O I L S E A R C H L I M I T E D Investor Briefing March 2004
Agenda Profile of Oil Search Performance in 2003 Value Drivers for the future Maximising value of existing oil operations Exploration Gas Commercialisation Summary
Oil Search - Profile Third largest E & P company in Australia Market capitalisation of US900 million Regionally significant operator, local specialist, with extensive contact base Operations largely located in PNG Operates all of PNGs…
Recent corporate events Took over from ChevronTexaco as operator of all PNGs oil fields in October 2003. As a lower cost operator, allows OSH to maximise value of assets and control pace of activity. Acquired ChevronTexacos PNG assets…
Strategic Focus Top quartile ASX performer Optimise operations in PNG assets Improve production Reduce operating costs, improve efficiency Continue investment / Development / Exploration Grow sustainable returns Exploration…
Permit Portfolio PNG 9 Exploration licences (5 as Operator) 5 Production licences (2 as Operator & 2 Units) 8 retention licences (2 as Operator) 3 Pipeline licences Yemen 3 Exploration licences (2 as Operator) Egypt 1…
PNG Acreage
Yemen Acreage
A Core Value of Oil Search Safety, People and the Environment First An uncompromised focus on World Class HSES performance will be the foundation for growth in all areas of business The company recorded outstanding safety…
Performance in 2003 - Highlights Core Operating Profit (After Tax) of US89.6m (A137.3m), 62% higher than 2002 and a Record for the Company Profit After Tax (after exploration write-offs and capital profit) was US85.7 million (A131.3…
2003 P & L USM 2002 2003 Revenue 237.0 51% 358.2 Field Costs 57.1 90.3 Other Costs 18.8 27.3 Exploration w/o 14.0 12.5 EBITDA 147.1 55% 228.1 Net Amortisation 56.3 64.3 8.3 A 11.7 A EBIT 90.7 81% 163.8 (4.5 US ) (7.7 US )…
Core Profit After Tax Strong profit growth over last 3 years 90 USm 89.6 80 70 60 50 55.2 40 30 20 10 17.6 0 2001 2002 2003
Hedging Summary Oil Hedging USM 2003 Cost Put Options 1.89 Swaps 5.61 7.50 2004 480,000 WTI Swaps at US23.85/bbl January June 2004 80,000 bbls/mth Exchange Exposure US Dollar risked company, natural hedges including US200m debt…
2003 Production Summary Total Production 9.400 mmbbls +23% (25,754 BOPD) Gas Production 5.3BCF +29% (14.6 mmscfd) Total BOE 10.29 mmBOE +24% (28,194 BOEPD) Gross PNG Oil Prodn 47,809 BOPD +4% Gold production 161,475 ounces +58%
Oil production field-by- field Oil production net 2001 2002 2003 to OSH (mmbbl) Kutubu 2.61 3.54 4.21 Gobe Main 0.72 0.99 1.11 SE Gobe 0.88 1.36 1.50 Moran 2.02 1.72 2.58 Total 6.23 7.61 9.40 Main drivers for production…
04 04 n- n- Ja Ja 03 03 p- p- Se Se 3 3 -0 -0 ay ay Production Summary M M 03 03 n- n- Ja Ja 02 02 Gobe Main p- p- Se Se 2 2 -0 -0 ay ay M M Moran 02 02 n- n- (gross bopd) Ja Ja 01 01 p- p- Se…
Value Drivers
Maximising value from existing operations Following taking over operatorship of all PNGs oil field from ChevronTexaco in October 2003, OSH established a Value Optimisation Team to identify potential cost reduction opportunities and…
Drilling cost savings can be achieved SE Moran 1X Days v Depth SE Moran was the first 0 10 20 30 40 Days 50 60 70 80 90 well to be drilled by OSH 0 Move rig Tech Limit following the change in Actual AFE Depth operatorship.…
Production Initiatives in 2004 Kutubu Continue optimising zone changes and swing well management Well intervention - recent coiled tubing success, conventional workover evaluations ongoing Agogo production optimisation Sidetrack…
NW Moran Extended Production Test NW Moran is in PPL-219 just outside the PDL-5 boundary Intention is to commence development with an EPT appraisal approach Well should be on production 728000 730000 732000 734000 736000 738000…
SE Mananda Field Development Project SE Mananda is wholly located in PDL-2 and was discovered in 1991 not material to previous Operator Development challenge is remoteness combined with difficult topography Initial production rate of…
Production outlook Overall: Production in 2004 to increase from 9.4 mmbbl in 2003 to at least 10.5 million barrels (11 mmbbl of oil equivalent cf 10.3mmboe), reflecting impact of a full year of CT, continued mitigation of Kutubu…
Production Forecast (Net 2004-2005) 40,000 35,000 30,000 Oil Production (bpd) 25,000 20,000 15,000 10,000 5,000 - M Se N M Se N Ja M Ju Ja M Ju Ja ov ov ay…
Exploration A Platform for Growth
2004 Drilling and Exploration Activity Core Objective: Grow the Reserve base by 10% after production each year Risk analysis indicates participation in at least 6 exploration wells per year required to achieve significant growth PNG…
2004 Exploration Activity PNG 2004 PNG activity will include: Re-tender for Rig 226, following benchmarking work that has shown that changes to rigs and contracting approach will deliver substantial cost benefits Drill Kapul-1 in…
2004 Exploration Activity Middle East - North Africa In 2004 seismic and exploration drilling planned in Yemen and Egypt with New Venture activities continuing The company will participate in 2 Firm wells in Yemen Nabrajah-1 in Block…
Implications of Nabrajah-1 Results 1. The success at Nabrajah-1 has proven the presence of a prolific source kitchen in the southern portion of Block 43 which de-risks a number of additional follow-up prospects in the area 2.…
Nabrajah-1 & Lead C4 Depth Structure Prospect C4 Nabrajah
Summary of 2004 Operations Probable 2004-2005 Activities Firm 3 well exploration 2004 2005 program (PNG & 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Yemen), Potential for addl 3 expln wells Moran Moran 10 10 Wildcat exploration well Near field…
Gas Commercialisation A significant Upside Value
Gas Commercialisation Highlands Gas Project Oil Search has over 4 tcf of largely undeveloped 2 P booked gas resources In conjunction with JV partners, have been pursuing gas export project to Australia for a number of years Have…
The Markets are There A rolling development window does not allow major customer aggregation Greater development certainty is required to capture several market opportunities 2005 2006 2007 2008 2009 2010 2011 2012 2013 Townsville…
What has changed OSH has greater influence following CT acquisition Finalised an integrated oil and gas development model that maximises value for both products and infrastructure, which is a natural extension of OSH original Hides…
The new Highlands Gas Project Hybrid Gas and Oil Development Concept: Gas produced at maximum rates from Hides (650 mmscf/d) Sent by pipeline to Kutubu where primary gas and liquids separation takes place Gas put in pipeline to…
Highlands Gas Project Total 650mmscfd Gas Production HIDES facilities production Full Condensate Recovery Multiphase 600mmscfd pipeline KUTUBU CPF Oil production & 165mmscfd gas AGOGO CPF Additional condensate oil up to…
The new Highlands Gas Project Hybrid Gas and Oil Development - Advantages: Provides accelerated condensate light oil recovery from original development plan, independent of market Optimises liquid recoveries Optimises oil facility…
Highlands Gas Project Market Capture Projections 250 Annual Contract Quantity (Petajoules per year) Likely market projection 200 P90 (pessimistic) market projection 150 100 50 0 2008 2013 2018 2023 Year
Highlands Gas Project the way forward Based on rigorous risk reward analysis Oil Search has decided to commit to FEED activities as soon as practical Oil Search = 54% FEED Costs (Total) US60m US70m Discussions taking place with all…
Summary Excellent profit results in 2003, with significant progress made on key strategic initiatives Focus for 2004 Incident Free Operations Deliver Top Quartile TSR Performance Fundamentals are strong Strong Balance Sheet and…
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