Oil Search Investor Field Trip | 23 - 27 November 2015 4 Field Trip Route Hides Gobe Nogoli Day 1 ? Port Moresby Kutubu CPF Gulf Central Morobe Northern Eastern Highlands Chimbu Madang Western NCD Southern Highlands…
Oil Search ? the National Champion ? Four-fold increase in production achieved over past two years: ? Highly profitable production, with low cost base ? Low ongoing maintenance capex requirements ? OSH has unique and specialised…
PNG LNG Project ? a major success story Oil Search Investor Field Trip | 23 - 27 November 2015 7 ? Annualised production in 3Q15 of ~7.4 MTPA (1H15 of ~7.1 MTPA), vs nameplate capacity of 6.9 MTPA: ? ExxonMobil stated increase in…
? Conventional LNG project ? Substantial proven reserves base ? High heating value, suitable for Asian reticulation networks ? High liquids, enhancing economics ? Onshore location with existing oil infrastructure base ? Located close…
Solid demand for PNG LNG spot cargoes Oil Search Investor Field Trip | 23 - 27 November 2015 9 5 0 10 15 20 25 30 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 LNG cargoes sold since PNG LNG start-up Long-term contract Short-term ? Project…
Proven success in optimising production from mature oil fields Oil Search Investor Field Trip | 23 - 27 November 2015 10 ? Since taking over oil field operatorship in 2003, Oil Search has: ? Drilled 43 development wells with ~85%…
Material opportunities still exist to add value, even in mature oil fields ? With mature reservoirs and US$50/bbl oil, traditional opportunities are more challenging. Investment discipline applied to new projects ? Operating…
5 0 10 15 20 25 30 2011 2012 2013 2014 2015F 2016F Net Production (mmboe) PNG LNG (T1 + T2) Hides GTE SE Mananda Gobe Moran Kutubu 19.27 27 - 29 21 - 22 6.3 ? 6.9 Production Outlook 1 LNG sales products at outlet of…
PNG 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 ? OSH in privileged position, with unprecedented…
PNG LNG Project expansion underway ? PNG LNG expansion identified by ExxonMobil as ?very well positioned to compete? globally* ? Supported by successful delivery and performance of foundation Project, competitive cost structure,…
P?nyang (PRL 3) ? key resource for expansion ? PNG Government expected to commence landowner Development Forums shortly ? Award of PDL for P?nyang imminent (expected Dec 2015), with immediate integration of P?nyang into PNG LNG…
17 Muruk 1 (PPL 402): High potential NW Highlands exploration Oil Search Investor Field Trip | 23 - 27 November 2015 ? Muruk 1 targeting multi-tcf exploration prospect on-trend with Hides ? Located north-east of Juha and Juha North…
Papua LNG: high-returning LNG development opportunity ? Significant progress on Papua LNG achieved in 2015: ? Locations of key infrastructure sites agreed by PRL 15 JV and supported by Government ? Commencement of financing ?…
Elk-Antelope appraisal results encouraging ? Results of appraisal programme to date have increased OSH?s resource expectations: ? Antelope 4 and 5 extended good quality reservoir to south and west ? Antelope 5 testing confirmed…
Elk-Antelope ? carbonate reef Oil Search Investor Field Trip | 23 - 27 November 2015 20 Glover?s Reef Atoll, Belize Potential analogue: Coral reef located on tilted fault block off coast of Belize. Scale: Atoll is 10km wide and 20…
OSH certification to complete July 2016 ? OSH certification under SPA with Pac LNG commences mid-March 2016, expected to complete mid-July 2016 ? Two expert independent certifiers engaged ? Gaffney Cline and NSAI ? Elk-Antelope…
PNG value drivers ? PNG can learn from other global LNG developments and expansions ? Adjacent locations of PNG LNG and Papua LNG plant sites provides real potential for cost and operational synergies, including full integration ?…
LNG industry: Undergoing fundamental change ? Markets and LNG pricing: ? Current oversupply through commissioning of major projects ? Gas prices globally have normalised, now trading in US$7 - 8/mmBtu range ? More globally connected…
Medium to long-term LNG demand forecasts still robust ? Global contractual supply expected to be >30 MTPA short of demand in 2022, >120 MTPA short by 2025, as demand increases, old contracts roll off: ? Few LT contracts have been…
5 0 10 15 20 US$/mmBtu FOB Shipping LNG projects from PNG competitive versus Australian and global alternatives (WoodMac) Source: Wood Mackenzie, full-life breakeven, 12% discount rate, Shipping costs are to Japan ? PNG LNG well…
Revitalising acreage and drilling programmes ? OSH analysis indicates Yet-to-Find potential of >5 bnboe in PNG ? Focus on building PNG acreage to support >10 year growth platform: ? LNG expansion and potential additional trains ?…
Active PNG exploration/appraisal programme proposed PRL 15 Antelope 4 ST1 Antelope 6 Further appraisal PRL 3 P?nyang reserves evaluation P?nyang South 2* PPL 402 Muruk 1* PPL 269 Strickland 1* Well 2* PPL 339 Kalangar 1*…
29 ? Three exploration wells planned in 2016, targeting ~3-4 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…
30 ? 2016 wells targeting ~1 tcf mean prospective resources* ? Gulf area, on trend with Elk-Antelope field, highly prospective and under explored Miocene play: ? Antelope appraisal ongoing ? Kalangar 1 ? PPL 339 (OSH 70%),…
Oil Search Investor Field Trip | 23 - 27 November 2015 31 ? 2016 programme includes appraisal of existing discoveries, targeting increase in 2C resource, plus exploration targeting new fault blocks ? Remapping has upgraded resource…
Measured appraisal of Taza in Kurdistan 32 ? Major work on licence complete: ? Three wells and 680km2 3D seismic survey ? Varying drilling results with clear compartmentalisation shown on 3D seismic ? Excellent community and…
Exploration and appraisal programme Oil Search Investor Field Trip | 23 - 27 November 2015 33 PNG Highlands Activity PRL 3 (OSH - 38.5%) P\'nyang South 2 & other possible appraisal activities* PPL 269 (OSH - 10%) Strickland 1 PPL 269…
Exploration summary ? Significant exploration upside remains in PNG, with only half of PNG?s estimated full potential of 10 bnboe discovered so far ? Aim to support PNG gas growth by drilling high impact wells through 2015-2016 and…
Business environment outlook ? Wide range of oil price forecasts ? Oil market appears oversupplied into 2016, inventories remain at record levels ? ?Lower for longer? pervasive in management thinking ? Global industry reaction:…
Industry reaction to changed price dynamics ? Clear focus on capital efficiency and prioritisation: ? Dividends ? Debt management ? Investment prioritisation ? Cost reduction and efficiency ? Significant downsizing led by…
OSH response: Performance and innovation ? sustainable efficiencies and cost reduction ? 2Q15: initiated business optimisation programme: ? Company-wide review of strategic priorities in low oil price environment ? Identified…
Initiative Objective Actions Organisation efficiency and effectiveness Right sized Performance focus Optimal planning Clear priorities Reduce Australia/MENA offices, reduce footprints in field operations, re-set organisation and…
Strong Executive Leadership Team Oil Search Investor Field Trip | 23 - 27 November 2015 40 Peter Botten, Managing Director ? Appointed MD in 1994 ? World-wide expertise in oil and gas Gerea Aopi, EGM ? Stakeholder Engagement ?…
OSH in strong financial position 1,047 488 210 960 867 0 300 600 900 1,200 2011 2012 2013 2014 3Q2015 ? Strong liquidity position of US$1.62 bn*: Cash (US$m) ? US$867m of cash ? US$750m of undrawn revolving facilities ?…
Investment Outlook Oil Search Investor Field Trip | 23 - 27 November 2015 42 ? 2015 capital spend forecast US$600 ? 670m: ? Exploration & Eval: US$300 ? 320m ? Development: US$170 ? 200m ? Production: US$110 ? 125m ? Other PP&E:…
2015 Guidance Unchanged Production 2015 Guidance 2016 Direction 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…
Cash Flow Priorities Available Cashflows After scheduled debt servicing, sustaining capital expenditure and commitments Dividends Payment in accordance with proportional dividend policy (35-50% of core NPAT) Growth Capital…
Contributing to long-term sustainability in PNG ? OSH plays unique role in PNG: ? Based on 86 years of operating in-country, unprecedented relationships ? Activities help reduce risks inherent in operating in a developing country as…
Ramu Power Project (RPP) ? Major, multi-phase power delivery project aimed at connecting up to 1m people to larger and improved electricity grid by 2030 ? Partnership between PNG Government, PNG Power Ltd and Oil Search ? In April,…
PNG Biomass Project ? large scale impact with landowners ? Joint venture between Oil Search and Aligned Energy ? Involves establishment of 30MW net (15MW + 15 MW) biomass power station in Markham Valley, Morobe Province ? 18,000 ha…
Strategic sustainable development and social responsibility Oil Search Investor Field Trip | 23 - 27 November 2015 49 ? OSH has made significant contributions to health outcomes for staff and communities: ? Major provider of…
OSH rejects Woodside?s non-binding conditional indicative proposal ? On 8 September 2015, OSH announced receipt of non-binding, conditional indicative, scrip only proposal from Woodside: ? One WPL share for every four OSH shares ?…
Relative TSR performance to 20 Nov 2015 Oil Search Investor Field Trip | 23 - 27 November 2015 51 Total Shareholder Return (%) 4 42 76 -28 -34 14 -49 -50 34 -57 -57 -38 -15 -6 34 4 31 195 -100 -50 0 50 100 150…
$32.00 Oil Search Investor Field Trip | 23 - 27 November 2015 52 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 19 Nov 14 19 Jan 15 19 Mar 15 19 May 15 19 Jul 15 19 Sep 15 19 Nov 15 OSH share price $8.15 $30.50 WPL vs…
Summary ? Strong production, with excellent performance from PNG LNG Project and steady output from operated PNG fields: ? Capacity of PNG LNG has increased 6% to 7.3 MTPA with further upside ? material additional value ? High-margin…
Appendix 1: Key milestones* PNG LNG Project/Expansion ? Continued operation above nameplate capacity of 6.9 MTPA ? Target award of PDL for P?nyang field and integration into PNG LNG Foundation Project Papua LNG Project ?…
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