OIL SEARCH LIMITED A Strong Platform for Further Growth Peter Botten, Managing Director, Oil Search Limited Merrill Lynch New York Conference, 30 September 2005
Oil Search - Profile Papua New Guinea company established in 1929 Operates all of PNGs producing oil and gas assets Responsible for 24% of PNGs export revenue and 14% of countrys GDP. Largest investor and taxpayer Has major…
Oil Search Who are we 3
Oil Search Who are we PNG 5 producing oil fields (Kutubu, Moran, NW Moran, Gobe Main & SE Gobe) 1 producing gas field (Hides) SE Mananda oil field under development Major gas development Extensive exploration acreage 4
Oil Search Who are we Yemen 1 producing oil field (Nabrajah) Nabrajah Basement Development 6 Concession areas (5 as Operator) 5
Core Expertise Developing country specialist Ability to work co-operatively with host governments and local communities Culturally sensitive and diverse Experienced in operating in challenging environments Low cost, innovative,…
Over past five years, Oil Search has Completed two major M & A transactions Taken operating control of PNGs oil fields Rejuvenated these mature fields through targeted investment Accelerated new developments to deliver production…
Where we are in 2005 World class safety performance across operations Record profit for first half of 2005, 53% increase on 1H04 Strong production performance, at 3 year high, with mature fields performing well Three new oil…
Increasing Revenues 250 USm 200 150 Minerals Oil 100 50 0 1H 2001 1H 2002 1H 2003 1H 2004 1H 2005 43% CAGR over last four years Oil revenues up 37% on prior 1st half 1H05 realised oil price: US53 (1H04: US36.18) 9
Very Strong Balance Sheet 250 Gearing % 200 40 150 30 Debt Cash 100 20 Gearing 50 10 0 2002 2003 2004 Jun-05 US208 million in cash at end June, debt at US147million Liquidity of over US300 million, including…
Superior Share Price Performance 500 450 400 Relative Performance Index OSH ELECTED 350 OPERATOR OF ASSUMPTION OF PNG OIL FIELDS OPERATORSHIP 300 & ACQUISITION CPS OF CT ASSETS GAS 250 CONVERSION PROJECT FEED STRATEGIC…
Superior Returns 2003 Total Shareholder Return (TSR) of 67% 2004 TSR of 81% 1H2005 TSR of 72% CONSISTENT TOP QUARTILE PERFORMER 13
14 N 0 20 40 60 80 100 120 O ex il 140 S en B ea u rl rch in Ta gt li on sm an C W alt oo ex ds id e P TT K er r- Ta M p B cG G ee S G & ro P /A up SX A * pa A na ch d e ar ko H RO ar C…
Where will future growth come from Substantial value remaining in PNG oil fields Production optimisation New developments Exploration opportunities Gas Commercialisation Multiple development options being brought to maturity…
PNG Interests 16
Why PNG Good, stable fiscal regime Competitive exploration success rates 1 : 5 success rate for oil 1 : 3 success rate for gas Approx 15 tcf 2P uncommercialised gas resources already discovered Over US3 billion of production…
ADDING VALUE - Value Through Field Optimisation Value Through Field Development Value Through Exploration Value Through Gas Commercialisation Value Through International Diversification 18
PNG Oil Field Optimisation Mature fields have been rejuvenated: Added 10,000 bopd to Kutubu, 8,000 bopd to Moran and over 3,000 bopd to Gobe fields production levels through new initiatives and more focused field management…
20 Oil Rate (stbo/d) Ja n 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 0 -0 0 Ju l- 0 0 Ja n -0 1 Ju l- 0 1 Ja n -0 2 Ju l- 0 2 Ja n -0 3 Ju l- 0 3 Ja n -0 4 Ju l- 0 4…
21 Oil Rate (stbo/d) Ja n 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 -0 0 Ju l- 0 0 Ja n -0 1 Ju l- 0 1 Ja n -0 2 Ju l- 0 2 Ja n -0 3 Ju l- 0 3 Ja n -0 4 Ju l- 0 4 Ja…
SEG Wedge Development Pre SEG 11 SEG 11 drilled in May 2005, proved a 61m oil column in the SE Gobe wedge area SEG 11 onstream and producing at 1,600 bopd with low GOR and no water Revised mapping indicates 50-60 mmbbl…
ADDING VALUE - Value Through Field Optimisation Value Through Field Development Value Through Exploration Value Through Gas Commercialisation Value Through International Diversification 23
SE Mananda Development Marginal field development of stranded oil Artists Impression Bridge to span 500 metre gorge, pipeline and facilities construction underway SE Mananda NW Moran Moran Project delayed by weather &…
SE Mananda Bridge Comparison Millau Road bridge France 25
SE Mananda Construction Progress South Abutment A-frame Tower Roll Up 26
SE Mananda Construction Progress SEM Bridge Cable Launching 27
ADDING VALUE - Value Through Field Optimisation Value Through Field Development Value Through Exploration Value Through Gas Commercialisation Value Through International Diversification 28
PNG Exploration prospects 29
Juha Appraisal Currently 0.5 tcf 10km proven gas-in-place (GIIP) PRL2 x-section Two wells being considered one appraisal of Juha discovery Mega-Juha - Exploration one exploration of mega-Juha prospect Juha Main Appraisal…
ADDING VALUE - Value Through Field Optimisation Value Through Field Development Value Through Exploration Value Through Gas Commercialisation Value Through International Diversification 31
A Long Time Coming PNG Gas Project has taken a step change towards commerciality over the past 12 months Alignment of key stakeholders for risk mitigation and growth FEED entry a pivotal point Front End Engineering and Design…
Project Scope Joint venture between ExxonMobil 39.43% Oil Search 54.15% MRDC/State 3.02% Merlin (JPP) 3.39% Gas Sales with condensate export Conversion of Kutubu oil fields to gas production Development of Hides Gas Field…
Project Scope Final pipeline configuration and route being determined by customer demand Abundant competitively priced gas to NT, Queensland and southern markets Interconnected pipeline system promoting competition and…
PNG Gas Project Configuration 600 mmscfd Sales Gas HIDES PRODUCTION New CENTRAL Full Condensate Recovery Condensate Gas GAS CONDITIONING FACILITY pipeline pipeline PLANT (CGCP) KUTUBU CPF 700mmscfd Oil production & 165 mmscfd…
PNG Gas Project - Status Over past year have commenced FEED, signed sufficient conditional gas sales contracts to underwrite project and introduced new, regionally aligned, upstream partner (AGL) Focus is on successful project…
Oil Search has played an important role Deliberate strategy to achieve stakeholder alignment Project FEED Decision Joint Venture Alignment Market / Customer and Downstream Alignment Sold 10% in project to AGL Largest east coast…
Stakeholder Alignment The Key to Project Success Likely Post Sanction Interests ExxonMobil 25.67% Oil Search 37.18% PNG Govt/Landowners 14.27% Nippon Oil 3.39% AGL 10.00% Santos* 9.49% *Subject to negotiation 38
Second & Third Phase Gas Developments Delivers High Value Impact Once gas spine is in place, other developments will follow Oil Search spearheading in-country gas developments World Scale Petrochemical Plant in Port Moresby…
ADDING VALUE - Value Through Field Optimisation Value Through Field Development Value Through Exploration Value Through Gas Commercialisation Value Through International Diversification 41
International Diversification - Now Bringing Value Oil Search commenced programme of measured international diversification in 2000 Leveraging core competencies Developing country oil company with material operating capabilities…
Yemen Licence Map Block S2: Masilah OMV Habban -1 Basin Play New Basement Fairway Discovery 120,000bopd Pipeline Marib-Shabwah Basin Play Fairway 250,000bopd Pipeline Interests in the two key oil producing basins…
Nabrajah Field - First Non-PNG Oil Production Located in Block 43, Yemen First oil in July 2005 Currently producing 4,500 bopd from Qishn reservoir building to 15,000 bopd capacity by year end Nab-5 well discovered oil in deeper…
Why Yemen World class petroleum system success rates 30% Relatively under explored petroleum basins, recent discoveries and new developments Access to good acreage (but getting more competitive) Low capital and opex…
Block 43 Nabrajah Facilities Under Construction Tie-in to Block 14 Separator at CPF Manifold at CPF Storage tanks 46
Block 43 Nabrajah Field Block 43 Development Area Block 14 Prospects and Leads Map Nab-9 Nab-8 Nabrajah Nab-2 Nab-1 Nab-5 Al Haglah-1 N-2 gas test 15 Mscfg/d 2000 m SRD Gas/oil contact Block 43 N-5 2225 m SRD Area of…
Yemen proven play types in new licences Block 7 Block 14 Fields 1.2 billion bbls reserves Block 35 OMV Habban New Basement Discovery 750m oil column Nabrajah Block 3 Block 43 Block S2 Block 74 48
Oil Search - A Strong Platform for Further Growth Oil Significant further opportunities in existing oil fields Major programme planned for 2006 Commissioning of SE Mananda Further development of Nabrajah Gas Commercialisation…
Oil Search - A Strong Platform for Further Growth Exploration Major active programmes in PNG and Middle East portfolio over 2 years Arakubi / Juha Yemen Basement Play Strong balance sheet and significant cashflows underpins…
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