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MID YEAR PERFORMANCE UPDATE – Oil Search Limited

Oil Search Limited · Jun 10, 2003 · 77 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. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 1
    O I L S E A R C H L I M I T E D Mid Year Performance Update June 2003
  2. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 2
    Agenda 10:00 Introduction Peter Botten 10:10 Production Initiatives and Status Mark Wilson 10:40 Operatorship Review Peter Botten 11:00 Break 11:10 Drilling Cost Initiatives Mike McGowen / John Speed 11:30 Exploration & New Ventures…
  3. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 3
    Production & Development Activity Update
  4. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 4
    2003 Production Update GROSS JV100% Q4 2002 Q1 2003 YTD April Total Production 4.052 mmbbls 4.474 mmbbls 5.994 mmbbls (44,049 BOPD) (49,714 BOPD) (49,953BOPD) Gas Production 1.327 BCF 1.323 BCF 1.79 BCF (14.43 mmscfd) (14.7…
  5. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 5
    Kutubu Production 40,000 2002 2003 YTD Average Monthly Rate (BOPD) 35,000 30,000 Net 3.54 1.66 25,000 Kutubu Production Gross Production 20,000 (MMB) 15,000 Net Rate 9,710 11,010 10,000 (bopd) 5,000 0…
  6. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 6
    Kutubu Activities & Outlook Recent compression overhaul affecting gas handling capacity for Main Block Toro May-June production down 10% Kutubu Asset Teams first phase reviews: IDT8ST1 Infill drilling & workover opportunities…
  7. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 7
    SE Mananda Activities Implemented accelerated development strategy following acquisition of PPL219 equity Seismic acquired over field in PPL219 in 2002 Processing and interpretation complete, geological mapping in progress…
  8. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 8
    Gobe Main 2002 2003 YTD 18,000 Average Monthly Rate (BOPD) 16,000 14,000 Gobe Main Production Gross Net 0.99 0.437 12,000 Production 10,000 8,000 (MMB) 6,000 Net Rate 2,712 2,893 4,000 (bopd) 2,000 0…
  9. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 9
    SE Gobe 2002 2003 YTD 18,000 Average Monthly Rate (BOPD) 16,000 14,000 SE Gobe Production Gross Net 1.36 0.676 12,000 Production 10,000 8,000 (MMB) 6,000 Net Rate 3,725 4,479 4,000 (bopd) 2,000 0 Ju…
  10. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 10
    Saunders EWT Operations Update 2002 - well tied-in for extended test but not commissioned Numerous flowline leaks required additional replacement pipe sourced from Aust. Landowner disputes interrupted construction Pressure data…
  11. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 11
    Gobe - Saunders Activities & Outlook 2003 focus on production optimisation SEG Daily Gas Production & Oil Rate SE Gobe individual well capacities 60000 16000 Gobe Main production - currently assessing 14000 re-perforation 50000…
  12. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 12
    Moran Production 18,000 2002 2003 YTD 16,000 Average Monthly Rate (BOPD) 14,000 12,000 Moran Production Gross Net 1.72 0.81 10,000 Production 8,000 (MMB) 6,000 Net Rate 4,723 6,765 4,000 (bopd) 2,000 0…
  13. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 13
    Moran Activities Moran 1X recompletion to a dual tandem Option in planning depends on pressure data Moran Field Production - Recent History & other wells performance 16000 Moran 5 & 8 well diagnostics found tubing 14000 M4 leaks…
  14. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 14
    Moran Outlook Key activities in 2003 focus on maximising gas injection to re-pressure reservoirs and increase well Moran Field Production productivities Recent History v Forecast(s) 24,000 Major differences with forecast are: Moran 4…
  15. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 15
    Moran Potential Moran development continues to be sub-optimal due to the lack of appraisal of its entire structure and facility configurations which will result in bottlenecks Upside is still to be addressed in this area Drilling…
  16. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 16
    Production Summary 2003-2004 Exploration & Development Schedule Strong production outlook 2003 - anticipate being at upper end of range 2004 - too early for accuracy, further info after JV programme agreed in 4Q 03 Further impact…
  17. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 17
    Transfer of Operatorship from CNGL to Oil Search Transition Program Update
  18. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 18
    Summary Following CNGL notice of resignation as Operator, OSH unanimously elected Successor Operator for Kutubu, Moran, Gobe, SE Gobe & PPL-219 Exxon unanimously elected as the Successor Operator for PRL 2 & 3 CNGL remain Operator,…
  19. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 19
    Chevron Texaco Operations 2003
  20. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 20
    Oil Search Operations 2003
  21. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 21
    Transition Team ChevronTexaco have responsibility for leading and managing the transition process A dedicated OSH transition team is in place and functioning A leader has been assigned to each key functional area Team has been drawn from…
  22. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 22
    Transition Timeline Initial discussions with CNGL & agreements on tasks and resources required for transition to be completed by 9 June Internal OSH workshops for transition and value optimisation teams planned to ensure alignment and…
  23. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 23
    Key issues for the transition team IT&T - CNGL use a CT proprietary system that will need to be replaced Operating platform will be replaced OSHs IT & T department will be increased by 5+ people CT own hardware an leased back to JV.…
  24. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 24
    What Does Operatorship Mean to Oil Search Able to provide leadership in investment Deliver a key Strategic Initiative : Control Able to drive development programmes and production initiatives Predictable programmes Drilling Cost…
  25. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 25
    What Does Operatorship Mean to Oil Search Significant lift in capabilities Drilling Development HES Applicability to all areas Open opportunities Parallel Group Reviewing Value Initiatives for 2004 Programme and Budget Report 4Q…
  26. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 26
    Drilling Cost Reduction Study Update
  27. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 27
    PNG Drilling Cost Reduction - Review Oil Search Request Following 2002 Internal Strategic Review Drilling Review Conducted November 2002 Team Members: CT & Oil Search Personnel
  28. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 28
    PNG Drilling Cost Reduction - Review Objectives of the review Commercializing remaining PNG exploration and development opportunities to recover additional reserves will require a step-change in processes and culture to achieve…
  29. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 29
    Review Findings There are significant step-change opportunities for PNG drilling cost reduction. 54 Action items were identified by the review team. Opportunities exist in the following areas; Prospect Maturation Project…
  30. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 30
    Review Findings Traffic Light Summary Red: Significant opportunities exist for realizing major cost reductions in PNG drilling costs. Yellow: Opportunities exist for realizing moderate cost reductions in PNG drilling costs.…
  31. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 31
    PNG Drilling Cost Reduction Review Traffic Light Summary Firm Well Sequence, Continuous Program, Eliminate Unscheduled Events. Better Well Planning, Apply Technical Limit Approach, Optimise Rig Equipment. Review use of real-time…
  32. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 32
    PNG Drilling Cost Reduction Review Traffic Light Summary Restructure key contracts, Create contractor incentives, Identify external constraints to cost reduction. Improve communication between well planning and operations teams,…
  33. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 33
    PNG Drilling Cost Reduction Review Traffic Light Summary Optimise casing / completion designs, Review procurement / inventory processes Evaluate cost benefit of increasing the capacity of the air drilling package. Identify…
  34. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 34
    PNG Drilling Cost Reduction Review Size of the Prize Moran Drilling Summary Closer Focus on Moran wells shows considerable uncertainty in D&C time and cost. Normalised spread of uncertainty from best actual performance to worst…
  35. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 35
    Operational Excellence Non productive TYPICAL PERFORMANCE Operational Performance 5-10% Invisible lost time 10-15% Technical limit 5-15% INDUSTRY BIC Innovation % WHAT IS ACHIEVABLE WHAT IS POSSIBLE Ultimate…
  36. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 36
    PNG Drilling Cost Reduction Review NW Moran Chevron Texaco have taken a normalised value for their target, P- 50 . Reflects staged approach to achieving the technical limit. 10 MM excluding Oil Search will have full control of…
  37. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 37
    Exploration & New Ventures Update
  38. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 38
    Exploration & New Ventures Overview (June 03)
  39. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 39
    Presentation Outline Strategy Oil Searchs Portfolio Planned Exploration Activity PNG International New Venture Focus Summary
  40. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 40
    Exploration Strategy Control the activity levels in core areas: Determine the pace, direction and cost of activity Focus on drilling cost reduction: More wells within given budget Fit for purpose drilling & more continuous program…
  41. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 41
    Current Exploration & New Venture Activity Areas PNG 7 Exploration licences (5 as Operator) 5 Production licences (2 as Operator & 2 Units) 8 Gas retention licences (2 as Operator) 3 Pipeline licences Western Australia 1…
  42. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 42
    OSH PNG License Interest 7 PPLs Operator of PPL188, 218, 227, 219, 234 3 APPLs 5 PDLs Operator of PDL2, PDL4, Moran & SE Gobe Unit areas 3 PLs 8 PRLs Operator of PRL8 & PRL10
  43. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 43
    Exploration Current portfolio 10 exploration licenses 7 operated As part of the Strategic Review a major review of Prospects & leads was undertaken: Delineate value Identify risks and priorities Establish work programs & focus…
  44. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 44
    PNG Operational Activity 2003-04 Mid 03-04 PNG activity NW Moran Well 2Q 03 4-5 exploration wells Falcon Airborne Gravity Survey SE Moran Well 4Q 03 2 potential gas appraisal SE Mananda appraisal Foldbelt seismic program 04…
  45. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 45
    Near Field Drilling Opportunities 2003 - 2004 NW MORAN 2Q 2003 24-40mmbbls NW PAUA 2004/05 150mmbbls MANANDA ATTIC Expl Test 86mmbbls MANANDA FW Expl Test 253mmbbls SE MANANDA SE MORAN Current 24mmbbls 50-90mmbbls…
  46. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 46
    NW Moran 1: Spud June 2nd PN02-507/508 Permit: PPL219/PDL5 OIP Potential: 86mmbbls Reserves: 40mmbbls COS: 0.33 Risked Reserves: 13.1mmbbls
  47. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 47
    SE Moran: spud planned 4Q 2003 PN96-305 Permit: PPL219 OIP Potential: 170mmbbls Reserves: 80mmbbls COS: 0.25 Risked Reserves: 20mmbbls
  48. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 48
    KAPUL: spud planned Dec 2003 Permit: PPL227 OIP Potential: 270mmbbls Reserves: 129mmbbls COS: 0.17 Risked Reserves: 22mmbbls
  49. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 49
    SE Mananda: Engineering & economics underway . Potential appraisal in 1-2Q 04 SE Mananda Dip Line (PN00-503) Permit: PPL219/PDL2 OIP Potential: 50-119mmbbls Reserves: 24-50mmbbls COS: 0.25 Risked Reserves: 22mmbbls
  50. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 50
    03-04 year forecast drilling program
  51. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 51
    New Venture Strategy Focus proven petroleum systems with : Existing infrastructure Low finding & development costs Low well costs to complement PNG activity Establish strategic relationships with well placed National Oil Companies…
  52. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 52
    Middle East North Africa Focus Areas Egypt Egypt offers low cost, near term prodn opportunities Recently offered E.Ras Qattara block (Nov) Reviewing other opportunities Low drilling & exploration Libya cost with material equity…
  53. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 53
    Yemen Operational Activity 2003-04 Block 35 (OSH 46%) 7 defined leads Mid 03-04 Yemen activity Awarded Mar 03. Seismic 03 Block 35 Drilling planned 04 Field & 400kms seismic 03 Drilling 1-2 wells 2nd half 04 Block 15 3D seismic…
  54. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 54
    Block 15 (OSH 50%, Kufpec 45%, TYC 5%) Infrastructure & Lead location Block 15 Leads TOTAL 18 Leads 30,000bopd NEXEN 5 leads 100 200mmstbo 230,000bopd 4 leads 200mmbo Ras Ghashwah-1X Recovered 38 API oil Sarar-1X 200m+ gross…
  55. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 55
    Sharmah 1 (3054 bopd post acidization) Appraisal through technology Observed Fracture Pattern on Coastal Strip Integration of outcrop & seismic data for carbonate fracture network prediction Potential for 500mmboip 3D acquired to…
  56. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 56
    Block 15 play examples (recent 3D data examples) Sigma Prospect (130mmbo+ unrisked) Beta Prospect (150mmbo+ unrisked)
  57. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 57
    Block 35 1) High potential acreage adjacent to Nexens Masila/Shabwah producing fields (230,000 bopd) & Total (30,000bopd) 2) Oil Search operator (46%), Sipetrol (30%), Saba (19%), TYC (5%) Block 35 Block 35 Summary Last explored 1995…
  58. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 58
    Block 35 1) Seven structural Leads identified on poor quality seismic 2) Potential mean reserves 11-219mmbo B lock 40 B lock 35 D- 65mmbo E - 25mmbo C- 185mmbo B - 120mmbo F - 11mmbo B lock 32 B lock 14 A - 214mmbo
  59. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 59
    Exploration Outlook Low risk and material PNG drilling program will continue to end 2003, with focus on near-field opportunities: NW Moran, SE Moran Emphasis on near term commercialization Kapul 1 test in foreland follow-up to Kimu…
  60. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 60
    Gas Commercialisation Summary
  61. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 61
    Gas Commercialisation PNG Pipeline Project Alcan decision a disappointment Progress made in Queensland and Southern States Active marketing continues in these areas Project being worked to go / no go decision
  62. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 62
    Gas Commercialisation Various options being pursued Pipeline to Port Moresby - Uramu / Kimu development - Small but promising - Next step July 03 Compressed natural gas - Small-medium gas supply option - Technical and commercial…
  63. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 63
    Gas Commercialisation Hides Cycling Project Commercially attractive as stand alone or in combination with future pipeline project Supported by EM, with Juha as possible add on Core focus for JV activities
  64. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 64
    Gas Commercialisation Studies show - Capex US400m Utilising 1/3 of gas resources Robust NPV and resulting upside JV control, not subject to markets Ideal as potential first stage for possible future pipeline development Juha add…
  65. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 65
    Gas Commercialisation Hides Cycling Project Studies being reviewed by EM for presentation to JV 3Q 2003 Juha appraisal planned 2004 Value a significant proportion of present pipeline to Australia without the Capex
  66. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 66
    Hides Field Development - Gas Cycling Concept Raw gas production at maximum rates Large tubulars (7) to minimise pressure losses through wells and flowlines to plant 3 REINJECTION WELLS Minimum new wells Maximise liquid yield…
  67. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 67
    Optimum Case Selection Conducted screening analysis on a range of production development scenarios to determine optimum plant cycling system: Preferred size = 660 MMscfd Hides Liquids Stripping Unit Technical Cost /bbl 10% before…
  68. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 68
    Preferred Case - 660 MMscfd Condensate Production Profile 30 Mstb/d 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025…
  69. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 69
    Wrap Up
  70. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 70
    Financial Standing Oil Search financial position is very strong Enlarged production base following Orogen merger and strong oil price Record 2002 results: reported profit A87m Operating revenue for first quarter of A137m up 126% on…
  71. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 71
    Current Corporate Facility 215m 5 year facility maturing 31 Dec 2005 Facility is secured by access to pre-merger oil interests and cash flows only 175,000 100% Debt balance (m) 150,000 Reserve tail (%) 80% 125,000 100,000…
  72. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 72
    Reason for Pursuing a Refinancing Oil Searchs current capital structure is sub- optimal at gearing of 11% Securing additional committed debt facilities will Further utilise available borrowing capacity Better position Oil Search to…
  73. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 73
    Reason for Pursuing a Refinancing Preferred approach is a single replacement financing with a common group of Banks that Replaces the current term Facility & extends tenor Achieves flexibility in the incremental capacity committed,…
  74. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 74
    Refinancing Facility Structure Structure is not finalised but is currently envisaged as follows Facility amount 270-275m with two components Term loan component 145m Revolving credit component 125-130m Term loan component 5 year term…
  75. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 75
    Other Capital Initiatives Share Buyback Buyback announced on 5 March of up to 10% share capital (108.8m shares) Total shares bought back at 5 June 47.6m shares (43.8% of total buyback) Company will continue to buyback at current…
  76. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 76
    Hedging Update No oil price hedging put in place during calendar year Summary of Hedges expired in 2003 Price Expense WTI Put Options 1,250,000bbls US19.17 US1.57m TAPIS Swaps 250,000bbls US26.58 US0.88m US2.45m Summary of Hedges…
  77. MID YEAR PERFORMANCE UPDATE – Oil Search Limited – slide 77
    Wrap Up Fundamental Change in Oil Search over the past two years : Acquisitions and new developments delivering production growth Excellent financial performance, impacted by high commodity prices Strong Balance Sheet low gearing…

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