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SEPTEMBER 2007 US ROADSHOW – Oil Search Limited

Oil Search Limited · Sep 11, 2007 · 63 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 1
    OIL SEARCH LIMITED US Roadshow September 2007 1
  2. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 2
    Investment Fundamentals Company value growth driven by commercialisation of discovered 1bnboe gas and associated liquids Company Game Changer, with significant progress on LNG and other options. Likely interest 30% in world scale…
  3. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 3
    Oil Search - Profile Established in PNG in 1929 Operates all of PNGs producing oil and gas fields In 2006, generated approx 23% of PNGs export revenue and 13% of its GDP. Largest investor and taxpayer. PNG Government is 17.6%…
  4. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 4
    Oil Search Where We Operate 4 4
  5. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 5
    PNG Licences 5
  6. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 6
    MENA Licences 6
  7. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 7
    Our Operating Environment 7
  8. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 8
    Why PNG Good, stable fiscal regime Competitive historic exploration success rates 1 : 5 success rate for oil 1 : 3 success rate for gas Over US3 billion of production infrastructure in-country PNG crude is light, sweet, trades at…
  9. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 9
    Why MENA Oil Search commenced programme of measured international diversification in 2000 Middle East / North Africa (MENA) selected as focus area. Have since built up strong portfolio in areas with proven petroleum systems Oil…
  10. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 10
    10 Share and indices prices (rebased to 100) Pa la din 100% 150% 200% 250% 300% 0 100 200 300 400 500 600 50% 0% Re so ur ce s Jul-02 242% Zin W ife or ley x Pa 125% Ca r so ns…
  11. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 11
    Solid Financial Performance 240 40 36.8 220 Net Profit 35 200 EPS* 207.5 180 200.2 30 160 25 US cents 140 USm 120 20 115.3 100 17.9 1H06 107.3 15 80 85.7 60 63.9 10 9.6 1H05 40 47.0 7.7 47.0 5 20 4.5 0…
  12. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 12
    Underlying Operations are sound USm 350 323.3 300 305.4 EBITDAX 276.8 250 Revenue 249.8 233.4 266.9 242.2 200 188.3 Operating 170.9 Cash Flow 150 136.1 167.4 130.5 115.3 100 Net Profit 63.9 50 46.9 41.7 0 1H 04 1H…
  13. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 13
    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…
  14. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 14
    Strong Balance Sheet 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 (refinancing planned at year end) Final 2006 dividend of US…
  15. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 15
    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…
  16. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 16
    Strategy for Growth Deliver maximum value from existing production assets (production and cost focus) Extract value from existing discovered gas and liquids resource Create value from exploration success and acquisitions to…
  17. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 17
    DELIVER VALUE 17
  18. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 18
    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…
  19. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 19
    Production Performance Since Oil Search took over operatorship of PNG oil fields in 2003, gross production has increased to around 50,000 bopd and field life extended With appropriate investment, expect to maintain production at…
  20. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 20
    PNG Oil Production Outlook August 2007 (gross bopd) 80,000 OSH Assumes Added over 34mmbbls 70,000 Field Operatorship in production 2003-06 60,000 Oil Production (stb/d) 50,000 40,000 P10 30,000 P50 20,000 P90…
  21. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 21
    PNG Fields 21
  22. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 22
    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…
  23. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 23
    Egypt Area A Production Oil Search shares in production above specified base production level 8,000 Since August, have been in sharing P50 territory. This result has been achieved even with a 2 month delay to the start of 7,000…
  24. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 24
    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…
  25. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 25
    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…
  26. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 26
    EXTRACT VALUE 26
  27. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 27
    Gas Commercialisation 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…
  28. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 28
    PNGs Competitive Advantage for LNG 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,…
  29. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 29
    Good Location US1.60 1.80 US0.50 0.75 US1.10 1.30 US1.20 1.40 PNG s geographical location & stability makes it an ideal supplier Based on 145,000m3 vessels chartered at 60- 29 70,000/day
  30. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 30
    Comparative LNG Pricing LNG (/mmbtu) 14 12 Crude Oil Parity 10 NWS Recent Contracting 8 6 NWS Traditional Contracting 4 2 0 10 15 20 25 30 35 40 45 50 55 60 65 70 JCC (/b) 30 Source: FACTS Global Energy
  31. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 31
    Strong Demand in Asia-Pacific Asia-Pacific Supply Demand Regional market mmtpa fundamentals are robust 230 Demand Steady expansion from (WoodMac) existing markets 210 Burgeoning growth from emerging markets of India & China…
  32. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 32
    Key Gas Fields in PNG Hides / Angore Fields (OSH Juha Hides 27.5%/52.5%) Hides 5.3 tcf of 2P resource, 3P upside to 10 tcf Angore Angore 1.2 tcf Kutubu Complex Fields (OSH - 60.0%) 1.5 tcf plus liquids, largely developed Key…
  33. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 33
    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…
  34. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 34
    Gas Resources (Gross PNG) Recoverable Gas (bcf) Elevala 30,000 Ketu Pandora Recoverable Gas (bcf) 25,000 Uramu Kimu Barikewa 20,000 P'nyang Angore 15,000 Juha Hides 10,000 SE Gobe Gobe Main 5,000 Moran Agogo 0 SE…
  35. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 35
    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…
  36. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 36
    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%,…
  37. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 37
    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 in…
  38. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 38
    CREATE VALUE 38
  39. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 39
    Exploration Programme Largest exploration programme ever undertaken by Oil Search is currently underway (spending US190 200m in 2007, up from US120m in 2006, US79m in 2005) In PNG, drilling a range of high potential impact oil…
  40. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 40
    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…
  41. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 41
    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…
  42. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 42
    Egypt Exploration Ongoing exploration programme in ERQ Exploration scheduled to recommence in Area A in 4Q07 2007 MENA spend around US70m 42
  43. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 43
    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 to date Rana-1 Further 3D…
  44. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 44
    Other MENA Assets IRAQ TUNISIA LIBYA 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 augment…
  45. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 45
    Strategic Review Company has embarked on major Strategic Review, focussing on: Maximising value from existing oil fields Extended field life management Oil and gas operational interface and value impact Operational cost and…
  46. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 46
    Outlook 46
  47. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 47
    Outlook for 2007 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 (Nabrajah, Area A,…
  48. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 48
    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…
  49. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 49
    Financial Outlook 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,…
  50. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 50
    Summary Company value growth will be driven by commercialisation of its 1bnboe quality resource. Strong momentum build for LNG Development, with likely 30% in world scale project Core business robust, with strong cash flows and…
  51. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 51
    OIL SEARCH LIMITED 51
  52. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 52
    Background information 52
  53. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 53
    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…
  54. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 54
    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…
  55. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 55
    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…
  56. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 56
    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…
  57. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 57
    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…
  58. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 58
    Cost Management Cost pressures: Infrastructure replacement (Kutubu accommodation, mess facilities, drilling support base) Aviation Capacity development (graduates, mentors, training) Impact of A appreciation Inflationary…
  59. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 59
    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…
  60. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 60
    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…
  61. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 61
    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…
  62. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 62
    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…
  63. SEPTEMBER 2007 US ROADSHOW – Oil Search Limited – slide 63
    PRL9 - Barikewa Gas Field PRL9 WI % PRL09 PPL246 Existing wells too Santos 42.6 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…

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