OIL SEARCH PNG INVESTOR SITE TOUR 25 - 29 November 2019 OIL SEARCH LIMITED ARBN 055 079 868 ASX: OSH PNGX: OSH US ADR: OISHY w w w.oilsearch.com
EMERGENCY EVACUATION You are here OIL SEARCH PNG INVESTOR SITE TOUR 25 29 NOVEMBER 2019 PAGE 3
AGENDA Welcome and Overview PNG Operations Update LNG Expansion Associated Gas Expansion (AGX) PNG Exploration PNG Operating Environment Alaska Update Financial Overview Social Responsibility and Oil Search Foundation…
OIL SEARCH PNG SITE TOUR - PROGRAMME Trip 1 Monday 25 November: Presentation Dinner at Lamana Hotel, overnight Airways Hotel Tuesday 26 November: Gobe Footwall well CPF and AGX Project Overnight Ambua Lodge Wednesday 27…
OIL SEARCH PNG SITE TOUR - PROGRAMME Trip 2 Wednesday 27 November: PNG LNG plant site Dinner and overnight Airways Hotel Thursday 28 November: Gobe Footwall well CPF and AGX Project Presentation and overnight Ambua Lodge…
SAFETY OVERVIEW 1H19 SAFETY PERFORMANCE DISAPPOINTING, IMPROVEMENTS BEING SEEN IN 2H19 TRIR increase due to incidents associated with One Tier 1 and three Tier 2 Process Safety events remote seismic and marine operations within PNG…
PNG ORGANISATIONAL CHART STRENGTHENING ORGANISATION THROUGH NEW HIRES Managing Director Peter Botten EVP - President & President EVP - Portfolio Management, PNG Country Chairman EVP - Development Gas & Marketing PNG Gerea Aopi…
PNG OPERATIONS UPDATE
PNG PRODUCTION HISTORY mmboe OSH Half Year Historical Production MT PNG LNG Annual Production Rates Impacted by 2018 PNG 18.0 earthquake 10.0 16.0 15.4 15.5 14.8 14.8 14.8 15.0 9.0 8.4-8.5 14.2 8.4 14.1 13.8 7.9 14.0 8.0 7.4…
OIL SEARCH OIL OPERATIONS SIMPLIFIED SCHEMATIC PDL 2 Moran 8,000 BOPD 30,000 BOPD Hides Gas Hides GTE Conditioning Plant 3,000 bopd Agogo 130 mmscf/d (HGCP) 17 mmscf/d PL 5 (owned by PNG LNG Project) Gas re-injected for oil field…
2019 IN PERSPECTIVE Restoration of earthquake damaged infrastructure: Completion of processing facility repairs and returned to service Decisions made on key infrastructure: Refinery rebuild or product import Mananda bridge…
POST-EARTHQUAKE RETURN TO SERVICE EARTHQUAKE RECOVERY CONTINUING OSH-operated oil production impacted in 2019 by 2018 earthquake-related issues, including delays in return- to-service, unplanned facilities outages requiring repairs…
CALM BUOY UPDATE OPERATIONS BACK TO NORMAL CALM Catenary Anchor Leg Mooring PLEM - Pipe Line End Manifold 3Q19 production also impacted by mooring buoy issue: Failure of Leg 6 caused listing of CALM buoy With restricted…
OPTIMISATION OF OIL PRODUCTION AIM TO INCREASE OIL PRODUCTION FROM MATURE OIL FIELDS AND MAXIMISE RECOVERY PRIOR TO GAS BLOW-DOWN Programme of in-field development wells/workovers is OSH Net Oil Production* bopd underway: 25,000…
2020 OSH-OPERATED PRODUCTION OPPORTUNITIES EXTENDING LIFE OF LEGACY OIL ASSETS Moran 4, 9, S Kutubu: Moran 15 Moran O & P IDT D targeting undrained Iagifu C sands in I3X8X block: IDT D Agogo IDT IDT 21 Access new Iagifu A & D…
OPERATIONAL EFFICIENCY KEY FOCUS OF 2020 Safety Focus on delivering cost reductions and operational efficiencies Business Production Cost Cost efficiency: People Assess viability of a Port Moresby Operations Centre…
HIDES GAS TO ELECTRICITY (GTE) RELIABLE PRODUCTION FROM HIDES PRODUCTION FACILITY (HPF) SINCE 1991 Hides Production Facility (HPF), 100% owned and operated by OSH, supplies gas to Barrick-operated Porgera Joint Venture: OSH…
PNG LNG PROJECT UPDATE CONSISTENT OUTPERFORMANCE PNG LNG produced at gross annualised rate of 8.5 MT for nine PNG LNG Annualised Volumes months to end Sept 19, despite being offline for 13 days in 2Q 10.0 for scheduled maintenance…
7.5 MTPA OF PNG LNG PRODUCTION CONTRACTED MIX OF LONG AND MEDIUM TERM CONTRACTUAL COMMITMENTS PNG LNG Contractual Commitments 7.9 MTPA of PNG LNG production contracted under long and medium-term agreements: 6.6 MTPA under 20 year…
LNG EXPANSION
LNG EXPANSION OVERVIEW WORLD CLASS PROJECT POISED TO PROCEED INTO FEED In early 2018, PNG LNG and Papua LNG joint ventures agreed an integrated development concept for construction of 8 MTPA of new LNG capacity in PNG: Three new…
PROPOSED CONFIGURATION AT PNG LNG PLANT SITE OIL SEARCH PNG INVESTOR SITE TOUR 25 29 NOVEMBER 2019 PAGE 23
NEARING COMPLETION OF FISCAL AGREEMENTS PAPUA GAS AGREEMENT VALIDATED, PNYANG GAS AGREEMENT ADVANCING WITH STATE PNG Government validated Papua Gas Agreement (originally signed in April 2019) in September Agreement delivers range of…
ASSOCIATED GAS EXPANSION (AGX) TARGETING FID IN 2021 AND FIRST GAS DELIVERIES IN 2024 Comprises accelerating gas from Associated Gas Fields to support PNG LNG expansion: Original PNG LNG Project development plan included scope to…
GLOBAL LNG SUPPLY SHORTFALL EMERGING PNG EXPANSION TRAINS TARGETING TO MEET MID-2020 SUPPLY SHORTFALL 4.6% global LNG demand CAGR forecast to 2030: MTPA Supply & Demand 2019 - 2030 Driven by government policies, with NE Asian 600…
ASIAN LNG GROWTH CONTINUES ASIA THE KEY DRIVER OF GLOBAL LNG DEMAND MT MTPA Global LNG demand Japan: Contracted LNG supply by source 100 350 country v demand 300 80 250 60 Contestable 200 Demand 150 40 Asia: 7% CAGR 100 20…
DECLINING SUPPLY OF RICH LNG PNGS HIGH CALORIFIC VALUE (CV) GAS Global LNG Quality in Btu/scf High CV gas is becoming diluted through: Weighted Average High Heating Value in Btu/scf Declining legacy projects in Australia and SE…
OSH MARKETING PNG WELL POSITIONED TO DELIVER INTO NEIGHBOURING REGION Strong LNG marketing team with key relationships among end users, IOCs and traders JAPAN Marketing underway for OSHs 1.8 MTPA equity share CHINA of LNG from LNG…
PNG EXPLORATION
EXPLORATION PORTFOLIO PROVIDES FLEXIBLE, LONG TERM, HIGH VALUE GROWTH AT LOW COST OSHs PNG portfolio contains 11 billion boe gross unrisked exploration potential with net EMV of US1 billion 80 prospects in portfolio; plot shows…
PNG EXPLORATION PORTFOLIO OFFERS LONG TERM GROWTH POTENTIAL AT LOW COST 1 1) HIGHLANDS GAS LNG Infill, Expansion & Back-fill Muruk 2 successful 11km step out from Muruk 1: 3 Updated resource statement in early 2020 2 Additional…
NEAR-FIELD EXPLORATION DRILLING GOBE FOOTWALL - RATIONALE Gobe Footwall exploration well spudded 12 November Value creation with limited capital outlay, drilled within existing operated field and from existing well pad in PDL 4…
GOBE COST EFFECTIVE EXPLORATION AND PRODUCTION GOBE FOOTWALL AND GOBE MAIN K WELLS Gobe Footwall 1 well is a deviated well, avoiding existing Gobe Field reservoirs to penetrate deeper footwall objective beneath and to west of field…
NORTH SLOPE, ALASKA
OIL SEARCH ALASKA MAJOR PROGRESS ON ALL AREAS SINCE ACQUISITION Pikka Development Pikka Exploration & New Ventures Appraisal Exploration Positive 2019 drilling 20 prospects with gross potential Well data trades Horseshoe…
CORE PIKKA DEVELOPMENT AREA APPRAISAL COMPLETE 20 PENETRATIONS, SIX WELLS WITH FLOW TEST DATA, FOUR WELLS WITH CORES Pikka B confirmed strong production potential Qugruk 7 (Repsol 2014) from southern drill site Pikka C / S CT1 (Oil…
PIKKA UNIT DEVELOPMENT PLAN FINE-TUNED, EPS ADDED Early Production System (EPS) Objectives Produce through Early Production System (EPS) from ND-B (core development area), targeting first oil in 2022 Maximise production rate for full…
SCHEDULE TO FIRST OIL EARLY PRODUCTION IN 2022 FOLLOWED BY MAIN PRODUCTION IN 2024 2018 2019 2020 2021 2022 2023 2024 Appraisal FEED Development (EPS) Production (Main) Built base team Production review Drilling 50 55 120kbd…
EXPLORATION WINTER 2019/20 TWO WELL, HIGH IMPACT PROGRAMME TESTING NANUSHUK ANALOGUES Pikka East (Mitquq): Success will open up an additional Nanushuk trend with potential Pikka tie-back Location enables tie-in to existing Pikka…
FINANCIAL OVERVIEW
FUNDING POSITIVE MOMENTUM IN FUNDING GROWTH PROJECTS Liquidity of US1.18 billion, comprising: US547 million of cash US636 million of undrawn corporate credit facilities PNG expansion projects funded through 60-70% project…
MAJOR PROJECT FINANCING ACTIVITIES 2019 - 2025 ECA & CB engagement Lender Model Construction: Commence PIM issuance - Debt draw down Commercial/ FEED: FIDs on: - State financing Debt Structure - Lender compliance Papua LNG Papua…
PNG OPERATING ENVIRONMENT
PNG POLITICS PNG POLITICS AND OPERATING ENVIRONMENT INCREASINGLY DYNAMIC PNGs operating environment has become more challenging in the last 12 months Benefits distribution improving but against a backdrop of very challenging economic…
PNG LNG ECONOMIC BENEFITS DISTRIBUTION IMPROVED PROCESSES IN DELIVERING BENEFITS PNG Government has made good process on resolving outstanding landowner beneficiary issues highly complex process Of 15 licences covering PNG LNG, 13…
SOCIAL RESPONSIBILITY STRATEGY COMMITTED TO SUSTAINABLE DEVELOPMENT 2020 Social Responsibility Strategy is integrated with OSHs strategic objectives and vision Prioritises initiatives with material business value and provides…
SOCIAL RESPONSIBILITY COMMITTED TO SUSTAINABLE DEVELOPMENT Shared value creation is a powerful way to achieve socio-economic outcomes. Through the Foundation, our strategic partnerships play a key role in providing practical solutions…
MANAGING STRATEGIC ESG RISKS OIL SEARCH ADOPTS PROACTIVE APPROACH TO UNDERSTANDING AND MANAGING OUR ENVIRONMENT, SOCIAL AND GOVERNANCE RISKS AND HAS STRATEGIES EMPLOYED FOR THEIR MANAGEMENT Committed to minimising impacts and upholding…
SOCIAL RESPONSIBILITY EMPOWERING OUR EMPLOYEES Enhance our organisational capability to deliver through employee engagement and empowerment Build organisational competency and capacity by creating opportunities for learning and…
SOCIAL RESPONSIBILITY SUPPORTING THE SUSTAINABLE DEVELOPMENT GOALS (SDGS) OIL SEARCH PNG INVESTOR SITE TOUR 25 29 NOVEMBER 2019 PAGE 52
PORT MORESBY POWER STATION LOWERING EMISSIONS AND ELECTRICITY COST FOR LOCALS Niu Power Ltd, 50:50 joint venture between Oil Search and Kumul Petroleum, has completed construction of 58MW gas fired power plant, located adjacent to…
PNG BIOMASS: RENEWABLE ENERGY PROJECT PROVIDING SUSTAINABLE ENERGY TO THE LOCAL COMMUNITY PNG Biomass: Renewable energy project in Markham Valley, PNG, to produce up to 40MW. Wholly owned by Oil Search Components: 30MWe biomass power…
CREATING SHARED VALUE WHATS GOOD FOR PNG IS ALSO GOOD FOR OIL SEARCH 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 Creates shared value whats good for PNG is also good for Oil Search Who provides funding for OSF OSH provided US64.2 million from…
WHAT DO WE DO IN HEALTH Promote effective leadership and governance at all levels of the system Supported 633,500 vaccinations for women, men and children across our three Provinces since 2015 Trained over 2,600 health workers to…
WHAT WE DO TO FACILITATE 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…
GROWING THE PNG LEADERS OF TOMORROW Teaching children to read - 400 since 2018 Building libraries/resource centres at least one each year Building future leaders through scholarships 33 scholarships funded to date Creating…
RECOVERY WORK POST 2018 EARTHQUAKE Almost 100 water tanks rebuilt or replaced in health facilities, schools and churches Rebuilding of earthquake damaged buildings Procurement of equipment destroyed Re-establishing health services…
APPENDIX OIL S E A RCH LIMITE D A RB N 055 079 868 ASX: OS H P NGX: OS H US A DR: OIS HY www.oilse arch.com
2019 PRODUCTION OUTLOOK Production 2019 Guidance1 M M BOE Oil Search Net Production1,2 Oil Search-operated production2,3 2.8 3.5 mmboe 30.1 30.3 Impacted by PNG LNG 30.0 29.0 2018 PNG 27.0 - 29.0 LNG 108 115 bcf earthquake Power 0.7…
2019 FULL YEAR GUIDANCE Operating Costs Low High Investment Expenditure (USm) Low High Production costs (US/boe) 12.00 13.00 Production 75 85 Other operating costs (USm) 140 150 Development oil & gas 25 30 Depreciation &…
PNG RESERVES1,2 AS AT 31 DECEMBER 2018 Licence/Field OSH Interest Proven Reserves (1P) Proven & Probable Reserves (2P) Total Total Gas4 Total Total Gas4 Oil/Condensate 3 Oil/Condensate 3 (mmbbls) (bcf) (mmbbls) (bcf) PDL 2 (Kutubu)…
PNG RESERVES & RESOURCES NOTES (1) Numbers may not add due to rounding. (2) Kutubu and Moran oil fields proved Reserves (1P) and proved and probable (2P) Reserves are as certified by independent auditor Netherland, Sewell & Associates,…
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