range of factors including oil and gas prices, demand for oil, currency fluctuations, drilling results, field performance, the timing of well work-overs and field development, reserves depletion, progress on gas commercialisation and fiscal and other government issues and approvals.
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