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August 2015 Investor Presentation – Oil Search Limited

Oil Search Limited · Aug 25, 2015 · 48 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. August 2015 Investor Presentation – Oil Search Limited – slide 1
    Oil Search Limited ARBN 055 079 868 August 2015 2015 Half Year Results ASX: OSH | POMSoX: OSH US | ADR: OISHY www.oilsearch.com
  2. August 2015 Investor Presentation – Oil Search Limited – slide 2
    2015 Half Year Results Agenda 3 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  3. August 2015 Investor Presentation – Oil Search Limited – slide 3
    Safety remains OSH?s top priority 2015 Half Year Results ? 25 August 2015 4 4.7 2.4 2.3 2.1 2.0 1.2 2.0 1.9 2.6 2.5 2.0 1.9 3.9 3.1 2.9 2.7 2.1 1.8 1.7 1.8 1.7 1.6 1.5 0.0 1.0 2.0 3.0 4.0 5.0 2004 2005 2006…
  4. August 2015 Investor Presentation – Oil Search Limited – slide 4
    Recent TSR performance reflects global oil price weakness 5 5.5 24.3 29.6 71.3 -30.9 -20.6 -29.5 70.7 -24.6 11.9 34.8 169.7 -60 -10 40 90 140 190 % TSR Median TSR ASX200 Median TSR ASX200 Energy OSH TSR 1 YEAR 3…
  5. August 2015 Investor Presentation – Oil Search Limited – slide 5
    2015 Half Year Highlights ? Total production of 14.3 mmboe ? nearly triple 1H14 and record half year for OSH ? Underpinned by excellent production performance from PNG LNG Project and good contribution from operated PNG fields ? top…
  6. August 2015 Investor Presentation – Oil Search Limited – slide 6
    2015 Half Year Highlights contd. 1H15 1H14 Net profit after tax (US$m) 227.5 152.5 Operating cash flow (US$m) 516.8 255.4 Earnings per share (US cents) 14.9 10.6 Interim dividend (US cents) 6.0 2.0 Net debt (US$m) 3,443 3,766…
  7. August 2015 Investor Presentation – Oil Search Limited – slide 7
    2015 Half Year Results Agenda 8 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  8. August 2015 Investor Presentation – Oil Search Limited – slide 8
    2015 Half Year Financial Performance 9 ? Revenue up 69%, driven by full period of LNG and condensate sales from PNG LNG Project, partially offset by lower realised prices ? Higher costs of production and DD&A mainly due to full…
  9. August 2015 Investor Presentation – Oil Search Limited – slide 9
    Healthy cash operating margin of 75% 80 72 72 78 75 117 114 111 98 57 0 20 40 60 80 100 120 70 75 80 85 90 95 100 2011 2012 2013 2014 HY2015 US$/boe % EBITDAX Margin EBITDAX Margin Oil & Condensate Price 10…
  10. August 2015 Investor Presentation – Oil Search Limited – slide 10
    Unit production costs reduced to US$8.90/boe 11 US$m 1H15 1H14 Production costs: - PNG LNG - PNG Oil and Gas 73.6 53.9 19.0 64.1 127.5 83.1 US$/boe 8.90 15.49 Royalties and levies 7.6 7.7 Gas purchases 11.3 19.3 Inventory…
  11. August 2015 Investor Presentation – Oil Search Limited – slide 11
    102% increase in operating cash flows ? Strong operating cash flows reflect full period of earnings from PNG LNG: ? Operating cash flow of US$35.76/boe ? Investment spend driven by Taza drilling in Kurdistan, two wells in PRL 15 and…
  12. August 2015 Investor Presentation – Oil Search Limited – slide 12
    Balance sheet solid, liquidity US$1.6bn 1,047 488 210 960 843 0 300 600 900 1,200 2011 2012 2013 2014 1H2015 Cash (US$m) 13 ? Strong liquidity position at 30 June 2015 of US$1.59 bn: ? US$843m of cash (incl. US$182m of PNG…
  13. August 2015 Investor Presentation – Oil Search Limited – slide 13
    2015 investment spend down ~65% on 2014 (down ~30% excl PRL 15 purchase) 2015 Half Year Results ? 25 August 2015 14 2015 Capital Cost Guidance (US$610 ? 690m) ? Exploration & Evaluation: US$310 ? 340m ? Development: US$170 ? 200m…
  14. August 2015 Investor Presentation – Oil Search Limited – slide 14
    2015 Guidance Summary Production 2015 Guidance Oil Search operated (PNG Oil and Gas) 6.3 ? 6.9 mmboe PNG LNG Project LNG 92 ? 97 bcf Liquids 3.0 ? 3.2 mmbbl Total PNG LNG Project1 21 ? 22 mmboe Total Production1 27 ? 29 mmboe…
  15. August 2015 Investor Presentation – Oil Search Limited – slide 15
    2015 Half Year Results Agenda 16 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  16. August 2015 Investor Presentation – Oil Search Limited – slide 16
    Highest half year production in OSH?s history 17 ? Total production for 1H15 of 14.3 mmboe, nearly triple 1H14 level: ? PNG LNG Project contributed 10.9 mmboe (47.7 bcf LNG plus 1.6 mmboe liquids) ? Oil fields and Hides GTE…
  17. August 2015 Investor Presentation – Oil Search Limited – slide 17
    PNG LNG Project ? producing consistently above nameplate capacity ? 52 LNG cargoes exported in 1H15, 119 cargoes loaded to date since Project start-up in 2014 ? Annualised production in 1H15 of ~7.1 MTPA, compared to nameplate…
  18. August 2015 Investor Presentation – Oil Search Limited – slide 18
    Solid demand for PNG LNG spot cargoes 2015 Half Year Results ? 25 August 2015 19 5 0 10 15 20 25 30 2Q14 3Q14 4Q14 1Q15 2Q15 LNG cargoes sold since PNG LNG start-up Long-term contract Spot ? Full contractual volumes being…
  19. August 2015 Investor Presentation – Oil Search Limited – slide 19
    Continued strong performance from operated oil fields ? 1H15 oil and Hides GTE production of 3.38 mmboe ? Gas supply from SE Gobe field to PNG LNG Project commenced in May. Gobe Processing Facility now handling >15,000 boepd…
  20. August 2015 Investor Presentation – Oil Search Limited – slide 20
    5 0 10 15 20 25 30 2011 2012 2013 2014 2015F Net Production (mmboe) PNG LNG (T1 + T2) Hides GTE SE Mananda Gobe Moran Kutubu 19.27 27 - 29 21 - 22 6.3 ? 6.9 2015 Production Outlook 21 1 LNG sales products at outlet of…
  21. August 2015 Investor Presentation – Oil Search Limited – slide 21
    2015 Half Year Results Agenda 22 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  22. August 2015 Investor Presentation – Oil Search Limited – slide 22
    Next LNG developments in PNG: sourced from Gulf Hub and NW Hub ? OSH holds material positions in NW Hub (P?nyang field) and Gulf Hub (Elk-Antelope field) which will supply next phase of LNG development ? Both PNG LNG expansion and…
  23. August 2015 Investor Presentation – Oil Search Limited – slide 23
    NW Hub: PNG LNG expansion and domesti ? MoU signed by of PNG LNG an January 2015 ? MoU sets sched underpin: ? PNG LNG Proj and potential th ? Delivery of dom ? PDL application ? Commencemen interruptible elec Power in Port M…
  24. August 2015 Investor Presentation – Oil Search Limited – slide 24
    P?nyang South 2 appraisal well to further constrain 1C and 2C resource 2015 Half Year Results ? 25 August 2015 25 ? Preparatory work underway for P?nyang South 2 appraisal well: ? Location in SE of structure agreed by PRL 3 JV ?…
  25. August 2015 Investor Presentation – Oil Search Limited – slide 25
    Gulf Hub: Papua LNG Project facilities site locations agreed, operator transition to Total SA completed 26 ? Potential second world-scale LNG development in PNG ? Significant progress achieved in 1H15: ? Locations of key…
  26. August 2015 Investor Presentation – Oil Search Limited – slide 26
    Elk-Antelope appraisal programme to be completed 2H15, certification 2Q16 27 ? Results of appraisal programme to date have been at upper end of OSH?s expectations: ? Antelope 4 extended good quality reservoir to south ? Antelope 5…
  27. August 2015 Investor Presentation – Oil Search Limited – slide 27
    Elk-Antelope appraisal programme to be completed 2H15, certification 2Q16 27 ? Results of appraisal programme to date have been at upper end of OSH?s expectations: ? Antelope 4 extended good quality reservoir to south ? Antelope 5…
  28. August 2015 Investor Presentation – Oil Search Limited – slide 28
    0 20 40 60 80 100 120 2017 2018 2019 2020 MTPA Window for uncontracted LNG demand expec re-emerge early next decade 2015 Half Year Results ? 25 August 2015 - 100 200 300 400 500 2010 2012 2014 2016 2018 2020 2022…
  29. August 2015 Investor Presentation – Oil Search Limited – slide 29
    5 0 10 15 20 US$/mmBtu FOB Shipping LNG projects from PNG competitive versus Australian and global alternatives (WoodMac) 29 Source: Wood Mackenzie, full-life breakeven, 12% discount rate, Shipping costs are to Japan ? PNG LNG…
  30. August 2015 Investor Presentation – Oil Search Limited – slide 30
    Gas development summary ? Successful delivery of PNG LNG has put PNG on map as reliable producer of high heating value gas, that provides buyers with geographical diversification ? Potential PNG LNG Project expansion and Papua LNG…
  31. August 2015 Investor Presentation – Oil Search Limited – slide 31
    2015 Half Year Results Agenda 31 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  32. August 2015 Investor Presentation – Oil Search Limited – slide 32
    Oil Search exploration: Revitalising acreage and drilling programmes ? OSH analysis indicates Yet-to-Find potential of >5 bnboe in PNG ? Focus on building PNG acreage to support: ? LNG expansion and potential additional trains ?…
  33. August 2015 Investor Presentation – Oil Search Limited – slide 33
    2H15/16 PNG exploration/appraisal programme targeting ~6-7 tcf gas 1, 2 2015 Half Year Results ? 25 August 2015 33 PRL 15 Antelope 4 ST1 Antelope 6* Antelope South* PRL 3 P?nyang reserves evaluation P?nyang South 2* PPL 402…
  34. August 2015 Investor Presentation – Oil Search Limited – slide 34
    ? Three exploration wells planned in 2H15/16, targeting ~4-5 tcf mean prospective resources* ? Highly prospective for large gas in proven Toro sandstone play: ? Muruk 1 ? PPL 402 (OSH 50%). On trend with Hides. Operated by OSH, to…
  35. August 2015 Investor Presentation – Oil Search Limited – slide 35
    35 ? 2016 wells targeting ~2 tcf mean prospective resources* ? Gulf area, on trend with Elk-Antelope field, highly prospective and under-explored Miocene play: ? Antelope South exploration well ? PRL 15 (OSH 22.8%). Adjacent to and…
  36. August 2015 Investor Presentation – Oil Search Limited – slide 36
    2015 Half Year Results ? 25 August 2015 36 ? 2016 programme includes appraisal of existing dicoveries targeting increase in 2C resource plus exploration targeting new fault blocks ? Remapping has upgraded resource potential ? Kimu…
  37. August 2015 Investor Presentation – Oil Search Limited – slide 37
    Taza 1, 2 & 3 unfractured region Taza 4 fault fracture zone Taza 3D Seismic Cube Main bounding fault Taza 3 Taza 4 Taza 1 Taza 2 Jeribe: Amplitude Measured appraisal of Taza in Kurdistan 37 ? Three wells and 680km2 3D seismic…
  38. August 2015 Investor Presentation – Oil Search Limited – slide 38
    2H15/16 Exploration an 2015 Half Year Results ? 25 August 2015 PNG Highlands Activity PRL 3 (OSH - 38.5%) PPL 269 (OSH - 10%) PPL 402 (OSH - 50%) PNG Gulf Activity PRL 15 (OSH - 22.8%) Antelope 4 ST1 An PPL 339 (OSH - 70%) PRL 8…
  39. August 2015 Investor Presentation – Oil Search Limited – slide 39
    Exploration Summary ? Multi-year, multi-well programme to drive long-term growth in PNG, in existing licences plus material licence acquisition programme: ? Supporting long-term gas reserves ? New conventional plays ? Areas with…
  40. August 2015 Investor Presentation – Oil Search Limited – slide 40
    2015 Half Year Results Agenda 40 2015 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Ian Munro Exploration/Appraisal Keiran Wulff Outlook & Summary Peter Botten…
  41. August 2015 Investor Presentation – Oil Search Limited – slide 41
    Business environment outlook ? Oil market appears oversupplied into 2016, inventories remain at record levels ? Falling oil prices impacting LNG prices and markets ? ?Lower for longer? pervasive in management thinking ? Global…
  42. August 2015 Investor Presentation – Oil Search Limited – slide 42
    Background to Business Optimisation Programme ? 2014 Strategic Review resulted in new vision and series of priority objectives ? In light of dramatic fall in oil prices in 2H14 and OSH view that oil prices will remain ?lower for…
  43. August 2015 Investor Presentation – Oil Search Limited – slide 43
    43 ? Refocus entire organisation on core strategic priorities and value creation ? Ensure we make best use of resources, including our people, to deliver priority projects ? Take advantage of current business climate to reset cost…
  44. August 2015 Investor Presentation – Oil Search Limited – slide 44
    Initiatives to be rolled out over 2H15/2016 44 ? Improve productivity of operated oil business: ? Pursue production enhancement opportunities through integrated planning and capital allocation discipline ? Formation of drilling…
  45. August 2015 Investor Presentation – Oil Search Limited – slide 45
    Business Optimisation Programme ? summary of expected outcomes 2015 Half Year Results ? 25 August 2015 45 *Based on OSH-controllable costs only and excludes any cost reduction initiatives delivered by PNG LNG Project operator ?…
  46. August 2015 Investor Presentation – Oil Search Limited – slide 46
    Key milestones* PNG LNG Project/Expansion ? Continued operation above nameplate capacity of 6.9 MTPA ? Award of PDL for P?nyang field and integration into PNG LNG Foundation Project Papua LNG Project ? Complete drilling of…
  47. August 2015 Investor Presentation – Oil Search Limited – slide 47
    Summary ? Strong production, with excellent performance from PNG LNG Project and steady output from operated PNG fields: ? PNG LNG performing above nameplate capacity with further upside ? potential to create material additional value…
  48. August 2015 Investor Presentation – Oil Search Limited – slide 48
    Appendix: Key metrics 202.5 175.8 205.7 353.2 227.5 0 100 200 300 400 2011 2012 2013 2014 1H2015 Net Profit After Tax (US$m) 4 4 4 14 6 5 0 10 15 2011 2012 2013 2014 1H2015 DPS (US cents) 6.7 6.4 6.7 19.3 14.3 5 0…

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