11
O I L S E A R C H L I M I T E D
22
Investor Field Trip28 – 30 March 2011
OSH PARTICIPANTS
Peter Botten Managing DirectorGerea Aopi EGM, External & Govt Affairs &
SustainabilityPhil Bainbridge EGM, Gas GrowthPhil Caldwell EGM, PNG LNG ProjectRichard Robinson EGM, Operations Ann Diamant Investor Relations Manager
33
Field Trip Route
MORO
CPF
HIDES Ambua Lodge
PORTMORESBY
100km LNG Plant144°E
8°S
6°S
147°E
DAY 1DAY 2DAY 3
KOPI
MoranMananda 5
44
Key Oil and Gas Fields, PNG
Kumul Terminal
Port Moresby
7°S
Juha
Hides
Moran
Agogo
Gobe Main
HidesConditioning Plant
ProposedJuha Facility
CSG Exploration
LNGFacility
Kutubu
Moro Airport
Flinders
145°E 146°E144°E143°E
6°S
8°S
9°S
GorokaKundiawa
Mt. Hagan
Mendi
Kerema
Huria
Barikewa
Pandora
SE Mananda
Uramu
P’nyang
100km
LEGEND
Oil Field
Gas Field
Prospect
Oil Pipeline
Gas Pipeline
OSH Facility
LNG Facility
Major Road
Lead
147°E
Madang
Daru
Wabag
Angore
ExplorationGas Resources
PNG LNG ProjectGas Resources
Non PNG LNG Gas Resources
SE Gobe
Kimu
Juha North
Mananda 5
55
DAY 1 – Port Moresby
Visit POM Tech training facility Visit PNG Plant SiteMeet with PNG ministers and senior bureaucratsOvernight Airways Hotel
66
Port Moresby Technical College
Both Construction Training Facility, to train up to 1,000 worker pa, and Production Operations Training Centre, for ongoing plant and operations, are openJuni Training Centre opening in 2011
77
PNG LNG Plant Site - schematic
888
PNG LNG Plant Site - actual
99
PNG LNG Plant
LNG facility located on State Portion 152 near Port Moresby
2 x 3.3 MTPA LNG trains
LNG storage tanks at the facility
LNG loading jetty off the coast for tanker ships to berth and load
Supporting facilities and infrastructure:Large camp for construction (~7,500) and operations (~500) personnel
Upgrade of existing road between LNG facility and Port Moresby and rerouting of the road around the LNG facility to maintain traffic flow to the north (completed)
Temporary laydown areas during construction only
1010
Schematic of LNG facility site and loading terminal
LNG Facility Location
1111
DAY 2 – PNG Highlands
Visit Kopi – southern logistics baseVisit Central Processing Facility (CPF) at Kutubu
Associated Gas construction activities
Overfly MoranOvernight Ambua Lodge
121212
PNG LNG Project
131313
Kumul Terminal
Port Moresby
7°S
145°E
HidesWellsJuha
Facility
EPC3LNG Facility
Kutubu CPF
Moro Airport
145°E 146°E144°E143°E
6°S
8°S
9°S
GorokaKundiawa
Mt. Hagan
Mendi
Kerema
EPC5BKomo
Airfield
100km
147°E
Daru
Wabag
PNG LNG Project
LEGENDOil Field
Gas Field
Oil Pipeline
LNG Gas Pipeline
Oil Facility
LNG Facility
Major Road
EPC1Telecommunications
(not shown)
Lae
EPC2Offshore pipeline
EPC5AOnshore pipeline
and Infrastructure
Gobe PF
Kopi Wharf
C1Support
Infrastructure
C2Support
Infrastructure
C1
EPC4Hides Gas
Conditioning Plant
141414
PNG LNG Project Overview
6.6 MTPA, 2 train development, operated by ExxonMobilOver its 30-year life, PNG LNG expected to produce over 9 tcf of gas and 200+ million barrels of associated liquidsInitial Equities:
ExxonMobil - 33.2% Oil Search - 29.0%Kroton2 (PNG Government) -16.8% Santos - 13.5% Nippon Oil - 4.7% MRDC (PNG Landowners) - 2.8%
Fully contracted to Asian buyers, with continuing strong market interest
Sinopec (China) ~2.0 MTPATEPCO (Japan) ~ 1.8 MTPA Osaka Gas (Japan) ~1.5 MTPACPC (Taiwan) ~ 1.2 MTPA
151515
PNG LNG Project Overview
Main EPC contractors:LNG Plant: Chiyoda/JGCOffshore Pipeline SaipemHides Gas Plant CBI/Clough JVOnshore Pipeline SpiecapagInfrastructure McConnell Dowell/CCC JVEarly Works Clough/Curtain JVAssociated Gas (OSH only) Aker Solutions (Jacob)
Different labour environment to Australian LNG projectsFour-year construction period. First LNG sales date of 2014 and capital cost estimate of US$15 billion unchanged
1616161616
Milestones achieved in 2010
Mobilisation by major engineering, procurement and construction contractors and procurement of long lead equipment and materials Construction of training facilities in Port Moresby and HighlandsContinued early construction activities both in Highlands (incl. earthworks, resettlement, clearing, road and bridge upgrades) and at PNG plant site near Port Moresby (accommodation camp, road bypass)Completion of LNG Plant site camp, earthworks started at Hides plant site and Komo airfield and delivery of pipe to Kopi wharf commencedAssociated Gas (AG) construction in oil fieldsand PL 2 Life Extension underwayGenerally in line with Operator’s plan for schedule and cost
1717171717
Activities in 2011
LNG plant Procurement, earthworks, foundationsCommencement of structural steelwork, pipe racksJetty works, tank foundations
Offshore pipelineContinued procurement and mobilisation of pipePreparations for pipe lay
Onshore pipelineContinued procurement, coating and mobilisationRoute clearance and commencement of pipe lay
Associated Gas work at Kutubu and on the liquids export systemHGCP and Komo Airfield
Earthworks, foundations and start of constructionMobilisation of drill rigs
1818
Associated Gas & Related Projects (AGRP)
Oil Search, as Oilfield Operator, is responsible for development and operation of facilities required to deliver oilfield gas into PNG LNG Project and receive Project Condensate
Key objectives of AGRP are to deliver safely and within budget/schedule:
Commissioning gas to PNG LNG Project
Receipt, storage and export condensate from LNG Project HGCP with high reliability
Delivery of associated gas from oil production systems at CPF and GPF into LNG Project gas pipeline to LNG Plant
191919
CPF Scope Of Work
Associated Gas DeliveryEnhanced dehydration by replacing existing gas driers to improvegas quality and reduce emissionsEnhanced gas cooling for spec commissioning gas to LNG PlantAG Gas Management System by automating various wells for remote operation and upgrading plant inlet gas management systemNew and upgraded metering to manage gas reserves
Condensate StorageUpgrading of pipework to allow inline mixing, loss prevention (particularly fire management) and control systems
Commissioning GasInstallation of skids to deliver early commissioning gas to LNG Plant
UtilitiesImprovements to ESD system and new control roomTie ins for new equipment into existing and improved utilities
2020
20
Facilities Basis - CPF
2121
Construction Progress
New Ridge accommodation units – handed over and partially occupiedEPCM Contractor, Aker Solutions, on site and undertaking pre-mobilisation activitiesMajority of key Construction Management personnel in placeEarly works programme has commenced (Control Room civil works)
2222
PNG LNG Project Focus areas
Ramp up of logistics and resourcingOnshore pipeline installation – terrain, multiple work frontsContinued work with project area communitiesEfficient use of landowner companies to deliver maximum local content (over K1.5bn to date)Engagement with Government during National Election build up
23232323
Timetable
2010 2011 2012 2013 2014
FinancialClose
•Continued early works•Detailed design•Order long leads and place purchase orders
•Open supply routes•Contractor mobilisation•Commence AG construction
•Complete pipe lay•Ongoing drilling•Complete Hides plant•Commission LNG plant with Kutubu gas
•Ongoing procurement and mobilisation
•Airfield construction•Drilling mobilisation•Start offshore pipeline construction
•Onshore line clearing and laying
•Start LNG equipment installation
First Gas from Train 1,
then Train 2
•Complete AG •Continue onshore pipe lay
•Complete offshore pipe lay
•Start Hides plant installation
242424
PNG LNG Project – Highlands, Kopi
Aerial view of HGCP site Juni Training Camp construction
Pipeline stringing, onshore pipeline Kopi Shore Base
2525
GrowthOpportunities
2626
PNG Gas Growth
Key strategic priority for Oil Search is to grow gas business in PNG, with LNG the optimum commercialisation route PNG LNG will provide infrastructure, workforce capability and provide a competitive cost structure:Government is very supportive of, and expects, future gas growthOil Search is pursuing a two pronged strategy:
PNG LNG ExpansionGulf Area LNG
Competitive and positive position in the LNG marketFocus on broad reserves maturation programme
2727
Source:�FACTS GLOBAL ENERGY,�Feb�2009
Asian LNG Markets Outlook
Multiple potential suppliers of LNG post 2015 Economically robust brownfield expansions with quality operatorswill have advantage when seeking offtake agreementsLNG outlook very dynamic
Source: Wood Mackenzie and Deutsche Bank, February 2011
MMTPA
JapanJapan
South KoreaSouth KoreaTaiwanTaiwanIndiaIndia
ChinaChina
0
50
100
150
200
250
300
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
OtherOtherMalaysiaMalaysia
SingaporeSingapore
ThailandThailand
ChileChileMexico WestMexico West
2828
PNG LNG Resource Maturation
PNG LNG dedicated fields:Associated Gas Fields:
Oil Search as Operator undertaking detailed evaluation on additional resource potentialSeeking PNG LNG Co-Venturers (CoV) alignment on additional resource
Hides GWC well:Targeting 4Q 2011.
Issue being considered is impact on Project logistics plan
Hides Northern Well:Timing still being discussed
2929
PNG LNG Resource Maturation
Existing discoveries outside PNG LNG dedicated fields with high equity alignment:
P'nyang: Seismic in 2011 scheduled to be completed in MayTargeting drilling of commitment well in 1Q 2012
Exploration licences with high equity alignment:Huria:
Seismic in 2010/11 complete and being evaluated Subject to final technical review, targeting drilling in 4Q 2011
Existing discoveries in “catchment area”Pandora (PRL 01):
Pandora JV progressing development studies and initial discussions with PNG LNG
Barikewa (PRL09):Oil Search have assumed Operatorship Commencing development studies and initial discussions with PNG LNG
Uramu (PRL10)Commencing development studies and initial discussions with PNG LNG
30
Huria Prospect
Located adjacent to Angore and Hides gas fields
Large, broad anticline
Multi tcf potential
Seismic completed and being interpretedTarget drilling 4Q11 subject to final decision.
PRL 11 WI %
Oil Search 52.50
Exxon 47.50
MSL
-1000
-2000
-3000
-4000
1000
-5000
SW
Ieru
Darai
ImburuToro
Strickland
Huria
NE
metres
PRL11
PDL7
PPL239
PDL1
PRL02
PPL260
PDL7
Huria Prospect
PPL219 PPL233
PDL6 PDL5
PDL9
PRL11
PDL8
PDL8
PRL02
PRL02
3131
Gulf Area LNG Strategy
Selected Gulf Area licences high graded:Proven hydrocarbon areaMultiple play typesRelatively untested
Strategy:Secure broad licence position De risk with seismic and then potentially:
Farmout to a credible LNG player with development aspirations aligned with OSH Targeting OSH equity of ~30-35%
Target multi well drilling programme in 2011/12
Steps completed so far:Increased equity in Pandora (PRL 01) to 24%Increased equity in PPL 244 as a result of the swap with Talisman for PPL239Completed farmins to four additional licences in Gulf AreaCompleted initial phase of large 3D seismic surveyRemaining seismic underway
3232
Gulf Area Licences
PRL03
PRL11
PRL12PPL239
PDL1
233
PRL02
PDL5PDL6
PPL260
PNG LNG ProjectGas Resources
Non PNG LNG Gas Resources
ExplorationGas Resources
OSH Operated LicenceOSH Interest LicencePetroleum Development LicencePetroleum Retention LicenceLicence Application“Farm in” LicenceOil FieldGas FieldOil & Gas FieldOil PipelineProposed Gas Pipeline
KumulTerminal
PRL01
PPL234
PRL10
9°S
145°E 146°E 147°E144°E143°E142°E
Pandora
PRL08
PPL240
PPL233
PPL190
PPL219PDL2
PDL4
PDL3
APDL14
AngoreJuha
Hides
Agogo
Kutubu
Gobe Main
Uramu
Moran
PPL276
PPL312
PPL338
PPL339
PPL339
339
339
338
338
338339
339
339
339
9°S
8°S
7°S
6°S
339
PPL244
PPL 276
PPL 339
PPL 312
PPL 338
50km
Flinders
PPL 339
PPL 244
PPL 234
PRL 1
3333
PPL 234 & PPL 24480% equityArea of 3D seismic ~4700km2
144°E
9°S
8°S
50km
8°S
7°S
145°E
PANDORA
PASCA
URAMU
GOBE
ELK
PNG LNG Pipeline
146°E
PPL 312Partner: Hillsborough Energy Ltd.30% equity for carry on 3D seismic45% equity for carry on well
PPL 276Partner: Rockwell Energy Ltd.30% equity for carry on 3D seismic50% equity for carry on well
Gulf Area LNG Licences
Port Moresby
PPL 338Partner: Dabajodi Int. Energy Ltd.30% equity for carry on 2D seismic40% equity for partial carry on well
PPL339Partner: Dabajodi Int. Energy Ltd.30% equity for carry on 2D seismic40% equity for partial carry on well
PPL 339Partner: Dabajodi Int. Energy Ltd.30% equity for carry on 2D seismic40% equity for partial carry on well
3434
Gulf Area Seismic Surveys
Seismic surveys:PPL 234 and PPL 244 3D complete
PPL 276 and PPL 312 3D commenced
PPL 338/339 contracts awarded and being mobilised
All acquisition and processing complete by July ‘11
Interpretation and evaluation complete at end 3Q11
35
PNG Oil Exploration
PPL 219 WI %
Oil Search 71.25
JX Nippon Oil & Gas 28.75
APF
SE ManandaMoran
Agogo
MANANDA 5
PDL6
PPL219
PPL233
PDL5
PDL210km
PPL233
PPL219
219
APPL349
APPL350
KutubuCPFRidge Camp
Moro 2C resource of 25 mmbboe booked
Currently completing extensive testing programme
Results have been encouraging
Considering options for appraisal/development
36
Mananda-5: Toro C Flare
36
3737
Toro A:
Main Flow: 800 – 1100 bopd, GOR 650 scf/bbl, maximum of 20/64” choke
Extended Flow: 1000 – 1200 bopd, GOR 900-1000 scf/bbl, choke 20-24/64”. Maximum flow 1900 bopd, GOR 900 scf/stb, choke size of 32/64”
Toro BL:
Main flow: 1150 bopd, GOR 600 scf/bbl, 20/64”choke
Maximum flow of 2085 bopd during multi rate testing
Toro C:
Main flow: 800-1200 bopd, GOR 1200 scf/bbl, 28/64” choke.
Maximum rate of 1885 bopd on 32/64” choke.
Imburu A:
Initial Flow: 500-700 bopd, GOR 1350 scf/bbl, 30% BS&W. Testing curtailed due behind pipe influx of water from Digimu.
Digimu:
Initial Flow: 500-1400 bwpd, 0.2 MMscfg/d.
Mananda 5 Production Testing Update
3838
CSG Exploration
OSH holds seven MELs, each approximately2,400 to 2,550 sq km. Total area 17,500 sq kmLow cost wells, high risk, potentially large prize Drimgas intersected coals and cores being testedSmipen 3 currently drilling
6°S
142°E20km
141°E
EL 1725
EL 1726EL 1720
EL 1721
EL 1722
EL 1723
EL 1724
Ningerum 1
Drimgas 2
Smipen 3
3939
MENA Exploration
Dubai Office
Tunis OfficeTajerouine + Le Kef- Recently completed 600km 2D- 2 commitment wells by 2Q 2012
K42 & Shakal- Recently completed 200km of
2D in K42 and 50km of 2D in Shakal
- Interpretation underway
Block 3 & 7- Tubb’a gas condensate discovery in
Block 3- Al Meashar 2 completed- Exploration/production options will be
reviewed post Al Meashar 2
4040
DAY 3 – PNG Highlands
Overfly HGCP, Komo AirfieldVisit Hides camp at NogoliOverfly Mananda 5, SE ManandaTo Port Moresby
4141
ProductionSummary
4242
World Class Safety Performance
Total Recordable Injury Frequency Rate Data(per Million Hours Worked (All Reported Data))
Fletcher Building
BramblesFoster’s
Macarthur CoalOZ MineralsDowner EDI
United GroupOrigin
Incitec PivotBoart LongyearContact Energy
James HardieHastie Group
CSR
StocklandTransfieldNewcrest
AWEBHP Billiton
Lahir GoldAmcorSantos
OricaWoodside
Oil Search
Fletcher Building
Brambles
Foster’s
Macarthur CoalOZ Minerals
Downer EDI
United Group
Origin
Incitec Pivot
Boart Longyear
Contact Energy
James Hardie
Hastie Group
CSR
Stockland
Transfield
Newcrest
AWE
BHP Billiton
Amcor
SantosOrica
Woodside
Oil Search
0 5 10 15 20 25 300 5 10 15 20 25 30
2009 2010
Source: Company data, Citi Investment Research and Analysis. Note: TRIFR – Total Recordable Injury Frequency Rate per 1 million hoursworked; * Lihir Gold taken over by Newcrest. (September 2010); ** Citi estimate for Macarthur Coal’s Group TRIFR based on operations’weighted average coal production.
FY10YTD data
434343
Oil Search Production
10 Net Production (mmboe)
0
2
4
6
8
2008 2009
8.60
7.66
2010
8.12
2011(Forecast)
6.2-6.7
2012 2013
MENAHides GTESE ManandaSE GobeGobe MainMoranKutubu
444444
FY10 Performance
World class safety performanceProduction
Strong production performance of 7.66 mmboe, above guidanceGas conservation exceeded targets with lower than expected impact on oil production
~20 bcf conserved in 2010
Kutubu and AgogoADT 2 ST3 well continued to contribute strongly ~1,500 bopd
Moran 15 ST1 proved field extension to the south eastMoran and Gobe Main – base production exceeded forecastsSE Gobe underperformed in 1H10 but improvement in 2H10
45454545
Reserves at 31 December 2010
No external reserves audit was completed this year:Field production performance consistent with predictions through 2010Following sanction of PNG LNG Project, 301 mmboe (1P) and 505 (2P) mmboe were booked in 2009, no significant changes since
2010 production of 7.7 mmboe led to:Proven (1P) net remaining oil and gas reserves decrease from 344.5 mmboe to 336.8 mmboeProven and Probable (2P) net remaining oil and gas reserves decrease from 566.9 mmboe to 559.3 mmboe
Oil reserves cover of 7 years, based on 2010 production, gas reserves cover of more than 25 years
46464646
Resources at 31 December 2010
2C contingent resources increased to 318 mmboe at end 2010, from 281 mmboe at end 2009, reflecting:
PPL 219 Mananda 5 and Yemen Block 7 Al Meashar-1 discoveries6.4% increase in PRL 1 (Pandora) following purchase of Twinza’s equity2.5% increase in PRL 9 (Barikewa) as result of farm-in with Santos
Total 2P and 2C reserves and resources of 877 mmboe, up from 848 mmboe in 2009
474747
2011/12 Development & Near-Field Appraisal Drilling Activity
PRL08
PPL240
PRL11
PRL12
PPL239 PDL1
PPL233
PPL190
PPL219
PRL02
PDL2
PDL5PDL6
PRL09
APRL14
PPL260
PPL219
PDL4
PPL219
PDL3
PDL4
PRL12
50km
AngoreJuha
Hides
SE Mananda
Barikewa
Kimu
Cobra
Iehi
PPL240
PPL233
APPL350
142°E
6°S
143°E 144°E
7°S
Usano:2011 : 1 well, 1 workover2012 : 1 well
Kutubu:2011 : 1 well, 1 workover
Agogo:2011 : 1 well2012 : ±1 well
Moran:2011 : 1 well2012 : 1-2 wells
SE Gobe:2011 : 4-5 workovers
Gobe Main:2011 : 1 workover
484848
2011 Production Outlook
Underlying production from oil fields expected to remain strong,with 2011 production impacted by:
Production from Moran 15 for full yearNatural decline Two week shutdown for tie-in of Associated Gas facilities
Production guidance for 2011 of 6.2 – 6.7 mmboe, with production out to first LNG broadly flat, subject to success of work programmes
Robust workover and development drilling programme in 2011Reservoir models for major PNG oilfields being comprehensively updated to ensure gas blowdown maximises value
Rig strategy:One rig focused primarily on development and near-field appraisal through 2011Second rig currently being utilised on third party opportunities
49494949
Key 2011 Focus Areas
Maintain OSH’s industry-leading safety performance in a high activity environment
Continue to build sustainable combined oil and gas business
Strong commitment to cost effectiveness
PNG LNG Project commitments driving operational developments:Improved reliability and long term integrityLife extension programmes for facilitiesUpgrade of key systems and processesEnhanced development of personnel
Continued focus on capturing additional in-field and near field reserve opportunities, particularly forelimb opportunity opened up by ADT 2 ST3Support ongoing LNG Project development with access to infrastructure and in-country expertise
505050
Strategic Review
Substantial broad based Strategic Review was completed in 4Q10
Review of all major assets and options to continue to deliver top quartile shareholder returns for the next 5+ yearsProvided key work programmes and required resourcing to achieve this goalPerformance management programme to drive delivery
Review provides the template for material continued value growth
515151
Strategic Review
Key Conclusions of Review:Past reinvestment in PNG has created significant value (more than 30 fold increase in market cap since 1992, 4 fold increase since 2005)OSH has asset base and primary skills to deliver top quartile returns for 5+ yearsKey value drivers will be major project delivery, continued resource build and enhancing oil and gas operating synergiesMaximum value is achieved by remaining a focussed oil and gas growth company, driven primarily from PNGOil business will continue to provide excellent platform supporting LNG delivery and growthLNG expansion, Trains 3 & 4 are catalysts for material growth
525252
Strategic Review
Major Strategies have been defined to deliver growth:1. Oil and Gas Production Optimisation
Near field production opportunitiesRigorous cost controlNew developmentsBuilding long term operating capacity
2. Maximising value from PNG LNG Project (T1 and T2)Project delivery on time, on budgetEnhance reserve portfolioActively manage in country issues, including benefits distribution
3. Development of Gas Expansion LNG OpportunitiesResource build for T3 underwritingOptimisation of cost structure
535353
Strategic Review
4. Gas Resource Accumulation for LNG OpportunitiesDevelop third party gas strategyResource build for T4 underwritingIncludes Offshore Gulf exploration and appraisalMeasured acquisitions and aggregations
5. Ensure Oil Search’s SustainabilityMajor enhanced focus on managing operating risks, as large projects are deliveredPromoting transparency in benefits distribution and sustainability“Social Licence to Operate” – new community initiativesImproved reporting
545454
Strategic Review
6. Evaluate New Growth OpportunitiesMeasured programme to identify future growth options within and outside core areasOptimisation of value of MENA asset values
7. Optimising Financial and Capital StructureThrough to and beyond first LNG production
8. Align Organisation to Deliver StrategySkills development, succession planning
55
Sustainability Group
In light of increasing value of PNG assets going forward, OSH seeking to further enhance its focus on managing PNG sustainability issues (traditionally an area of strength)New Sustainability Group has been formed:
Focus on communities, government/regulatory and in-country business relationships
Group will be multi-facetedSpecific initiatives involve:
Relationship building, Government, Landowners etc Facilitating transparency and equity in benefits distributionEnhancing capacity to capture growth opportunities
New Health Foundation also being establishedExpansion of existing health programmes
56
Comprehensive Approach to Sustainability
Project Benefits to Government and Landowners include:
Tax Payments to GovernmentDirect Project Royalties – an essential componentRoyalties and development leviesLandowner company development and contract ownershipEmployment, training and educationCommunity Area ProjectsTax Credit InfrastructureCommunity Programmes (MDG’s)Sustainable Community Development InitiativesEnvironmental Sustainability
57
Comprehensive Approach to Sustainability
Oil Search Enhanced FocusPNG Stakeholder Engagement
GovernmentLandowner Leaders and Community EngagementBureaucracy capability enhancementFrom village to Port Moresby – outside the fence and dealing in the village
Transparency in Benefits Distribution Public payment, contract awardsPromote governance
Independent Sovereign Wealth and Funds
58
Comprehensive Approach to Sustainability
Transparency in ManagementSustainability ReportStakeholder Engagement
OSH Commitment to PNGOil Search Health FoundationExpand world class HIV/Aids and malaria management programmesExpand Health of the Nation Programme
Child and Women's healthSupported by Global Fund (Primary Recipient) AusAid and ADB
Environmental SustainabilityISO 14001 accreditationPartnership with WWFEnvironmental EducationWild Life Management Areas
A Major Corporate Focus to Deliver Value
595959
2011 Outlook
PNG LNG Project delivery underway:Project ramp up continues at accelerating pace:
Commencing construction at PNG LNG plant site, HGCP and KomoAssociated gas and life extension projects Focus on management of in country issues
Further pursuit of gas expansion and resource underwriting
Hides evaluationHuria and P’nyang exploration and appraisalGulf area seismic and prospect maturation
Continued strong oil field production performanceTesting and evaluation of Mananda 5 discoveryComprehensive development and workover programme
Optimise value of MENA Assets
606060
2011 Guidance Summary
Continued good field performance Oil and gas production: 6.2 – 6.7 mmboeSimilar performance in 2012 and 2013
Operating costs ex corporate costs: US$16-18/boe Impacted by:
Lower production volumesMajor workover programme to maximise oil recoveries before gas productionExpected PNG inflation, including currency impactsAssociated Gas activitiesCost sharing opportunities
Corporate Costs~ US$3/boe from ~US$2.16/boe
Stronger A$ exchange ratesFocus on sustainability initiatives
D,D & A: US$7-9/boe
616161
2011 Investment Outlook
US$’m
Investing :Exploration inc gas growthPNG LNGProductionCorporate (inc rigs)
Financing :Dividends
2010 (A)
1761139
427
0*
* Dividend fully underwritten
# 35-40% of spend in MENA
2011 (F)
180 – 200# 1,150 – 1,400
110 – 13010
0*
626262
Liquidity Outlook
Funding in place to meet existing commitments and base business plan:US$1.26 billion in cash at end December, US$304.5 million available from term revolving facility, nil drawn down = Group liquidity ~US$1.56 billion
Discretion over timing of non commitment activitiesSufficient liquidity to deliver on strategic plan initiatives
Key Assumptions:1. Brent Forward curve pricing as at 3 February 20112. PNG LNG Project on schedule and budget3. Train 3 FEED costs included, Train 3 construction costs excluded4. Production profiles, other Capex / Exploration based on strategic review business plan5. Existing oil facility refinanced
Time
US
$m
Liquidity (cash plus undrawn bank debt)
31 Dec 2010
636363
Summary
Company fully focused on delivery of Major Strategic Initiatives
Oil field performance remains strong, costs are tightly controlled. Impacted by associated gas constructionPNG LNG T1/2 construction underway
Timing and budget unchanged
LNG expansion and gas resource accumulation programmes matured. Seismic underway and drilling planned for 2H11Testing and appraisal activities planned for Mananda 5Activities underwritten by strong balance sheet and ample liquidity to meet LNG obligations and expansion focussed activities
646464
Long Term Production Outlook
PNG LNG transforms production profile, adding ~18 mmboe pa to OSH at plateau in 2015 onwards. 30 year Project life
T3 could add an additional ~9 mmboe pa, with T4 of similar magnitude
Net
Pro
du
ctio
n (
bo
ep
d)
0
10,000
20,000
30,000
40,000
50,000
60,000
LNG GasLNG Gas
PNG DevelopmentPNG Development
70,000
80,000
Potential T3 LNG GasPotential T3 LNG Gas
LNG CondensateLNG Condensate
90,000
Potential T3 LNG CondensatePotential T3 LNG Condensate
2012 2014 2016 2018 2020 20262022 20282024 2030
656565
O I L S E A R C H L I M I T E D
666666
Appendix
Oil Search began selling production off a Dated Brent marker in July 2010Positive impact on revenue since this dateChange driven by liquidity in the Brent market compared to Tapis
Brent Premium over Tapis - July to December 2010
(6.0)
(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Jul Aug Sep Oct Nov Dec
US
$b
oe
Lifting dates
676767
Port Moresby
8°S
6°S
146°E142°E
Juha
100km
Hides & Angore
Gobe
Kutubu & Agogo
PNG Attracting Growing Interest
Petroleum Licences
CSG Licences
Oil Search Equity ParticipationTalisman and Sasol have acquired significant acreage in Western Forelands. Interoil has strong position in Eastern ForelandsOSH strategy focused on enhancing position in core PNG LNG Foldbelt acreage and Gulf - viewed as offering greatest potential for large gas discoveries
Port Moresby100km
Juha
Gobe
Kutubu & Agogo
Hides & Angore
8°S
6°S
146°E142°E
Talisman Equity Participation
Port Moresby
Juha
Gobe
Kutubu & Agogo
Hides & Angore
8°S
6°S
146°E142°E
NGE & Interoil Equity Participation
NGE
Interoil
100km
686868
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