OIL SEARCH LIMITED 2006 Full Year Results Continuing to Deliver 20 February 2007 1
2006 Results - Agenda Review of 2006 Peter Botten Financial Summary Nigel Hartley Operations Review Phil Bainbridge Production Exploration Gas Commercialisation Peter Botten Outlook for 2007 Peter Botten 2
Review of 2006 3
2006 Performance Metrics Record core profit after tax of US207.5m, +4% on 2005, US412m including profit on AGL asset sale Lower production PNG Gross production rates 5% higher than in 2005, Oil Search share reduced by AGL asset sale…
World Class Safety Performance Better than Industry Peers Total Recordable Incidents (TRIs) 1998 2006 14 OSH OGP APPEA 12.7 12 TRI / 1,000,000 Hours 10.6 10.7 9.4 10 Australian Companies 9.1 9.8 9.3 8.3 8 8.5 8.2 7.8…
Share Price Performance Indexed Comparable Share Price Performance Best performing Oil and Gas stock over 4 years 800 Share and indices prices (rebased to 100) 700 600 OSH 500 400 WPL 300 ASX200 Energy AWE ROC 200…
10 USm 0 50 100 150 200 250 300 350 400 450 2 0 0 200 O 5 il P ri ce O il 85 S al es (97) Ta ri ff s (10) In te A re m 24 st or ti sa ti 8 on E & (9) E Ta x 15…
Cash Operating Expenses 2005 2006 PNG Oil Field US Costs per Barrel USm USm 7 Kumul 0.45 Field Costs Tariffs 0.82 - Oil: PNG 74.6 57.6 6 Tariffs 1.55 - Oil: MENA 3.1 12.4 Other Field 5 Costs 1.69 - Hides 4.0 6.5 Other…
Operating Cash Flows 750 Operating cashflow 92 included US180m of tax 625 paid, a 22% increase on (226) the prior year 500 Investing inflows included AGL sale USm 399 375 proceeds of US371m, offset by outflows of 250…
Treasury Review 500 Cash Debt Gearing Gearing % 400 40 300 30 USm 200 20 100 10 0 2003 2004 2005 2006 US478 million in cash at year end including JV balances , no debt Current cash position of US515 million US126…
2007 Capital Outlook USm 2006 2007 Actual Outlook Investing : Exploration 122 190 Development 144 126 Corporate 16 70 Financing : Dividends 101 45* Debt Repayment 126 - *2006 final dividend only 14
Production 15
Oil Search Net Production 40,000 Kutubu Moran Gobe Main SE Gobe Hides Nabrajah SEM 35,000 +10% Post +6% AGL 30,000 +25% sale 25,000 +23% stb/d 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006…
PNG Production 2006 was a successful year despite the export issues Increase in overall gross production Moran production increased by 18% compared to 2005 SE Gobe production up by 4% as a result of the Wedge development First…
PNG Production cont. Activities in 2007 will centre on: Optimising Kutubu production by: 5 new wells and 5 workovers, with programme commencing mid-07 Continued swing well management Facilities de-bottlenecking opportunities New…
PNG Production and Aspiration 80,000 OSH Assumes Field Operatorship 70,000 60,000 Oil Production (stb/d) Aspiration 50,000 I D nc e v re 40,000 el m o p en m ta en l 30,000 t Decline before 20,000 Oil Search…
Near Field Drilling Activity Moran: 2007-9 development drilling, 1-3 wells Gobe/SE Gobe: Agogo: 2007-9 workovers and development 2008-9 development drilling, 1-2 wells drilling, 1-4 wells Kutubu: Usano: 2007-9…
Usano Development Focus 2007-08 UST 7 drilled 2006-7 Proven oil in eastern extension to Usano 1/2/3 Block SE nose Potential for between 3-7 MBT Arakubi additional wells IDTG Arakubi 1 Pad Location UDT2 pad UDT1 pad UDT3A…
Yemen Production Block 43 Nabrajah Oil Field Nabrajah gross production currently averaging 7,000 bopd OSH 28.33%, Operator DNO Nab 2 and 7 returned to production Nabrajah Production Forecast following water injection upgrades Nab…
Egypt Production Area A First 2 exploration wells - secondary Area A Production Forecast production targets BOPD 6,000 currently being 1,800 tested 5 candidates 5,000 OSED 1,500 identified for Share development…
Exploration 24
PNG Exploration Juha Oil exploration 40-50mmstb net risked reserves being tested in 2007 NW Paua Gas - Co-ordinated programme Kutubu, to add reserves to support Arakubi commercialisation projects 3 exploration wells 1.0 tcf net…
PRL 2 Juha PRL2 WI % Juha A Oil Search 31.5 Esso Highlands 56.0 Juha B Merlin Petroleum 12.5 Existing gas discovery, 60 km north west of Hides 3 wells drilled on structure in 1980s Two well programme commenced in 4Q 06…
PPL219 Kutubu 2 PPL219 WI % Oil Search 91.25 Merlin Petroleum 8.75% Close to Iagifu-Hedinia Kutubu 2 fields quick tie-in possible Inadequately tested by Kutubu 1X (1988) Only Toro logged, but Iagifu as secondary target Site…
PPL 233 NW Paua PPL233 WI % Oil Search 52.5 Esso Highlands 47.5% Highly prospective structure adjacent to Moran Digimu target with Toro secondary Wide range of reserves Partially constrained by Paua 1X well (1996) Important…
MENA Drilling Programme TOTAL WELLS: 28 19 Exp + 9 Dev Yemen: 3 Rigs Onshore (Op): JOECO Rig-3 Onshore (Non-op): Rig-47 Offshore (Op): Energy Searcher Egypt: 2 + 1 Rigs Onshore (Op): ECDC Rig-1 New Build (2007) Onshore (Non…
2007 Yemen Exploration Drilling Program Drilling campaign commenced in November 2006. 2007 programme comprising 10 exploration wells. Proposed Reeb-1 Proposed Magrabah-1 1Q 2007 1Q 2007 NABRAJAH Shaibah-1 Proposed Al…
Egypt - East Ras Qattara Shahd-1 Well Summary East Ras Qattara First well in ERQ programme Mean Reserves: 10- Ghard-1 15 mmbbl Shahd-1 Well Status Discovery Rana Prospect Fahd (Shahd SE) Shahd-1 completed Shahd South for…
Egypt - East Ras Qattara Ghard-1 Well Summary East Ras Qattara Second well in an Ghard-1 expanded drilling Discovery programme Mean Reserves: Shahd-1 Rana Prospect 15-20 mmbbl Fahd (Shahd SE) Prospect Well Status Shahd South…
Gas Commercialisation 33
Pnyang Juha Angore Major Oil Mogulu and Gas Fields with Iehi Exploration Korobosea Barikewa Kimu Uramu Pandora 34
PNG Gas Commercialisation Summary Targeting projects with access to world gas and liquids pricing (LNG , Petrochemicals..) Material increase in core pricing over last 2 years Strong and sustained demand The world has caught up with…
Gas Fields to Potential Gas Industry Developments 36
Key Resource Base Hides / Angore Fields 6.5 tcf of Proven and Probable resource ExxonMobil led studies identify potentially attractive LNG development Advanced discussions with Kutubu and Juha Joint Ventures to study optimum…
Key Resource Base Kutubu Complex Fields 1.5 tcf plus liquids, largely developed Significant infrastructure, high value Reviewing options for development LNG with Hides LNG with BG or others Petrochemicals development 38
Key Resource Base Juha Field 1.0 tcf subject to present appraisal Significant reserve upside Liquids rich, with material potential reserves Reviewing options for development LNG with Hides Other LNG Liquids cycling as a…
Strategic Considerations LNG first developer has value Total value chain approach Development competition to drive optimum value outcome and final timetable 40
Strategic Considerations Credible LNG partner a requirement OSH and BG engaged in LNG feasibility study through second half of 2006 ongoing Reviewed capital costs, project structure Reviewed initial 3-4 mtpa based on Kutubu…
PNG Gas Commercialisation Development Options Mature opportunities to supply gas to Petrochemicals and Fertiliser Plant in Port Moresby Production range 90PJ/pa to 136PJ/a Product price with linkage to international energy…
PNG Gas Commercialisation Comparisons Analysis indicates value and return ranking LNG Petrochemicals PNG Gas Project Important access to world energy markets (direct or indirect) Scale of investment and return In-country…
PNG Gas Commercialisation Way Forward LNG ExxonMobil led Project Negotiations for Project entry with Kutubu and Juha JVs Negotiations with PNG Government on key fiscal issues Kutubu led Project Negotiations with BG on project…
PNG Gas Commercialisation Other complementary activities Significant expansion of appraisal and exploration programme for gas Juha wells Kimu Korobosea Barikewa Mogulu Aimed at increasing contractable gas Targeting early Juha…
Outlook for 2007 and Beyond 46
Strategy for Growth Deliver Value Substantial remaining potential in PNG oil fields Further development in Yemen & Egypt Cost controls and improved profitability Extract Value Commercialise our 1 billion boe gas and liquids…
Outlook - Production Production Outlook for 2007 is between 10.5 11.0 mmboe PNG development opportunities mean gross production can continue at around 50,000 bopd for least three years Review of liquids cycling project at Juha,…
Outlook - Exploration 2007 biggest programme in Companys history MENA programme has potential to add to production, short lead times Production from East Ras Qattara, Egypt from 2H07 Most of PNG oil targets close to…
Production Outlook 35,000 MENA Production 30,000 PNG Development PNG Production 25,000 20,000 15,000 10,000 5,000 ACTUAL FORECAST 0 6 7 8 0 1 3 9 2 Ju 7 Ju 6 Ju 8 Ju…
Outlook - Gas Gas Range of commercially attractive opportunities available OSH well placed competitively, with resources at Hides/Angore, Kutubu, Juha etc. representing a spectrum of risks and rewards with options for control and…
Summary Oil Search remains on strong growth trajectory Existing oil production assets performing well, costs under control, extended production plateau Large discovered gas resource will be commercialised into world energy…
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