INVESTOR FIELD TRIP November 2018 OIL SEARCH LIMITED ARBN 055 079 868 ASX: OSH POMSoX: OSH US ADR: OISHY www.oilsearch.com
SAFETY MOMENT 26 FEBRUARY: A DAY WE WONT FORGET 03:44 26 February 2018: 7.5 Magnitude earthquake struck in Hela Province All people accounted for Surveillance of all our hydrocarbon containing equipment: make safe all facilities…
PRESENTATION AGENDA WELCOME PNG PRODUCTION PNG GAS DEVELOPMENT PNG EXPLORATION SOCIAL RESPONSIBILITY ALASKA FINANCIAL OVERVIEW SUMMARY OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 4
FIELD TRIP ROUTE OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 5
PNG OPERATIONS KEY OIL AND GAS FIELDS Juha Muruk Hides Angore Pnyang Moran HGCP Agogo Kutubu Gobe Main SE Gobe Triceratops Kimu Elk/Antelope Barikewa Uramu OSH Operated OSH Non Operated Hagana OSH Application Oil…
PNG OPERATIONS GULF REGION OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 7
PNG OPERATIONS KUTUBU REGION OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 8
PNG OPERATIONS HIDES REGION OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 9
PNG LNG WORK UNDERTAKEN ON HGCP DURING SHUTDOWN Previously, preferential flow into slug-catcher at the Hides Gas Conditioning Plant (HGCP): Resulted in capacity of HGCP slug-catcher insufficient to process liquid surges, did not…
7.5 MTPA OF PNG LNG PRODUCTION CONTRACTED PNG LNG CONTRACTUAL COMMITMENTS 7.5 MTPA of PNG LNG production Non contracted under long and mid-term Escrow agreements: Tranche 3 Escrow 6.6 MTPA under 20-year contracts with JERA, BP…
PNG LNG ECONOMIC BENEFITS DISTRIBUTION PNG Government has made good progress on resolving outstanding landowner beneficiary issues highly complex process Of 15 licences covering PNG LNG, 13 licences either receiving or close to…
OPERATED PRODUCTION PROGRESSIVE RAMP UP THROUGH 1H19 KUTUBU AND AGOGO Central Production Facility (CPF) fully operable, production back to pre- earthquake levels. Majority of wells available for production Agogo Production Facility…
PNG OIL FIELD OPPORTUNITIES Significant low risk opportunities identified to extend production life of the PNG oil fields Potential to extend plateau oil production until 2023-24 and add 30mmbbl net to OSH M15 M5ST2 Subject to…
OIL OPPORTUNITIES A MIX OF IN- WELLBORE, IN-FIELD AND NEAR-FIELD Development Wells & Work Moran 4, 9 Overs Moran X, O, Q, P Work Overs Wells (2018/19) (2018/19) M4 UDT S M9 UDT H IDT 21 IDT 21 Agogo Forelimb Appraisal…
ASSOCIATED GAS EXPANSION (AGX) OPPORTUNITY Work progressing on AGX opportunity Comprises accelerating gas from Associated Gas fields (Kutubu, Agogo and Moran) to support higher PNG LNG production: Original plan to support PNG LNG…
PNG GAS DEVELOPMENT
MEMORANDUM OF UNDERSTANDING SIGNED BETWEEN PAPUA LNG AND PNG GOVERNMENT Agreement marks significant step forward for Papua LNG Project MoU follows tough negotiations on key terms Participants and State now have basis for certainty of…
PREFERRED DEVELOPMENT CONCEPT FOR NEW LNG CAPACITY Preferred downstream concept: Three trains, 8 MTPA total capacity, two Hides supported by Papua LNG (Elk-Antelope), Juha Elk-Antelope one by PNG LNG and Pnyang, all located…
LOCATION OF NEW TRAINS ON EXISTING LNG PLANT SITE OFFERS MATERIAL CAPEX AND OPEX SAVINGS Potential capex savings of US2-3bn and opex savings of US125m p.a. Sharing of shipping channel and, if necessary, construction of spur instead…
PATHWAY TO EXPANSION Road to LNG production in 2024 Gas Licencing and Approvals Construction: Agreements Early Works Tendering - Complete infrastructure - Complete site clearing PNG LNG Commence - Construction camps Access FEED:…
SUBSTANTIAL GROWTH IN GLOBAL LNG DEMAND GLOBAL SUPPLY AND DEMAND Global LNG demand up 11% in 550.0 2017 and on track to grow 7-8% in 2018 500.0 LNG demand growth forecast at New supply required 4.5% pa to 2030, driven by Asia:…
COMPETITIVE ADVANTAGES OF LNG FROM PNG Conventional LNG project, tried and tested, highly reliable technology, with very high uptime Globally competitive production costs: Cooperative brownfield expansion with shared common…
OIL SEARCH EQUITY MARKETING OF EXPANSION VOLUMES Very positive response received from buyers to CONTRACT EXPIRATIONS BY YEAR initial OSH equity marketing from new LNG capacity in PNG 15 Buyers seeking LNG source diversification from…
EXPANSION DRIVES NEW GROWTH PROGRAMMES Indicative LNG Growth Profile PNG LNG currently comprises two trains producing at 8.9 MTPA (3Q18) Papua LNG Project combined with expansion of PNG LNG underpinned by Pnyang field will T6+…
EXPANSION DRIVES NEW GROWTH PROGRAMMES WESTERN FOLDBELT Key strategic areas of OSH Pnyang High value optimisation/growth opportunities portfolio assessed Juha Muruk Karoma Hides Onshore Gulf (Eastern Foldbelt) identified as…
MEASURED INVESTMENT IN EXPLORATION TO FEED GROWTH Highlands Drilling Greater Juha Prospect Likely 2020-21 exploration drilling Definition following 2019-20 Seismic 102km of 2D seismic (PPL 402 & OSL Operated OSH has surrounds) 4Q18/…
PNG EXPLORATION
PNG EXPLORATION AND APPRAISAL TO SUPPORT NEXT PHASE OF DEVELOPMENT Muruk NW HIGHLANDS Muruk 2 appraisal well recently spudded, 11km step-out to constrain resource NW Foldbelt FORELANDS Elk-Antelope Kimu 2 and Barikewa 3…
MURUK 2 APPRAISAL PROGRAMME Spudded on 10 November 2018 OSH drilling well on behalf of ExxonMobil- operated PDL 9 joint venture 11km step-out from Muruk 1 discovery well Base case: 80 day well with expected total depth 3,500m…
KIMU 2 AND BARIKEWA 3 SUCCESSFUL APPRAISALS PPL 375 Both wells encountered gas in line with pre-drill Kimu 2 expectations but with better than expected reservoir quality PRL 8 Drill stem tests conducted on both wells to constrain…
ONSHORE GULF/EASTERN FOLD BELT SEISMIC ACQUISITION Bridging Bridging Material seismic acquisition program in Eastern Crew Fold Belt in 2018-2019 operated by Oil Search on behalf of ExxonMobil and Total 330km seismic acquired in…
SOCIAL RESPONSIBILITY
STRONG COMMITMENT TO SOCIAL RESPONSIBILITY INITIATIVES Long-standing commitment to operating responsibly and to sustainable development in PNG: Key to promoting stable operating environment Directly and indirectly through Oil Search…
POWER: DOMESTIC USES FOR GAS PORT MORESBY 57.8MW GAS FIRED POWER STATION Satisfies PNG LNG JV licence commitment for gas supply for domestic use Provides cleaner, lower cost fuel for power generation: PNG Power Ltd (PPL) to realise…
SOCIAL RESPONSIBILITY REPORTING Climate Change 2017 Climate Change Resilience Report published in Mar-18: One of the first ASX-listed companies to report in accordance with TCFD guidelines Well received by investment and ESG…
PARTNERSHIPS IN ACTION Oil Search Foundation Limited Incorporated in Papua New Guinea
Why does Oil Search support the Foundation Its our social responsibility Its the right thing to do Whats good for PNG is also good for Oil Search Who provides funding for OSF OSH committed K185 million over 5 years for health,…
Health Promote effective leadership and governance Support recruitment of doctors to remote areas Fund nursing and community health workers through church partnerships Train health workers Fund and support outreach visits to remote…
Leadership and Education Teaching children to read Building libraries and resource centres Building future leaders through scholarships OIL SEARCH INVESTOR FIELD TRIP NOVEMBER 2018 PAGE 42
Womens Protection and Empowerment Empowering women through literacy opportunities Addressing family and sexual violence through an innovative Public Private Partnership approach (Bel isi PNG) Creating Champions of Change in our…
Oil Search Foundation actively involved in rehabilitation of infrastructure damaged by Feb-18 Highlands earthquake Just completed rehabilitation of Habare literacy library Undertaking initial rehabilitation of Koroba District…
NORTH SLOPE, ALASKA
ALASKA TIMELY ACQUISITION WITH MATERIAL RESOURCE UPSIDE US400m acquisition completed in Feb-18, operatorship assumed in Mar- 18: Competitive implied acquisition cost of US3.10/bbl, based on 2C resource of 500 mmbbl Potential to…
BALANCE OF NEAR TERM DEVELOPMENT, EXPANSION AND EXPLORATION 2 rig, 2 well programme 2019 Pikka Unit FEED 2019 & FID mid 2020 Pikka Unit Development 1st oil in 2023 Potential for 300mmbbl extension* Horseshoe Nanushuk 2019 3D…
2018/19 WORK PROGRAMME FOCUSED ON MATURING PIKKA RESOURCE ESTIMATES Planning to drill two appraisal wells to constrain continuity of Nanushuk reservoir of Pikka Unit: Approximate extent of Pikka B and Pikka C locations identified,…
PIKKA WELL DESIGN APPLYING PROVEN DRILLING AND COMPLETIONS TECHNOLOGY Extended reach drilling (ERD) within industry limits 5,000+ foot horizontal section & multi-stage fracs Optimized fracture placement Zonal isolation between stages…
PRIORITISING ACTIVITY TO MAXIMISE VALUE FOR ALL STAKEHOLDERS1 2000 Gross Discovered & Unrisked Prospective Resources Pikka CPF Resources Horseshoe CPF Resources Pikka Nan 2/3 Horseshoe North & South Alpine C & Satellites Horseshoe…
INDICATIVE TIMETABLE TO FIRST OIL 2018 2019 2020 2021 2022 2023 2024 Development Appraisal FEED Production (permitted base case) 2017/18: ConocoPhillips Early works no regret 15 producers/injector pairs expected to be drilled…
MATERIAL EXPLORATION UPSIDE IN PROVEN PLAYS Portfolio being developed to support sustained exploration programme Currently identified 1bn bbl unrisked resource potential: Evaluation and high-grading of preferred exploration…
MULTIPLE UNDRILLED NANUSHUK PROSPECTS Putu (Narwhal) Seismic Amplitude 3D seismic proven to directly show Nanushuk oil (Conoco Phillips, July 2018) reservoir in Pikka / Horseshoe / Narwhal Multiple analogous seismic anomalies in 3D…
INDICATIVE 5-YEAR EXPLORATION ACTIVITY PLAN LOW RISK HORSESHOE EXPLORATION & APPRAISAL, GRIZZLY AND OTHER NEW EXPLORATION HAS THE POTENTIAL TO DRIVE MATERIAL RESOURCE GROWTH LONGER TERM 2018 2019 2020 2021 2022 2023 2024 Seismic…
ACTIVE COMMUNITY ENGAGEMENT TO UNDERSTAND ISSUES & OPPORTUNITIES FOCUSED ON BUILDING LONG-TERM RELATIONSHIPS ACTIVE COMMUNITY ENGAGEMENT Paused Pikka development planning to better understand and resolve concerns related to culture,…
FINANCE
BALANCE SHEET CAPACITY TO SUPPORT LNG EXPANSION AND ALASKA Liquidity of US1.44bn (end Sep-18): INDICATIVE PNG LNG REPAYMENT PROFILE (NET, USM) US710m corporate facilities, US728m cash 600 Operating cashflow benefiting from higher…
FUNDING ASSUMPTIONS FOR LNG EXPANSION AND ALASKA OSH total share of development costs (including capitalised interest and financing fees) for 20192023 expected to be US4.5bn: Comprising LNG expansion US3bn and Alaska North Slope…
2018 FULL YEAR GUIDANCE OIL SEARCH NET PRODUCTION (MMBOE)1,2 Operating Costs 35 Production costs US11.50 12.50 / boe OSH-operated PNG LNG 30.25 30.31 Other operating costs3 US140 150 million 29.25 30 25 26 mmboe Depreciation and…
SUMMARY Strong recovery following devastating earthquake in PNG in February, with production at pre-earthquake levels and profitability supported by higher oil and LNG prices Papua LNG MoU with PNG Government, a significant step…
PRODUCTION FORECAST TO DOUBLE BY 2025 INDICATIVE OSH PRODUCTION BASED ON DEVELOPMENT OF EXISTING RESOURCES 2017 Existing Assets PNG Oil PNG LNG + Rerating Papua Alaska - Pikka 2025 OSL Decline LNG (DS2&3)* + Expansion *Oil…
APPENDIX INVESTOR FIELD TRIP November 2018 OIL SEARCH LIMITED ARBN 055 079 868 ASX: OSH POMSoX: OSH US ADR: OISHY www.oilsearch.com
ALASKA ECONOMIC CASE SUMMARY INDICATIVE PIKKA DEVELOPMENT WITH PERMITTED BACKFILL1 Permitted Scope Pikka Nan 2/3 Alpine C Other Satellites (2018) (DS 2&3) (DS1) (DS2) Startup 2023 2024 - 2028 2024 - 2028 Total Volume (mmbbl)2 620…
ALASKA FISCAL PROFILE ILLUSTRATIVE EXAMPLE Alaska North Slope Illustrative US Cash Tax Calculation Ref e.g. NPV Illustrative NPV government take will vary Revenue A 100.0 depending on several factors including, but not State…
THANK YOU INVESTOR FIELD TRIP November 2018 OIL SEARCH LIMITED ARBN 055 079 868 ASX: OSH POMSoX: OSH US ADR: OISHY www.oilsearch.com
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