OIL SEARCH LIMITED 2007 Half Year Results 21 August 2007 1
2007 Half Year Results Overview 3
Overview NPAT for first half of 2007 was US46.9 million. Operating performance remained sound, but result impacted by higher non-cash items, exploration expense and increased tax rate Record oil prices unhedged, average realised…
Overview In recognition of the solid underlying performance and strong balance sheet, the Board has recommended an unchanged interim dividend of four US cents per share. Payable on 12 October 2007 5
2007 First Half Profit Drivers US'm 150 7 (29) 100 (10) (19) (49) 115 7 50 25 47 0 n e x es * 6 7 s x io c Ta er ge 0 0 pe ri al 0 0 at th P ar 2…
Factors Affecting the Results Higher non-cash charges: primarily driven by higher future capital spend estimates impacting on amortisation rates 64% effective tax rate due to non-deductible Middle East exploration expenses Almost…
Some Cost Pressures 1H06 1H07 PNG Oil Field US Costs per Barrel USm USm 8 Field Costs 7 Tariffs 1.00 - Oil: PNG 22.2 28.4 Tariffs - Oil: MENA 5.9 8.0 6 0.82 Other Field - Hides 2.3 2.8 5 Other Field Costs 2.09 Costs 1.69…
Operating Cash Flows USm Operating cashflow 750 included US55m of tax (186) paid 625 242 Investing outflows 500 (47) included US50m on production/ 375 development and US113m on 250 exploration and 478 487 evaluation (incl…
Treasury Review USm 500 400 300 200 100 0 2004 2005 2006 Jun-07 US487 million in cash at end June, no debt US163 million in undrawn committed bank lines US 4 cent dividend (US44.8 m) paid on 23 March 2007 No oil…
2007/08 Capital Outlook Exploration expenditure for full year 2007 expected to be US190 - 200 million Gas commercialisation and new business expenditure of US40 million Development expenditure of US100 million, plus US65 million on…
2007 Half Year Results Production 15
Oil Search Net Production 40,000 Kutubu Moran Gobe Main SE Gobe Hides Nabrajah SEM Area A ERQ 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…
Field-by-field performance Kutubu Hides Reservoir performing well - 1Q production affected by Porgera reduced need for 2007 workovers JV turbine maintenance Expected under performance for Normal operations resumed full year due to…
Field Development Drilling Activity Moran: 2008 development: 3 wells Agogo: 2008 development: 1 well potential Kutubu: 2008 development: 2-3 wells SE Gobe: 2008 development: Usano: 1 well potential 2007-8 development…
Usano Development Potential Usano well SE nose Likely Usano well 2007-8 Arakubi Kutubu Field IDTG Arakubi 1 Pad Location UDT2 pad UDT1 pad UDTC UDT3A pad UDTG UDTD Usano East UDTB Block UDT7 Usano Main UDTJ UDTE…
Kutubu Development Possible IDT-11 twin (Iagifu target) Remapping and simulation support IDT 23ST2: strong a Hedinia Digimu performance infill well indicates potential for at least one additional well +/- appraisal…
Moran Development MZ (K Block) Moran infill well M10 ST2 (J Block) MR (B Block) Field depletion plan encompasses 3 new wells in 2008 MZ K Block production well MR B Block gas injection well M 10 ST2 J Block downdip…
PNG Drilling Update Rig 101 (Ex Rig 2): Refurbishment and upgrade complete Currently shipping to Korobosea for September spud date Drilling contractor secured and resourced Rig 3: Delays due to parts delivery and commissioning…
23 Oil Production (bopd) Ja n -2 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 0 0 0 Ja n -2 0 0 1 Ja n -2 0 0 2 Ja n -2 0 0 3 Ja n -2 0 0 4 Ja n -2 0 0 5 Ja n -2 0…
Egypt Area A Production For the first week of August production averaged 5,500 bopd 8,000 P50 This result has been achieved even with a 2 month delay to the start of the 7,000 development drilling programme, due to the…
Yemen Nabrajah Production Nabrajah-15 well has proven a new terrace/compartment within 9,000 P50 the field 8,000 Field reserves currently being evaluated by NSA. Anticipate an 7,000 increase in certified reserves Gross Oil…
Oil Search Net Production 40,000 Kutubu Moran Gobe Main SE Gobe Hides Nabrajah SEM Area A ERQ 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…
Cost Management Cost pressures: Infrastructure replacement (Kutubu accommodation, mess facilities, drilling support base) Aviation Capacity development (graduates, mentors, training) Impact of A appreciation Inflationary…
2007 Half Year Results Exploration 28
PNG Exploration Juha Oil - Remaining 2007 programme testing 40 mmbbl net risked reserves NW Paua Gas exploration/appraisal to Arakubi add reserves to support Mananda Attic commercialisation projects Cobra PNG 2007 exploration…
Juha Update PRL 2 WI % Oil Search 31.5 ExxonMobil 56.0 Juha-3X Juha 4ST1 Merlin Petroleum 12.5 Juha 5 Juha-2X Juha 5 well confirms GWC for Juha main pool Juha 4ST1 proves PRL2 Juha-1X separate pool to the east Awaiting…
PDL 2 - Arakubi 10km PDL 2 WI % Line P N Oil Search 60.0 Depth 04-411 migra tion ExxonMobil 14.5* Moran AGL 11.9 SE Mananda Paua Merlin Petroleum 6.8 Arakubi structure PRK 6.8 APF * ExxonMobil did not participate in…
PPL 233 NW Paua 10km PPL 233 WI % PDL5 PPL233 L ine PN Oil Search 52.5 Depth 04-411 mig NW PAUA ration Esso Highlands 47.5% Moran Highly prospective SE Mananda Paua structure adjacent to Moran Arakubi structure Digimu target…
PPL240 - Korobosea PPL240 WI % KOROBOSEA Oil Search 90.0 Gedd 10% Korobosea well will test KIMU prospect along trend from Kimu gas discovery Prospect is well defined by seismic (9 lines of good PRL08 quality) Reservoir known…
PRL9 - Barikewa Gas Field PRL9 WI % PRL09 PPL246 Santos 42.6 Existing wells too close together Oil Search 42.6 Cue 14.8 2 Barikewa 1 Discovery well drilled in 1956 Hedinia tested 10 mmscf/d Toro tested 4 mmscf/d Gas analysis…
Yemen Exploration Remaining 2007 Activity 5 Exploration Wells testing total 130mmbbl BLOCK 35 50km 1 Nabrajah Appraisal 400+sqkm 3D in Block 3 BLOCK 7 Reeb-1 currently drilling (75mmbbl, COS=21%) NABRAJAH Dahgah-1…
Egypt - East Ras Qattara 3 wells drilled to date 5km 3 discoveries at 4 stratigraphic levels Development plans Ghard-1 submitted for Shahd and Discovery Ghard Production in 4Q 07 No reserve additions booked Rana-1 to date…
Other MENA Assets TUNISIA IRAQ LIBYA EGYPT Offshore Libya Block 18 seismic complete drilling expected in late 2008 Bina Bawi drilling continuing Awaiting ratification of: Egypt Block 6 Two licences in Tunisia to…
2007 Half Year Results Gas Commercialisation 38
LNG Development Strong momentum building for world scale LNG project operated by ExxonMobil. Oil Search interest 30% Studies ongoing with BG Group Work underscoring viability of PNG LNG development Strong market demand continues…
PNGs Competitive Advantage Quality and location of resource makes PNG very competitive in project line up for a 2012 2014 development timetable Advantages of LNG from PNG Highlands: Substantial certified reserve base, sufficient to…
Key Gas Fields in PNG Hides / Angore Fields (OSH 27.5%/52.5%) Hides 5.3 tcf of 2P resource, 3P upside to 10 tcf Angore 1.2 tcf Kutubu Complex Fields (OSH - 60.0%) 1.5 tcf plus liquids, largely developed Key strategic resource and…
Pnyang Juha Hides Angore Existing gas fields, gas Iehi exploration Korobosea Barikewa Elk Kimu and appraisal opportunities Uramu Pandora 43
LNG with ExxonMobil ExxonMobil Pre-FEED review progressing well - strong momentum build Kutubu/Agogo/Moran/Gobe Main participants have joined Hides/Angore/Juha JVs in LNG studies. OSHs funding share has increased to 36.6%. Interest…
Full foldbelt 6.3 mtpa ExxonMobil LNG option Estimated capital Juha 250 mmscfd (nominal) 75km cost (USbn): Hides & 960 mmscfd Conditioning Plant Angore - Upstream & 8-inch condensate line Pipeline 5.0 66 km 14-inch gas line…
LNG with BG BG and OSH co-sponsors of alternative development option, presented to Government and gas resource holders in June 2 x 3.6 mtpa trains, demonstrated competitiveness of Bechtel technology Likely OSH interest 30%,…
Other Complementary Gas Activities Core focus to develop ancillary gas business complementary to LNG Active programme to secure and/or find further certifiable reserves Reviewing options for early pipeline development Exploration…
2007 Half Year Results Strategy & Outlook 48
Strategy for Growth Core Focus areas for growth: Deliver maximum value from existing production assets (production and cost focus) Extract value from discovered 1bn boe gas and liquids resource Create value from exploration success…
Strategy for Growth Company embarked on major Strategic Review, similar to 2002/03 focussing on: Maximising value from existing oil fields Extended field life management Oil and gas operational interface and value impact…
Outlook for 2007 Operational Production expected to be between 9.5 10.0 mmboe Kutubu and Moran fields performing well, but no new development wells expected onstream in PNG in 2007. Focus in 2008 Rising production from MENA…
Outlook for 2007 Financial Oil Search remains unhedged, oil comprises over 90% of production pure exposure to oil prices Second half field costs in PNG expected to be slightly higher than first half, with a number of work-overs,…
Outlook beyond 2007 80,000 PNG LNG Gas Liquids Oil Production (bopd) 60,000 40,000 MENA PNG LNG Gas Development MENA Explo ration 20,000 PNG E xplora tion PNG Development 0 9 1 3 5 7 0…
Outlook beyond 2007 Financial Continued focus on cost control Higher production from Kutubu and Moran will see amortisation rates decline Exploration expected to revert to lower levels annual spend US120 million pa Strong…
Summary Continuing to generate strong cash flows from operations underlying business is robust Commercialising gas resource remains Oil Searchs highest priority PNG LNG provides attractive returns, progressing steadily with…
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