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H1 2016 Results – Oil Search Limited

Oil Search Limited · Aug 31, 2016 · 42 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. H1 2016 Results – Oil Search Limited – slide 1
    2016 Half Year Results August 2016 Oil Search Limited ASX: OSH POMSoX: OSH US ADR: OISHY ARBN 055 079 868 www.oilsearch.com
  2. H1 2016 Results – Oil Search Limited – slide 2
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  3. H1 2016 Results – Oil Search Limited – slide 3
    2016 Half Year Highlights Total production of 14.9 mmboe 4% higher than 1H15 1H16 1H15 and only marginally lower than record 2H15: Sales volume 15.17 14.45 2016 full year production guidance upgraded to 28 30 mmboe (mmboe)…
  4. H1 2016 Results – Oil Search Limited – slide 4
    Bid for InterOil (IOC) and MoU with Total In May, OSH announced agreed bid for IOC and MOU with TOT In July, IOC board changed recommendation to pursue transaction with ExxonMobil OSH decided it was not in best interests of…
  5. H1 2016 Results – Oil Search Limited – slide 5
    OSH to benefit from ExxonMobil IOC transaction Post ExxonMobil IOC transaction, significant overlap in equity across PNG LNG and Papua LNG ExxonMobil and Total have expressed desire to explore downstream integration between projects:…
  6. H1 2016 Results – Oil Search Limited – slide 6
    Safety improvement plan introduced 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 0.46 Per million Hours worked 4 3.9 0.25 3.1 0.00 3 2.9 2.7 0.00…
  7. H1 2016 Results – Oil Search Limited – slide 7
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  8. H1 2016 Results – Oil Search Limited – slide 8
    2016 Half Year Financial Performance USm 1H16 1H15 Revenue down 33%, driven by significantly lower realised oil and LNG prices, partially offset by Sales volume (mmboe) 15.17 14.45 higher sales volumes Revenue 580.8 863.8 Lower…
  9. H1 2016 Results – Oil Search Limited – slide 9
    Operating Margins EBITDAX Margin Cash Margin by Asset 100 111 120 50 95 114 98 100 40 90 80 85 US/boe US/boe 30 22.00 78 % 80 51 60 42 28.06 75 72 20 40 5.59 70 72 73 20 10 65 14.25 1.82 65 6.34 60 0 0 2012…
  10. H1 2016 Results – Oil Search Limited – slide 10
    Unit production costs reduced to US8.21/boe USm 1H16 1H15 Lower PNG LNG Project unit production costs reflects cost savings and LNG plant producing well above Production costs: nameplate capacity - PNG LNG 72.1 73.6 Lower PNG Oil…
  11. H1 2016 Results – Oil Search Limited – slide 11
    Healthy operating cash flows USm Healthy operating cash flows despite weak oil 1,250 price environment: Operating cash flow equates to US15.77/boe 1,000 Includes borrowing costs paid of US94.9 million 910 (160) 239 Investment…
  12. H1 2016 Results – Oil Search Limited – slide 12
    Robust balance sheet to fund development activities in capital efficient manner Strong production base from high quality, low opex assets, Liquidity (USm) 2,000 with modest sustaining capex, generating positive cash flows 600 750…
  13. H1 2016 Results – Oil Search Limited – slide 13
    2016 investment spend expected to be 45% lower than 2015 2000 Revised 2016 capital cost 1,861 1,877 guidance (US270 315m) 1750 1,672 Exploration & Evaluation: US190 210m 1500 1250 Development: US20 30m USm US918m 1000 PRL…
  14. H1 2016 Results – Oil Search Limited – slide 14
    2016 Guidance Summary Production 2016 Guidance 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…
  15. H1 2016 Results – Oil Search Limited – slide 15
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  16. H1 2016 Results – Oil Search Limited – slide 16
    Strong performance in 1H16 Total production for 1H16 of 14.9 mmboe, Net Production (mmboe) 4% higher than in 1H15 and only PNG LNG marginally down on record 2H15 16 OSH-operated 14.93 14.89 14.32 13.91 PNG LNG Project contributed…
  17. H1 2016 Results – Oil Search Limited – slide 17
    PNG LNG Project Annualised production in 1H16 of 7.7 MTPA, compared to nameplate capacity of 6.9 MTPA: Results achieved despite scheduled rate reduction for Qingdao LNG maintenance in April and unplanned shutdown in May Terminal…
  18. H1 2016 Results – Oil Search Limited – slide 18
    Solid demand for PNG LNG spot cargoes Contract offtake at plateau levels Consistent demand for spot volumes, particularly from Japan, reflecting: High heating value gas well suited to Asian reticulation network Geographical proximity…
  19. H1 2016 Results – Oil Search Limited – slide 19
    Excellent performance from operated oil fields 1H16 oil, SEG gas and Hides GTE Juha North Hides GTE Papua New Guinea production of 3.52 mmboe Hides Juha Hides Kutubu Port Moresby Excellent outcome given field maturity. Angore…
  20. H1 2016 Results – Oil Search Limited – slide 20
    Reduction in operated cost base Sustainable reduction in operating expenditure: Unit production cost for PNG Oil and Gas operations of US14.25/boe (US15.96/boe in 1H15) Reduction in staff levels Contract renegotiation/renewal…
  21. H1 2016 Results – Oil Search Limited – slide 21
    2016 Production Outlook 2016 production guidance increased from 27.5 29.5 Net Production (mmboe) mmboe to 28 30 mmboe, comprising: 35 Production from operated oil fields, Hides GTE and SEG sales PNG LNG (T1 + T2) 28 - 30 to PNG LNG:…
  22. H1 2016 Results – Oil Search Limited – slide 22
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  23. H1 2016 Results – Oil Search Limited – slide 23
    Delivering OSHs gas strategy: two new LNG trains in PNG with further expansion upside Monetising discovered resources: OSH Operated OSH Interest Antelope certification plus Pnyang resource has confirmed Oil Pipeline combined gas…
  24. H1 2016 Results – Oil Search Limited – slide 24
    Resource certainty: 10 tcf in Pnyang and Elk- Antelope underpins at least two trains Foundation PNG LNG fields recertification: 2016 Antelope Certification Results Summary Potential to sustain PNG LNG increased capacity 10 tcf of 2C…
  25. H1 2016 Results – Oil Search Limited – slide 25
    Potential for material upside in, and adjacent to, Elk-Antelope in PRL 15 PRL 15 Further gas upside for potential additional expansion train from Antelope 7, Antelope Deep and Antelope South: Antelope 7 expected to spud Oct 16 to test…
  26. H1 2016 Results – Oil Search Limited – slide 26
    Potential capex savings of US2-3 bn and opex savings of US125m pa (OSH estimate) through infrastructure sharing Sharing of utilities, Reduction of overall tank Sharing of Construction of spur instead Infrastructure power generation,…
  27. H1 2016 Results – Oil Search Limited – slide 27
    Commercial models to deliver project integration OSH expects project integration could involve: Two new 4 MTPA trains constructed together at existing PNG LNG site, operated by ExxonMobil, operational 2022/23 Trains underpinned by 10…
  28. H1 2016 Results – Oil Search Limited – slide 28
    Indicative timetable for integrated development 2016 2017 2018 2019 2020 2021 2022 2023 Integrated development Drilling of Ant-7 and Pnyang (and Muruk) Photo possibly Reserve and Resource Definition Integration Agreements FEED…
  29. H1 2016 Results – Oil Search Limited – slide 29
    Significant LNG supply gap from early 2020s Current market - excess LNG supply vs Global LNG demand vs contracted LNG supply demand, 100MTPA of new supply under construction 600 500 However, significant number of LNG projects 400…
  30. H1 2016 Results – Oil Search Limited – slide 30
    Material LNG demand growth in quality Asian markets Asian LNG demand Regional market in Asia anticipated to grow by 100 350 MTPA by 2030 In addition, 80 MTPA of existing NE Asia LNG 300 contracts expire next decade 250 LNG supply…
  31. H1 2016 Results – Oil Search Limited – slide 31
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  32. H1 2016 Results – Oil Search Limited – slide 32
    Exploration/appraisal strategy to target major gas opportunities PRL 3 (2/4Q17) 2015/16 study identified high Pnyang (appraisal & near APPRAISAL field exploration) yet-to-find potential: PPL 402 (4Q16) Yet-to-find estimated at 5-7…
  33. H1 2016 Results – Oil Search Limited – slide 33
    Significant gas upside potential from near term drilling at Muruk 1 (PPL 402) and in PRL 3 Muruk 1 targeted to spud in 4Q16 (OSH 50%): PPL 269 PPL 402 Operated by OSH in co-venture with ExxonMobil Pad construction and rig mobilisation…
  34. H1 2016 Results – Oil Search Limited – slide 34
    Material opportunities adjacent to Elk-Antelope being matured for drilling in 2016/17 N S Three 2016/17 onshore Gulf wells will High resolution airborne gravity Antelope Antelope South test 2-3 tcf* mean prospective Add structural…
  35. H1 2016 Results – Oil Search Limited – slide 35
    Systematically enhancing portfolio in PNG to support gas growth OSHs exploration portfolio study has led to: 15 new licence applications, one offered to date Identification of new focus area Four potential farm-ins OSH farming out…
  36. H1 2016 Results – Oil Search Limited – slide 36
    2016 Half Year Results Agenda 2016 Half Year Highlights Peter Botten Financial Overview Stephen Gardiner PNG Production Julian Fowles Gas Development Keiran Wulff Exploration/Appraisal Keiran Wulff Strategy post InterOil Peter…
  37. H1 2016 Results – Oil Search Limited – slide 37
    Strategy refresh OSH undertook major review of corporate strategy in 2014, identified that top quartile returns for shareholders could be delivered by competitive LNG expansion in PNG Undertaking focused refresh of strategy:…
  38. H1 2016 Results – Oil Search Limited – slide 38
    OSHs strategies have delivered top quartile long term growth for shareholders Strategic Our actions post strategic Total shareholder returns to 30 June 2016 Core strategies review review 190 Median TSR ASX200 Median TSR ASX200 Energy…
  39. H1 2016 Results – Oil Search Limited – slide 39
    Core strategies have delivered long term share price stability in volatile market 12.00 OSH ASX 200 ENERGY BRENT CRUDE 22 Aug 2016: A7.44/Sh Rebased to OSH Share Price (A/sh) 10.00 8,733 US49.0/bbl 8.00 6.00 31 Dec…
  40. H1 2016 Results – Oil Search Limited – slide 40
    Committed to helping preserve stable PNG operating environment Long-standing commitment to social responsibility and sustainable development: Fundamental to maintaining stable operating environment Helps forge strong relationships…
  41. H1 2016 Results – Oil Search Limited – slide 41
    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…
  42. H1 2016 Results – Oil Search Limited – slide 42
    Appendix: Key metrics Production (mmboe) Core & Underlying NPAT 40 600 534 29.3 500 30 400 353 360 19.3 300 206 206 20 14.9 176 153 200 10 6.4 6.7 100 -39 26 26 0 0 -100 2012 2013 2014 2015 1H 2016 2012 2013 2014 2015 1H 2016…

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