Investor Field Trip November 2016 Oil Search Limited ARBN 055 079 868 ASX: OSH POMSoX: OSH US ADR: OISHY
Presentation Agenda Welcome PNG Production Gas Development Exploration Financial Overview & Strategy Update Social Responsibility Summary Oil Search Investor Field Trip 21 - 25 November 2016 3
Field Trip Route Hela Enga Western Muruk Highlands Jiwaka Madang Papua New Guinea Hides HGCP Ambua Lodge Moro Airstrip Chimbu Southern Eastern Ridge Camp Highlands Highlands Morobe Gobe Elk / Antelope Western Herd Base…
Well positioned for future growth Strong production base from high quality, low cost assets with low sustaining capital requirements: Trending towards upper end of 2016 production guidance of 28 30 mmboe Generating positive cash…
Core strategies have delivered long term share price stability in volatile market 12.00 OSH ASX 200 ENERGY BRENT CRUDE 17 Nov 2016: Rebased to OSH Share Price (A/sh) 10.00 A6.79/Sh 8,461 US46.54/bbl 8.00 6.00 1 Jan…
PNG Production Oil Search Investor Field Trip 21 - 25 November 2016 7
PNG LNG Project continues to produce well in excess of nameplate capacity Annualised production to end Oct 2016 of 7.9 MTPA (Oct PNG LNG Project Fields Hides wells 16 8.2 MTPA), compared to nameplate capacity of 6.9 OSH Operated MTPA…
PNG LNG sales Full contractual volumes of 6.6 MTPA being taken by long term contract customers (TEPCO, Osaka Gas, Sinopec, CPC) Consistent demand for spot volumes, reflecting: High heating value gas well suited to Asian reticulation…
PNG LNGs competitive advantages Conventional LNG project, tried and tested, highly reliable technology, with very high uptime Substantial proven reserves base, with upside through recertification Qingdao LNG currently underway…
Associated Gas Acceleration (AGA) significant value opportunity for oil fields and PNG LNG AGA key value drivers are acceleration of competitive gas supply option for PNG LNG while enhancing efficiency of oil and gas operations 400…
Optimising production from mature oil fields Production continues to perform at high end of long term forecast Since taking over oil field operatorship in 2003, OSH has drilled 44 development wells with 85% success rate In past five…
Oil field performance 2016/17 Oil production in 2016 full year expected to materially exceed forecast at beginning of year: Strong production from Usano Main and Hedinia Digimu as well as from Moran early in year, with M1X and M6X…
Production Outlook 2016/17 2016 production expected to be at upper end of OSH Net Production (mmboe)1,2 35 28 30 mmboe guidance range: PNG LNG (T1 + T2) 28 - 30 6.3 6.7 mmboe from operated oil fields and Hides 30 29.25 Hides GTE…
Gas Development Oil Search Investor Field Trip 21 - 25 November 2016 15
Delivering OSHs gas strategy of two new LNG trains with further expansion upside PNG LNG Project has established PNG as reliable producer of high heating value gas that provides buyers with geographical Co-operation between our two…
10 tcf 2C gas resource in Elk-Antelope and Pnyang, underpins two trains Foundation PNG LNG fields 1P / 2P recertification 12 underway, to supply increased T1/T2 capacity 10 Certification of Elk-Antelope completed in July 8 2016 by…
Potential for upside in PRL 15 Additional prospects in PRL 15 have potential to underpin third expansion train Near term upside from Antelope 7/ Antelope Deep: PRL 15 Antelope 7 spudded early November, to test poorly imaged western…
Potential for upside in NW Highlands PPL 402 Muruk 1 (PPL 402) exploration well spudded 2 November Operated by OSH in co-venture with ExxonMobil JUHA NORTH Muruk 1 Exploration prospect on-trend with Hides and north-east of Juha PDL…
Cooperative LNG expansion agenda provides opportunity to maximise value OSH and its co-venturers driving towards 18 coordinated development: 16 Delivers cost synergy 14 LNG Export (MTPA) 12 Optimises timing of spend 10…
Cooperative LNG expansion examples. Value prize will incentivise all stakeholders Unitisation of Elk-Antelope and Pnyang E T5 T6 X PRL3 P A U T3 T4 N N I S T PRL15 I O T1 T2 N TARIFF Coordinated separate projects…
Cost benefits for LNG expansion integration, with material opex and capex savings Sharing of utilities, Reduction of overall Construction of spur power generation, tank storage instead of new jetty & ExxonMobil and Total supportive of…
Global cost reduction trend Material reductions evidenced in development costs globally High expectations for cost savings: Chevron have reported rate reductions of 20-50% in major drilling and completion spend categories Majors…
Asian LNG demand forecast to continue to grow strongly Asia continues to be Europe dominant market 40 88 99 New markets have begun to emerge, Americas 2016 2020 2030 Asia including through deployment of 182 221 310 18 19 21…
North East Asian LNG market will continue to be key for PNG Quality Asian buyers require volumes post 2020 that can more than underpin 8 MTPA expansion from PNG PNG proximity ideal for market capture of North East Asia buyer…
Summary Delivering OSHs gas strategy Cooperative development agenda Key stakeholders ExxonMobil, Total and Government OSH well positioned to play key role to ensure optimum development Material PNG resource base for at least two…
Exploration Oil Search Investor Field Trip 21 - 25 November 2016 28
Revitalising acreage and drilling programmes PNG-wide prospectivity review completed in 2015/16 to underpin long term exploration strategy 60% of PNGs petroleum resource remains to be discovered. 7 billion barrels oil equivalent,…
2016/17 exploration / appraisal programme targeting 4-6 tcf, 3 key hubs, multiple play types 1. NW Highlands Hub PPL 402 - Muruk 1 Near field exploration APDL13 Pnyang South 2* activities targeting 2-3 tcf 2. Gulf / Forelands Hub…
Systematically enhancing PNG portfolio OSHs 2015/16 prospectivity review has identified and high graded several new focus areas and led to: 14 new licence applications Six potential farm-ins Rebalancing portfolio risk exposure via…
Multiple opportunities on trend and adjacent to Antelope in Gulf (Aure Foldbelt) Under-explored region on-trend with Elk-Antelope: Papua New Guinea Seismic & aero gravity defined number of near field exploration opportunities Close…
Appraisal of material upside in existing Foreland fields Appraisal to define 2C resource and near field exploration PRL8 PRL9 opportunities (Kimu North): 2016 seismic acquisition / remapping upgraded resource Barikewa potential…
Offshore play types 11. Miocene reef play: Uramu, Pasca, Antelope and other seismically defined but undrilled reefs 22. Eocene reefal banks play: New opportunity defined by existing 3D 1 seismic with prolific global analogues 33.…
Offshore - shallow water Gulf of Papua High quality 3D seismic grids Number of materially significant multi tcf game changer opportunities OSH operated licences Overpressured Eocene-Miocene Pliocene-Pleistocene Papua New Guinea…
Offshore - deep water Gulf of Papua Frontier basin with no wells Water depth 1,500-2,000 metres 2000 m Constrained by regional scale grid of 2D seismic data Multiple plays and number of significant opportunities identified,…
Exploration and appraisal programme Location Licence Activity Location Licence Activity 4Q16 NW Highlands PPL 402 Muruk 1Q18 Onshore Gulf PRL 14 2D Seismic* Onshore Gulf PRL 15 Ant 7 /Deep Onshore Gulf PRL 15 Ant South* 1Q17 NW…
Exploration summary 5 Hides is largest fields Recoverable Volume (bn boe) Significant exploration upside remains in PNG: Cumulative Discovered P50 found to date 4 Many future fields of all sizes remain YTF 40 tcf & 500…
Power Initiatives Oil Search Investor Field Trip 21 - 25 November 2016 39
Oil Search Power: Rationale and Strategy Power a significant development challenge in PNG OSH has mandate to find PNG power solutions in support of Governments goals for electrification Focus is on viable, scalable and competitive…
Markham Valley Biomass Existing underutilised 18,000 ha dedicated 15MWe Biomass IPP Power to consumers via grasslands plantation (Boiler + Steam turbine) existing transmission lines Plantations established on Log Storage Yard…
Highlands Integrated Power Work underway since 2013 Large proportion of PNGs potential electricity consumers live in proximity to Ramu Grid: 2.3 million people live within 10km 3.0 million people live within 20km Initial demand from…
Other power opportunities: Domestic LNG Commercialising discovered-but-undeveloped gas resources from Gulf, Western and Highlands Provinces Market capture is key: Price needs to be locally competitive, with customers looking for…
Finance Oil Search Investor Field Trip 21 - 25 November 2016 44
Robust cash flow and balance sheet to fund development activities in capital efficient manner Liquidity (USm) Forecast 2016 production costs…
Debt profile Total debt of US4.08bn, representing OSH share of debt drawn under PNG LNG Project finance facility: Indicative Annual Repayment profile OSH guarantee to LNG lenders terminated at Financial Completion, debt now…
Financing approach for expansion Unitised two train development facilitates joint Robust forecast liquidity and equity funding project financing: capacity: Structure mirrors PNG LNG Phased development of Antelope and Pnyang fields…
Capital investment Outlook 2000 2016 capital cost guidance (US240 275m) 1750 Exploration & Evaluation: 1500 US165 180m Development: US25 30m 1250 USm Production: US40 50m 1000 Other PP&E: US10 15m 750 500 2017 budgets…
2016 Guidance Summary Production 2016 Guidance 2017 Direction Oil Search operated (PNG Oil and Gas) 6.3 6.7 mmboe PNG LNG Project LNG 95 98 bcf Liquids 3.3 3.5 mmbbl Total PNG LNG Project1 22 23 mmboe Total Production1 28 30 mmboe…
Cash flow priorities remain unchanged Available Cashflows After scheduled debt servicing, sustaining capital expenditure and commitments Dividends Payment in accordance with proportional dividend policy (35-50% of core NPAT)…
Strategy Refresh Oil Search Investor Field Trip 21 - 25 November 2016 51
Strategy Refresh OSH undertook major review of corporate strategy in 2014 which identified that top quartile returns for shareholders could be delivered by competitive LNG expansion in PNG Undertaking focused refresh of strategy:…
Social Responsibility Oil Search Investor Field Trip 21 - 25 November 2016 53
Helping preserve a stable operating environment OSH plays unique role in PNG: Based on 87 years of operating in-country, unprecedented relationships Activities help reduce risks inherent in operating in a developing country as well…
Contributing to long-term sustainability in PNG Responding to PNGs development priorities through the Oil Search Foundation: Oil Search Health Foundation operating since 2011. Relaunched in 2015 to include Leadership and Education,…
Social Responsibility Video Oil Search Investor Field Trip 21 - 25 November 2016 56
PNG election timeframe 'Your Choice, Protect the Democracy - Election 2017' Timing PNG Major Political Party's as at Nov Seats % of Last sitting of Parliament 2016* held seats People's National Congress Party 27 24.3% Friday, 5…
Summary Downstream integration of Papua LNG and PNG LNG projects de-risked by ExxonMobils bid for InterOil: Total and ExxonMobil have expressed willingness to work together to develop optimal outcomes for LNG development Benefits of…
Appendix 2: Safety a key priority Total Recordable Incident Rate Lost Time Injury Frequency 5 4.7 OSH IOGP 0.75 Per million hours worked 0.50 0.59 0.49 Per million Hours worked 4 3.9 0.24 0.25 3.1 0.00 3 2.9 2.7 0.00…
Appendix 3: Relative TSR performance to 30 Sep 2016 Total Shareholder Return (%) 200 ASX 200 Accumulation Index 150 139 ASX 200 Energy Accumulation Index 100 OSH 75 % TSR 50 33 35 21 3 0 0 -50 -42 -47 -100 1 YEAR…
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