OIL SEARCH LIMITED Oil Search Roadshow September 2008 1
Summary Oil Search has delivered sustained top quartile growth over past five years (53% annualised return) Delivery of PNG LNG Project over next four years, together with progressive development of 2nd and 3rd tier gas, has…
Profile Established in Papua New Guinea (PNG) in 1929 Operates all of PNGs producing oil and gas fields. Current gross production 44,000 boepd, net share 23,000 boepd As operator, responsible for generating 22% of PNGs export…
Oil Search Location Map 4
Consistent strong performance over past 5 years Ranked No.5 TSR Performer amongst current ASX 100 for 5 year period to Dec 2007 (53% annualised return) 7.00 Share price (rebased to OSH) 6.00 Oil Search 5.00 4.00 Woodside WTI…
World Class Safety Performance Total Recordable Incidents (TRIs) 1998 2007 14 TRI / 1,000,000 Hours OSH OGP APPEA 12.7 12 10.6 10.7 9.8 Australian Companies 10 9.4 9.3 8.3 8.5 9.1 8 7.8 8.2 7.0 7.3 6.8 6.3 6 5.8 4.7…
Strategy 2007/08 Strategy Review defined initiatives to drive continued top quartile returns, by unlocking value within existing asset base Major strategy objectives Ensure Final Investment decision for PNG LNG Project Transforms…
PNG LNG Project AsiaPacs next LNG development 8
Primary Focus - PNG LNG PNG LNG Project represents PNGs cornerstone gas development, will more than double country's GDP Affects economy of PNG and its balance of trade situation profoundly (ACIL Tasman report, Feb 2008) Will…
Regional LNG markets are robust Regional market Pacific Basin LNG Supply and Demand to 2020 mmpta fundamentals remain robust 300 Steady expansion from LNG supply unlikely to keep up with demand with existing markets (Japan, high…
LNG Projects Under Construction and Proposed Large number of possible projects under consideration Not many possible projects will be able to cover the demand gap in 2013 Western Australia: strong cost pressures and competition…
LNG Pricing Strong pricing drivers: LNG (US/mmbtu) 20 Supply/demand fundamentals Pull from Europe Delays in other projects Environmental advantages Crude Oil Parity 15 Pricing and challenges with competing energy sources Recent…
PNG LNG: The Premier AsiaPac LNG Project World Class and World Scale LNG Project 2C resources of 9.3 tcf 6.3 mmtpa, 2 train LNG project Clean, liquids-rich gas No technology issues or concerns Well positioned for the Asia market…
PNG LNG Project Integrated development of Hides, Angore and Juha gas fields plus associated gas from the Kutubu, Agogo, Gobe and Moran oil fields Upstream infrastructure including production wells, processing facilities and…
PNG LNG Project Fields Angore Juha Main Hides Moran Agogo Kutubu Gobe Main 15
PNG LNG Project Milestones reached in 1H08 Commercial alignment achieved, with Joint Operating Agreement (JOA) executed in March 2008 amongst the Project Owners Initial funding interests pre-Government back-in agreed (OSH 34%)…
Project Status High quality project team assembled ExxonMobil personnel plus secondees from partners including OSH FEED activities proceeding on schedule. Target completion in 3Q09 (13 months): EOS (KBR/ WorleyParsons JV)…
Project Status Marketing: Negotiations commenced between Project and selected offtakers Project is strongly positioned, competitive advantages recognised by customers Targeting end 08/early 09 for HOAs, SPAs prior to FID Government…
PNG LNG Capex Estimates EM Project Execution First phase capex (2008 2014) Performance expected to be between US10 Actual vs. Funded (%) 11 bn (real mid-2007 s) 125 Cost Schedule Historically, ExxonMobil has delivered projects…
PNG LNG Financing Debt: Joint debt financing approach, led by a Finance Committee co- ordinated by ExxonMobil with key input from OSH. Soc Gen financial advisor Recent road shows elicited strong interest from Export Credit…
Economic Importance of PNG LNG Project 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 will increase 4 fold Up to 7,500 jobs in…
Impact on Oil Search For Oil Search, the Project will provide: Annual incremental net production of 20 mmboe Booking of 550 mmboe of Oil Searchs 2C gas resources providing positive impact on depreciation Past costs pay back by…
Benchmark of OSH Peers by AV/2P Reserves PNG LNG FID will allow booking of 550 mmboe of 2P reserves Agg. Value / 2P Reserves US/boe 60 54.7 International Australian 25 20.4 20.0 20 18.1 15.1 15.0 15.0 14.1 14.1 Median =…
Growth Opportunities 26
Gas Growth Opportunities PNG LNG Project sets the stage for additional gas-based growth opportunities, beyond PNG LNG Project debottlenecking (10 +15% above nameplate capacity) Additional LNG developments command the highest…
Gas Resource Base PNG discovered gas reserves by field (Source: Wood Mackenzie Path Finder) Gobe Area Kuru Iehi Bwata Koko SE Mananda Technical Technical Gas Gas 17,000 17,000 bcf bcf 2% 1% 1% 0.3% 0.1% 0.1% Pandora B Pasca…
Oil Search Vision for LNG Expansion 3.5 4.0 tcf additional gas tcf Forelands & volumes required to 25 Offshore underpin construction of Resources additional train Other 3C Exploration Highlands PNG LNG fields comprise JV Partner…
Location of Gas Resources: PNG LNG Project Fields Hides Field 2C 3C Juha Angore Hides 5.3 9.9 Moran Juha, Kutubu Angore, Agogo Kutubu, Gobe Main Moran, Gobe Main 4.0 5.1 Total 9.3 15.0 Sufficient 3C upside in existing…
Location of Gas Resources: Other field resources Pnyang Juha North Hides Field 2C 3C Juha Highlands: Angore Pnyang Moran Juha Kutubu Agogo North 2.3 4.7 Gobe Main Forelands SE Gobe and Kimu Offshore: Barikewa Kimu,…
Location of Gas Resources: Exploration Pnyang Juha North Hides 2009 2011 exploration Juha Huria programme will test over Angore 13 tcf mean resource Moran (gross), with average POS Cecilia Kutubu of 15% Agogo Testing…
Other Gas Growth Opportunities Other gas commercialisation opportunities can also offer attractive returns, diversification and timely delivery. These range from export oriented projects to domestic micro projects including:…
Other Gas Growth Opportunities Pnyang Juha North Stanley Ketu Elevala SE Gobe Douglas Kimu Elk Optionality in fields Barikewa such as Pnyang (Western Corridor) Uramu and Barikewa (Eastern Hub) to be feedstock for…
AGL Asset Sale Outcome a Win:Win for OSH shareholders AGL is selling its interest in PDL 2 (11.9%) and PDL 4 (66.7%) Asset AGL % interest OSH % interest Kutubu (PDL 2) 11.9% 60.0% Moran Unit (PDL 2) 5.2% 49.4% SE Mananda (PDL 2)…
AGL Asset Sale: OSH Core Asset Value Implications Implied OSH Core Asset See-Through Core Assets Value (USm) 8,500 OSH AGL Comments Excludes Other Gas, Producing 53.8 10.4 As at 30/6/08. 8,000 Exploration, Cash & Oil mmbbl mmbbl…
PNG Oil Operations 37
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 Oil Fields Moran SE Mananda Kutubu Usano Gobe Main SE Gobe 39
Production Summary Net Production (mmboe) 6.0 MENA Hides GTE 5.0 SE Mananda SE Gobe 4.0 Gobe Main Moran Kutubu 3.0 2.0 1.0 0 1H 06 2H 06 1H 07 2H 07 1H 08 40
PNG Drilling Rig Strategy Two state of the art new rigs, owned by Oil Search: Rig 103 became operational late 2007. Had a number of commissioning and teething problems, now resolved (significant performance improvement on last…
Exploration 43
PNG Exploration Portfolio optimisation Data room 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 proximity to…
PNG Exploration Cecilia Wasuma Iwa Cobra 45
Cobra 1A PDL4 PPL219 PPL 190 WI % Gobe Oil Search 62.6 Main Murray Petroleum 26.5 SE Gobe Wasuma Cue PNG Ltd 10.9 COBRA Seismically defined footwall anticline (Sub-thrust Play) adjacent to SE Gobe oil field PDL3 PDL4…
Wasuma PDL4 PPL219 PPL 219 WI % Gobe Main WASUMA Oil Search 91.25 SE Merlin Petroleum 8.75 Gobe Wasuma Near field exploration opportunity adjacent to the SE Gobe oil field PDL3 PDL4 Iagifu sandstone primary objective - proven…
Iwa PDL6 PDL5 PPL233 PDL 2 WI% Moran Oil Search 60.05 Paua ExxonMobil 14.52 SE Merlin Petroleum 6.78 Mananda PRK 6.75 Agogo PPL219 IWA AGL (PNG) 11.90 Lake Kutubu PDL2 Near field exploration opportunity located Kutubu along…
MENA Exploration Strategy Sale of some of MENA assets to Kuwait Energy recently completed for US200 million & WC Re-focus on MENA assets that have potential to make a material contribution Retained assets provide significant upside…
MENA Exploration Le Kef Tajerouine Bina Bawi Shakal Area 18 Dubai Office Sanaa Office Block 7 Block 3 50
Shakal Kurdistan, Iraq Shakal PSC WI% Shakal compartment Oil Search 15 Shakal Prod. Ltd (op) 36 Petoil 9 Govt (unassigned) 20 Govt. 20 Pulkhana Field Near Top Euphrates depth map 10km Shakal 1 will target a large…
Area 18 Offshore Libya Area 18 WI % Oil Search 30 Petrobras (Operator) 70 Area 18 located in under-explored Pelagian Basin, offshore Libya. Pelagian Basin contains 7 bn boe reserves Area 18 is located on trend to productive…
Financial Performance Net Profit EBITDAX 800 Revenue USm Core 700 Full Year 600 Half Year 500 466.7 410.7 400 300 200 133.3 100 0 2005 2006 2007 1H 08 55
Treasury Update US600 million in cash following receipt of MENA asset sale funds. No debt Refinancing of 5 year US oil facility in final stages: Very positive response from bank market with competitive offers for more than twice…
FY08 Capital Outlook Update Exploration expenditure for full year 2008 expected to be US150 - 160 million, inclusive of acquisition of Shakal interest in Kurdistan Gas commercialisation and new business expenditure of US80…
Outlook 58
Gas set to dominate portfolio over time Value NPV Over Time (Unrisked) Substantial unrealised value exists within Oil Searchs existing asset portfolio (particularly PNG gas) Fourth Train Current share price discounts assessed PNG…
Outlook Production outlook for 2008 of 8.5 9.0 mmboe Cash flows from operations continue to strengthen already healthy balance sheet. Liquidity of US1 bn provides excellent financing flexibility for PNG LNG as well as an active…
Likely Catalysts in 2008-2009 3Q 2008 AGL Asset sale Spud Shakal well in Kurdistan 4Q 2008 PNG LNG Offtake HOAs late 08/ early 09 Spud Caliph well in Libya 1Q 2009 Benefits Sharing Agreement 2Q 2009 Decision to commence early…
Summary PNG LNG Project and commercialising remaining gas will drive Company value. Rising NPV over time, as cash flows get closer and Project de-risks Core PNG oil business remains robust, with stable production and cost outlook,…
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