Oil Search2013
Annual Meeting
STRATEGYON
TRACK
2013 Annual Meeting Agenda
Overview
2012 Results
PNG LNG Project Update
Gas Expansion Opportunities
Production/Near Field
MENA Oil Exploration
Commitment to PNG
Summary2
Overview
3
Strategies for Growth
Optimise performance of existing producing PNG oil fields
Support ExxonMobil in delivering PNG LNG Project on schedule
Aggregate gas resources in PNG Highlands to underpin LNG expansion
Establish gas resources in Gulf of Papua for potential standalone LNG project
Evaluate and pursue international growth opportunities
Optimise capital and financial structure
Operate safely and sustainably
4
Core Strategies Deliver Consistent Share Price Appreciation
Share price (A$)
January 2003 – April 2013
0
1
2
3
4
5
6
7
8
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Merger of Oil Search & Orogen
Acquisition of Chevron Texaco’s PNG assetsAssume Operatorship
Manage transition toPNG LNG Project
PNG LNG FID
5
TSR performance
Source: Orientcap
Oil Search ranked 14th in S&P/ASX 200 for TSR over five years to 31 December 2012
Median TSR ASX 200 OSH TSR
% T
SR
-60
-40
-20
0
20
40
60
1 Year 3 Year 5 Year
15.6
-3.6
-23.1
-5.9
-23.6
-34.7
12.8 16.5
52.2
Median TSR ASX 200 Energy
6
0
1
2
3
4
5
6
7
8
9
2004 2005 2006 2007 2008 2009 2010 2011 2012
TR
I /
1,0
00
,00
0 H
ou
rs
Oil Search
InternationalCompanies
(OGP)
1.761.68
1.75 1.851.96
1.16
6.0
5.2
2.64*
4.7
Committed to Achieving World Class Safety Performance
Total Recordable Injury Frequency Rate of 2.64 for 2012
Australian Companies (APPEA)
*PNG Asset TRIFR: 2.71 MENA Asset TRIFR: 5.83
7
Changing Face of Oil Search
Delivery of PNG LNG Trains 1 & 2 approaches:Project over 80% complete, increasing confidence in delivering on schedule and within revised budget
Start of substantial long term (20 years+) cash flow stream getting closer
Resource underpinning for further growth. Progressive results delivery to end 2014:
Comprehensive exploration and appraisal programme underway in PNG Highlands, Gulf of Papua and oil fields
Overseas, focusing on material oil (Taza discovery)
Preparing for LNG production and beyond:Oil operations review and sustainability
Understand growth potential in core PNG areas
Understanding the upside value of our assets
Resource base to underpin further growth8
2012 Results
9
2012 Performance
9.88.6 8.1 7.7
6.7 6.4
07 08 09 10 11 12
Production (mmboe)
78
100
6576
116 114
07 08 09 10 11 12
Oil Price (US$/bbl)
Production of 6.38 mmbboewithin guidance range
Good result given maturity of oil fields and unplanned and planned shut-downs during year
Strong underlying field performance
Realised oil price marginally lower than in 2011
No hedging in place
10
2012 Performance
137.9
313.4
133.7185.6 202.5
175.8
07 08 09 10 11 12
NPAT (US$m)
8 8
4 4 4 4
07 08 09 10 11 12
DPS (US cents)
Net Profit after tax of US$175.8 million
Key drivers included lower sales volumes and oil prices
Higher exploration expense, reflecting increased levels of exploration and evaluation activity
Total dividend of 4 US cents (8.4 toea), unchanged from 2011
11
2012 Profit Drivers
Higher cash expenses reflects gas purchase costs, adverse FX movements and one-off itemsExploration expenses include write-off of drilling costs of Trapia and IDT-25 Koi Iange test and higher geological and geophysical, general and admin costsPre-tax profit from sale of assets relating to Block 3, Gulf farm-out and sale of 10% of PPL 260Impairment expense of US$23.8m relating to PRL 1 – Pandora
US$m
202.5
2011
NPA
T
(53.0)
Cas
h O
PEX/
BD
(8.3)
Rev
enue
(83.4)
Expl
orat
ion
175.8
2012
NPA
T
Tax
65.6
DD
&A
1.9
0
50
100
150
200
250
Oth
er
(4.0)
Prof
it o
n Ass
et
Sale
s/I
mpa
irm
ent
54.5
12
Cost Management
Actively working to control costs
Costs associated with Kumul Marine Terminal oil sheen incident, flood damage, foreign exchange and higher inflation added ~US$3/boe
Higher gas purchase costs reflect new Hides GTE contract, more than offset by higher gas revenue
20122011
US$24.82US$20.16
US$6.00Gas purchase
costs
25
5
10
15
20
30
US$/boe
US$0.62
35
Gas purchase costs
13
Strong Financial Position
Strong balance sheet, able to fund remaining equity share of PNG LNG Project as well as active exploration and development programme
US$3.06 billion drawn down under PNG LNG project finance facility
PNG LNG 2012 cost increase :
To be funded 70:30, debt:equity. Discussions progressing well to secure US$1.5bn supplemental debt available under existing project finance agreement
OSH has ample capacity to fund its equity share of additional costs (~US$300m)
536
1,289 1,2651,047
488
08 09 10 11 12
Cash (US$m)
435363
304247
500
08 09 10 11 12
Corporate Facility (US$m)
14
Investment Outlook
0
500
1,000
1,500
2,000
2,500
2008 2009 2010 2011 2012 2013F
Other PP&E
Production
PNG LNG
Exploration & Evaluation
451586
1,364
1,568
1,861
2013 GuidanceUS$1.93-2.0bn
US$20 – 30mUS$150 – 170m
US1,500 – 1,600m
US$260 – 300m
US$m
15
PNG LNG Project Update
16
PNG LNG Project Overview
More than 80% complete
Operator has confirmed Project remains on track for first LNG sales in 2014
Have passed peak for logistics and workforce
Capital cost increased to US$19.0 billion last year, comfortable that Operator can deliver within revised budget
Capacity of LNG Plant increased to 6.9 MTPA
Despite cost increase, Project remains economically robust
HidesGas Field
AngoreGas Field
Juha Production Facility250 Mcfd
60km x 8” liquids line
109 km x 8” condensate line
LNG Facility6.9 MTPA
407 km x 34” subsea gas pipeline
Existing 270 km x 20”crude oil export line
*Existing Facilities
Kutubu*
Agogo/Moran*
Gobe*
Hides Gas Conditioning Plant960 Mcfd
292 km x 32” gas pipeline onshore
60km x 14” gas line
JuhaGas Field
Port MoresbyGulf of Papua
17
PNG LNG Project
Oil Pipeline
PNG LNGGas Pipeline
OSH Facility
PNG LNG Project Facility
100km
Offshore pipeline
Kumul Terminal
7°S
Juha
Moran
Agogo
6°S
8°S
9°S
145°E 146°E144°E143°E 147°E142°E141°E
Gobe Main
Kutubu
Hides
Angore
LNG Facility
Port Moresby
Onshore pipelineand Infrastructure
Juha Facility
Komo Airfield
Hides Gas Conditioning Plant
18
PNG LNG Plant Site
Engineering and procurement substantially complete. Preparations underway to ready plant for receipt of commissioning gas
LNG Facility
PNG LNG plant site, March 2013
19
PNG LNG Plant Site
Export Jetty
LNG Facility
20
PNG LNG Plant Site
Storage tanks
LNG Facility
21
PNG LNG Offshore Pipeline
Offshore pipelay – SEMAC I
Offshore pipelay – SEMAC I
OffshorePipeline
Offshore pipeline completed in 2012
22
PNG LNG Onshore Pipeline
Onshore pipeline welding
Highlands section pipeline
Pipeline burial
258km of onshore pipeline welded at end March 2013, with 197km of pipeline hydrotested
OnshorePipeline
23
Associated Gas/PL 2 Life Extension
Completed Phase 1 of PL 2 Liquids Export Life Extension Project
Associated Gas (oil fields) well advanced and readying for supply of commissioning gas in 2013
TEG Dehydration Unit installation Kutubu
New CALM Buoy at Kumul
Upgrade of Kumul Marine Terminal
Kutubu
Kumul
24
PNG LNG Project - Upstream
Completed HGCP foundations and erection of structural steel substantially complete
Hides Gas Conditioning Plant (HGCP)
Mar 2013
Mar 2013 Apr 2013
HGCP
25
Komo AirfieldDec 2012
Terminal
North
South
First Landing of Antonov 124 May 2013
PNG LNG Project - Upstream
Construction of Komo Airfield complete
Komo Airfield
26
PNG LNG Project - Drilling
PNG LNG development drilling programme commenced in July 2012 with Rig 702 at well pad B
Access roads and wellpad construction nearly complete
Second rig, Rig 703 commenced drilling at well pad C in April 2013
Hides Nogoli Camp
Hides GTE PlantPDL 1/7 – Hides Field8 New Production Wells
Drilling 2012+
Hides Gas Conditioning Plant
PDL 8 – Angore Field2 New Wells
10km Komo Airfield
27
PNG LNG ProjectTimetable Unchanged
FinancialClose
» Complete pipe lay» Ongoing drilling» Construction of
HGCP» 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
» Continued early works» Detailed design» Order long leads and place
purchase orders» Open supply routes» Contractor mobilisation» Commence AG
construction
First Gas from Train 1,
then Train 2
» Continue onshore pipe lay
» Complete offshore pipe lay
» Start Hides plant installation
» Start Hides drilling» Complete key AG items
2010 2011 2012 2013 2014
28
Gas Expansion Opportunities
29
Gas Growth - PNG Highlands
Comprehensive exploration and appraisal in PNG Highlands, to fully understand gas resource picture
Significant progress in 2012 with discovery of gas at P’nyang South
Upside at Hides to be tested by PNG LNG drilling programme
Seismic underway/planned in other Highlands areas. Aiming to mature prospects for possible drilling in late 2013/2014Kumul Terminal
7°S
PRL08
PRL11
PDL7
PDL2
PDL4
PDL3
PRL09
PDL6 PDL5
PRL14
260
PPL233
PDL9PDL8
6°S
8°S
Mt. Hagen
Mendi
Wabag
338
338
PPL260
PRL3
PPL219
PNG LNG Project
Gas ResourcesNon PNG LNG Gas Resources
PPL277
PRL02
PDL1
Juha
Moran
Agogo
P’nyang
Gobe MainKutubu
Hides
Angore
SE Gobe
Juha North
Hides GasConditioning Plant
& Komo Airfield
144°E143°E142°E
100km
PPL277
PPL233
PPL276
BarikewaKimu
Iehi/Cobra
30
P’nyang Gas Field
PRL 3 JV advancing with concept selection studies, optimal development concept expected to be finalised in 2013
Oil Search estimates total 2C gas resources in P’nyang field of 2.5 – 3.0 tcf, sufficient to underpin potential LNG expansion. Believes further upside potential exists in PRL 3, requires appraisal
Additional seismic in PRL 3 underway, to support potential development and resource evaluation
6°S
144°E
Hides
Kutubu
Gobe
Moran
Agogo
Juha
Angore
P’nyang
100km
142°E
8°S
5km
31
Gas Growth - Gulf of Papua
Exploration programme for gas to support possible new LNG hub recently commenced
If exploration is successful, potential to rapidly build resource base:
Proven hydrocarbon province, with over 30 opportunities identified across multiple play types
Development options include standalone LNG, floating LNG or integration with existing infrastructure
In 2012, introduced Total SA as our strategic partner:
Share costs and risks
Experienced LNG operator
Port Moresby145°E
146°E
144°E
8°S
9°S
Kerema
LNG Facility
Kumul Terminal
Elk/Antelope
2011 3D Seismic Regions
2D Seismic 2011 Lines
Uramu
2012 3D Seismic Region
2011 3D Seismic Regions
2D Seismic 2011 Lines
100km
32
2013 Gulf of Papua Programme
Flinders 1 in PPL 244 spudded late March 2013 and drilling ahead. Targeting gas in Plio-Pleistocene-age, submarine fan sands. Mean resource of 1 – 1.5 tcf
Hagana 1 in PPL 244 to follow. Stacked objectives, mean resource 1.1 tcf
Possible third well, Kidukidu, in PPL 244/PPL 385. Mean resource of 1.3 tcf
In 2013, acquire gravity and seismic data in onshore licences and decide whether to take up equity
FlindersProspect
HaganaProspect
Kidukidu ProspectJurassic & CretaceousJurassic & Cretaceous
Flinders
Hagana
Flinders 1 Hagana 1
Triassic & olderTriassic & older
MioceneMiocene
PliocenePliocene
PleistocenePleistocene
LateMiocene
LateMiocene
PascaRidgePascaRidge50km
33
Adding Value to PNG’s Oilfields
Since Oil Search assumed operatorship of all PNG’s producing oilfields in 2003:Reserves increased by 100 million barrels to 550 million barrels (+22%)
Kutubu previously expected to shut by 2011-12. Life of oil fields extended by 30+ years
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Oil R
ate
(bop
d)
Oil Searchtakeover
operatorship
Kutubu AgogoMoran
SEG WedgeMoran
Decline underprevious operator
Oil SearchAdded Valueoperatorship
UsanoKutubuMoran
34
PRL08
PRL11
PDL7
PDL1
PPL233
PPL219
PRL02
PDL2
PDL5PDL6
PRL09
PRL14
PPL260
PDL4
PDL3
PDL4
PDL7
Juha
SE Mananda
BarikewaKimu
Cobra
Iehi
PPL233
6°S
143°E 144°E
7°S
Mananda 6
PPL277PDL8
PDL9
PRL11
Angore
JuhaNorth
PNG Production and Near Field Opportunities
Oil Field
Gas Field
Oil Pipeline
PNG LNGGas Pipeline
OSH Facility
PNG LNG Project FacilityMajor Road
40km
Prospect
PNG producing fields are highly profitable and generate strong cash flows
Seeking to minimise production decline prior to start of PNG LNG with active programme
Substantial remaining high value opportunities close to existing infrastructure eg Mananda
Focus on getting ready to deliver Associated Gas into PNG LNG Project
Moran
Agogo
Gobe Main
Kutubu
Hides
SE Gobe
35
Production Outlook (ex-PNG LNG)
Expect 2013 production to be similar to 2012. Guidance range of 6.2 – 6.7 mmboe
Active workover and development drilling programme planned for 2013
Production out to first LNG in 2014 also expected to remain largely flat
Delivery of commissioning gas to PNG LNG will not impact production performance
0
1
2
3
4
5
6
7
8
9
2009 2010 2011 2012 2013 2014
ForecastHides GTESE ManandaSE GobeGobe MainMoranKutubu
Net Production (mmboe)
(Forecast)
7.668.12
6.386.69
6.7-6.2
36
Mananda 6
Mananda 6 appraisal well in PPL 219 (OSH 71.25%, JX Nippon 28.75%) spudded in April 2013
~5km south east and ~140m up-dip from Mananda 5 discovery, 10km from SE Mananda
Estimated recoverable oil resource of 30 mmbbl, with significant upside
If resource proven, aim to apply for development licence 2H 13, FID 2014, with field to be tied-in to SE Mananda facilities
First oil targeted for 2015 with peak production (gross) up to 15,000 bopd
Potential material impact on OSH’s total oil production
Mananda 5
2012 Seismic
Mananda 6
5km
SW
NE Mananda 6
DaraiDarai
IeruIeru
37
MENA Exploration
Existing Middle East/North Africa licences focused on exploration opportunities that have material oil potential
Long term strategy is to leverage existing strong relationships and skill base to develop international portfolio. Pace dependent on availability of suitable value-add opportunities, PNG capital commitments
38
Chia SurkhTested 11,950 bopdfrom Jeribe
Qamar Oil Discovery by IOC 1980 Tested 2000bopd from Jeribe
Oil Discovery by IOC 1956. Tested max2180bopd from EuphratesAnd 700bopd Shiranish
Kor Mor300mscfd gas/condensate toLocal power stations
JamburOil discovery 1953 by IOC. Reserves in excess of 1BBLExport via KirkukEuphrates & Qamchuqa
KurdamirGas condensate discoveryKurkuk & Jaddala Shiranish
SarqalaGas/Oil discovery 9000bopd from Jeribe
ShakalOil discovery. Tested 2700bopd from Jaddala
Taza-1Taza PSC, Kurdistan
Taza-1 reached total depth in April 2013. Testing of lower zone underway
Continuous oil shows over 250 metre section, covering three reservoir intervals –Jeribe, Dhiban and Euphrates
Pre-drill estimate of potential resource unchanged at 250-500 mmbbls
Follow-up drilling programme in 2H13, to further appraise Jeribe, Dhiban and Euphrates Formations and drill Cretaceous Shiranish and possible deeper targets
Open hole test of lower zone of Taza 1 well, Kurdistan
Taza PSC
Baghdad
36°N
40°E
200km
30°N
46°E
Taza-1
39
Commitment to PNG
40
Commitment to PNG – Continued Investment
Oil Search was PNG’s largest single investor in 2012, and largest tax payer
Approx. US$1.8bn spent on development, appraisal, exploration and operations. Expect to spend similar amount in 2013
Investor confidence in Oil Search and PNG is strong:
Driven by stable government and policy settings
Financial and social change driven by development requires us to contribute to society in PNG
41
Commitment to PNG - Sustainability Focus
Need to play major role in long term development and improving living standards for communities in PNG
Improving health and wellbeing through Oil Search Health Foundation
One of the largest private sector health services provider
Working with Dept. of Health and donors, Global Fund and AusAid along with various NGO’s
Providing HIV/AIDS management, malaria control, child/maternal health
Now in nine provinces
42
Commitment to PNG - Sustainability Focus
Comprehensive programme of benefits distribution:
Equity, royalties, development levies, employment, business development, education, training, health care, agriculture
Biomass power
Focus on full transparency and reporting of where benefits go and how much they are:
Extractive industry transparency initiatives (EITI)
Efficient delivery of key infrastructure through extended Tax Credit scheme
43
Summary
A hugely exciting time for Oil Search and PNG
Undergoing phase of unprecedented growth and substantial change
Building blocks now coming into place:Delivery of PNG LNG will transform production and cash flows
Largest ever appraisal and exploration programme underway, designed to confirm growth projects past PNG LNG T1/2:
Initial results encouraging
Gas expansion, new oil developments
Growth opportunities 2014-2020
44
0
5
10
15
20
25
30
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Net Production (mmboe)
(Forecast)
Production Outlook – Including Possible Mananda Development
KutubuMoranGobe MainSE GobeSE ManandaHides GTEBase oil production
PNG LNG (T1+T2)Mananda
7.668.12
6.386.69 6.2-6.7
45
46
DISCLAIMER
While every effort is made to provide accurate and complete information, Oil Search Limited does not warrant that the information in this presentation is free from errors or omissions or is suitable for its intended use. Subject to any terms implied by law which cannot be excluded, Oil Search Limited accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice.
This presentation also contains forward-looking statements which are subject to particular risks associated with the oil and gas industry. Oil Search Limited believes there are reasonable grounds for the expectations on which the statements are based. However actual outcomes could differ materially due to a range of factors including oil and gas prices, demand for oil, currency fluctuations, drilling results, field performance, the timing of well work-overs and field development, reserves depletion, progress on gas commercialisation and fiscal and other government issues and approvals.
47
