OIL SEARCH LIMITED Macquarie Australian Conference Emerging Energy 8 May 2008 1
Setting a new course Strategic Review recently completed Highlighted value potential and actions required to transform Company value Review has set strategy for next five years: Continue to deliver top quartile returns Transform…
Total Shareholder Returns (TSR) Ranked No.5 TSR Performer amongst current ASX 100 for 5 year period to Dec 2007 (53% pa on an annualised basis) 70% 60% 53% 50% 40% CAGR 30% 20% 10% 0% Macquarie…
Key Conclusions of Review Gas Commercialisation the Key to Growth PNG LNG will dominate A robust economic project ranking well relative to other possible developments ExxonMobil led, with strong alignment and commitment OSHs…
Key Conclusions of Review Re-focus MENA Oil Search successfully built up diversified, value accretive portfolio in MENA, but some assets were sub-material Recommendation to refocus on assets with material value potential relative…
Key Conclusions of Review Management of Cash to Fund LNG Financial position is strong (net cash of over 400 million at end April 08) Funding of PNG LNG capex (OSH share US3bn) will consume large proportion of operating cash flow…
Delivery of Strategy Achieve superior value growth performance versus peer group over the next five years by: Ensuring a positive Final Investment decision for the PNG LNG Project Optimising PNG operating performances to sustain…
Primary focus - PNG LNG Delivery of PNG LNG Project is Oil Searchs primary focus This development will represent PNGs cornerstone gas development and will underpin Oil Searchs production and profits for 30+ years. Will more than…
The Environment is right for LNG Burgeoning demand for LNG from Asia Pacific region, as well as globally Tight supply: demand equation. Large number of potential new projects in the region, only a few will reach commerciality in…
PNGs Competitive Advantage Large number of potential new projects in this region (NW Australia, CSM) Screening economics indicate the PNG LNG Project is robustand stacks up favourably against other projects in the region…
Delivering PNG LNG Imminent events: Execution of Gas Agreement (Prime Minister announced agreement of fiscal terms in last week of April) Commencement of FEED FEED deliverables: Securing market off-take (2008/09) Securing debt…
PNG LNG Financing Debt: Joint debt financing approach, led by a Finance Committee co-ordinated by ExxonMobil. Soc Gen appointed financial advisor. OSH share of project finance around US3 billion, nominal, including fees,…
Economic Importance of PNG LNG ACIL Tasman Report 6 February 2008 Affects economy of PNG and its balance of trade situation profoundly GDP will more than double Oil & gas exports increase 4 fold Up to 7,500 jobs in initial phase,…
Oil Operations providing cash for growth Since Oil Search took over operatorship of PNG oil fields in 2003, fields have produced 45 mmbbl in excess of previous operators expectations and field life extended Aim is to optimise PNG…
PNG Gross Oil Production 80,000 Oil Search Added over P50 Hides P50 2008 P50 takeover 45mmstb Base GTE Programme Contingent 70,000 operatorship compared Resources- to Chevron LOF 60,000 Oil Rate (bopd) 50,000 40,000…
Cost Control - Capex Need to reduce capex through drilling performance improvements, drilling cost reductions, new technologies and optimised rig strategy Initiatives: Rigorous cost control of contracts, materials and logistics…
Gas Growth Opportunities 34 Gas Growth Opportunities PNG LNG Project sets the stage for additional gas-based growth opportunities. OSH seeking to: Increase contractible gas for threshold developments Plan infrastructure…
Gas Resources Juha Hides PNG has substantial Northern Hub Pnyang discovered undedicated Elevala gas resources Angore Western Corridor Stage II Central Company has 2 tcf of Foldbelt discovered gas outside Western Corridor…
Delivering Gas Growth Focus for OSH: Build on existing gas portfolio by acquiring/ consolidating interests in key fields Undertake further exploration & appraisal in 5 hubs: Eastern Forelands (eg Barikewa) Western Corridor (Stage 1…
PNG Exploration Portfolio optimisation Data room being prepared for farm down of some exploration exposures in PNG Seeking to build on gas portfolio (already outlined) Oil exploration High grade remaining prospects in close…
MENA Exploration Sale of MENA assets to Kuwait Energy recently announced for US200 million & WC Allows OSH to re-focus on MENA assets that have potential to make a material contribution eg Libya Area 18, Yemen Blocks 3 & 7,…
Treasury Review US344 million in cash at year end, no debt Current cash position of US407 million Work underway to refinance corporate facility increasing funding commitment to US400 million and group liquidity to in excess of…
Conclusions Setting The Course 46 Oil Search The Next 5 Years The Company at a cross roads Potential to multiply value by delivering PNG LNG and other Gas Opportunities Three distinct phases over the next 5 years Phase I…
The Immediate Focus Phase I PNG LNG to FID 2008-2009 Support for Operator Oil Search specific value delivery Oil operations synergies, oil fields gas FEED Government and landowner management Financing Reorganisation to deliver…
The Long Term Phase III First Gas and Beyond 2013 Further growth opportunities Debottlenecking New train development Other gas developments off new infrastructure Major cash generation Legacy Asset Delivery A New Oil Search…
Summary Latent value in existing portfolio of assets is sufficient to deliver superior value to shareholders over the next 5 years Opportunities are well defined Challenges can be managed Company is well positioned to deliver…
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