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UBS Australasian Conference – Oil Search Limited

Oil Search Limited · Nov 17, 2015 · 32 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. UBS Australasian Conference – Oil Search Limited – slide 1
  2. UBS Australasian Conference – Oil Search Limited – slide 2
    Overview ? Strong production from quality assets: ? PNG LNG Project capacity increased from 6.9 MTPA to 7.3 MTPA ? Mature oil assets performing well ? Solid balance sheet with liquidity of ~US$1.6bn ? PNG LNG has created strong…
  3. UBS Australasian Conference – Oil Search Limited – slide 3
    Core strategies have delivered steady long-term share price appreciation UBS Australasian Conference - November 2015 3 0 20 40 60 80 100 120 140 160 8 6 4 2 0 10 12 OSH Brent oil price Manage transition to PNG LNG…
  4. UBS Australasian Conference – Oil Search Limited – slide 4
    Oil Search licence interests, PNG PNG LNG Project Gas Fields PNG LNG Project Facilities Non PNG LNG Gas/Oil Fields Oil Field Gas Field Oil Pipeline Gas Pipeline Oil Facility Gas Facility OSH Operated OSH Interest Condensate…
  5. UBS Australasian Conference – Oil Search Limited – slide 5
    PNG LNG Project ? producing consistently above nameplate capacity ? At end 3Q 2015, >125 cargoes delivered and nearly 9 million tonnes produced since start-up in 2014 ? Annualised production in 3Q15 of ~7.4 MTPA (1H15 of ~7.1 MTPA),…
  6. UBS Australasian Conference – Oil Search Limited – slide 6
    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 1 LNG sales products at outlet of…
  7. UBS Australasian Conference – Oil Search Limited – slide 7
    Commercialising PNG?s undeveloped gas ? PNG LNG Project has delivered strong platform for growth: ? Major infrastructure ? Government and landowner support ? Tier 1 LNG customers ? Financier confidence ? PNG can deliver at least…
  8. UBS Australasian Conference – Oil Search Limited – slide 8
    NW Hub: PNG LNG expansion, potential third train and domestic power ? MoU signed in January 2015 by ExxonMobil (as operator of PNG LNG and PRL 3) and PNG Government sets schedule to develop P?nyang gas field, to underpin: ? PNG LNG…
  9. UBS Australasian Conference – Oil Search Limited – slide 9
    Up to two P?nyang wells planned to further constrain 1C and 2C resource ? Preparatory work underway for P?nyang South 2 well: ? Location in SE of structure agreed by PRL 3 JV, to be drilled 2Q/3Q 2016 ? Potential second well ?…
  10. UBS Australasian Conference – Oil Search Limited – slide 10
    10 Muruk 1 well to target multi-tcf exploration prospect UBS Australasian Conference - November 2015 Hides Angore Juha Muruk P?nyang SW NE Darai Formation Muruk 0 2 Km ? Muruk 1 ? PPL 402 (OSH 50%). Operated by OSH in…
  11. UBS Australasian Conference – Oil Search Limited – slide 11
    Gulf Hub: Papua LNG Project ? Potential second world-scale LNG development in PNG ? Significant progress achieved: ? Locations of key infrastructure sites agreed by PRL 15 JV and supported by Government ? Commencement of financing…
  12. UBS Australasian Conference – Oil Search Limited – slide 12
    Elk - Antelope appraisal programme underway, OSH certification targeted for 2Q16 ? Results of appraisal programme to date at upper end of OSH expectations: ? Antelope 4 extended good quality reservoir to south ? Antelope 5 testing…
  13. UBS Australasian Conference – Oil Search Limited – slide 13
    Active PNG exploration/appraisal programme proposed PRL 15 Antelope 4 ST1 Antelope 6 Antelope South* PRL 3 P?nyang reserves evaluation P?nyang South 2* PPL 402 Muruk 1* PPL 269 Strickland 1* Well 2* PPL 339 Kalangar 1* PRL…
  14. UBS Australasian Conference – Oil Search Limited – slide 14
    Exploration and appraisal programme UBS Australasian Conference - November 2015 14 PNG Highlands Activity PRL 3 (OSH - 38.5%) P\'nyang South 2 & other possible appraisal activities* PPL 269 (OSH - 10%) Strickland 1 PPL 269 Well 2*…
  15. UBS Australasian Conference – Oil Search Limited – slide 15
    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: ?…
  16. UBS Australasian Conference – Oil Search Limited – slide 16
    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…
  17. UBS Australasian Conference – Oil Search Limited – slide 17
    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…
  18. UBS Australasian Conference – Oil Search Limited – slide 18
    OSH in healthy 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 ?…
  19. UBS Australasian Conference – Oil Search Limited – slide 19
    2015 Investment Outlook ? 2015 capital spend forecast US$600 ? 670m: ? Exploration & Evaluation: ? US$300 ? 320m ? Development: ? US$170 ? 200m ? Production: ? US$110 ? 125m ? Other PP&E: ? US$20 ? 25m ? 2016 budgets under…
  20. UBS Australasian Conference – Oil Search Limited – slide 20
    Cash Flow Priorities Available Cashflows After scheduled debt servicing, sustaining capital expenditure and commitments Dividends Payment in accordance with dividend policy (35-50% of NPAT) Growth Capital Investment I LNG…
  21. UBS Australasian Conference – Oil Search Limited – slide 21
    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$7 - 8/mmBtu range ? More globally connected…
  22. UBS Australasian Conference – Oil Search Limited – slide 22
    Medium to long-term LNG demand forecasts still robust ? Global contractual supply expected to be >30 MTPA short of demand in 2022, >120 MTPA short by 2025, as demand increases, old contracts roll off: ? Few LT contracts have been…
  23. UBS Australasian Conference – Oil Search Limited – slide 23
    Expiry of existing LNG Contracts UBS Australasian Conference - November 2015 23 0 20 40 60 80 100 120 2015 - 2019 2020 - 2024 2025 - 2029 2030 - 2035 LNG Contract Size (MTPA) LNG Contract Expiry (Year) Source: Wood Mackenzie…
  24. UBS Australasian Conference – Oil Search Limited – slide 24
    ? Conventional LNG projects with no new technology utilised in development ? Substantial reserves base with high heating value, suitable for Asian reticulation networks ? High liquids, enhancing economics ? Onshore location with…
  25. UBS Australasian Conference – Oil Search Limited – slide 25
    5 0 10 15 20 US$/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…
  26. UBS Australasian Conference – Oil Search Limited – slide 26
    PNG context ? living in the real world ? PNG has unprecedented opportunity to benefit from PNG LNG expansion and Papuan LNG development: ? Both world-class projects with potential to significantly impact economy over next 5-7 years ?…
  27. UBS Australasian Conference – Oil Search Limited – slide 27
    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 ?…
  28. UBS Australasian Conference – Oil Search Limited – slide 28
    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 ? Drill Antelope 4 ST1 and…
  29. UBS Australasian Conference – Oil Search Limited – slide 29
    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…
  30. UBS Australasian Conference – Oil Search Limited – slide 30
    Appendix 1: 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 21.7 5…
  31. UBS Australasian Conference – Oil Search Limited – slide 31
    Appendix 2: 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…
  32. UBS Australasian Conference – Oil Search Limited – slide 32
    Appendix 3: LNG Projects with declining production UBS Australasian Conference - November 2015 32 Project Name Country Plateau Production Off Plateau ADGAS Abu Dhabi 7.8 MTPA 2020 Atlantic LNG (1 ? 4) Trinidad and Tobago 18 MTPA…

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