Good Oil Conference, 7th September 2005

O I L S E A R C H L I M I T E D

2

A New Beginning

Oil and Gas Industry in PNG has undergone a renaissance in last 3 years– Driven by local control of industry– Significant new investment– Helped by high oil prices

Investment bringing returns– Oil industry growing– Gas commercialisation making major strides– New developments– New exploration

3

Oil SearchThe Last 18 Months

Completed acquisition of ChevronTexaco’sPNG assetsSuccessful transition to significant operatorNew approach to delivering maximum value:– Focus on mature fields and new developments– Investment for growth in exploration and

development– Measured diversification

The dog now has control of the tail

4

Oil SearchThe Last 18 Months

Continued world class safety performance across operations

Top quartile Total Shareholder Returns

Driven by capturing value in PNGoil and gas assets

5

Focus Areas for Value Creation

Maximise value of discovered resources– Production optimisation– Improved profitability

– Field and operating efficiencies– Contract efficiencies

Gas Commercialisation– 1st and 2nd tier developments– Integration with oil business

Exploration– Measured diversification

6

Revenue Growth

43% CAGR over last four yearsOil revenues up 37% on prior 1st halfRealised oil price: US$53 (1H04: US$36.18)

0

50

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250US$m

1H2001

1H2002

1H2003

1H2004

1H2005

MineralsOil

7

Net Profit After Tax

US$m

Net profit up 53% on restated prior first half

17.9

36.5

3.2

41.7

63.9

5.7

3.7

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EPS

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Expln Exp

8

Treasury Review

Gearing %

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Cash

Gearing

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2002 2003 2004 Jun-05

US$208million in cash at end June, debt at US$147millionLiquidity of over US$300 million, including undrawn committed bank linesUS 3 cent final dividend (US$33.5m) paid on 24 March 2005. An additional US 2 cent interim dividend (US$22.3m) has been declared on 23 AugustNo oil hedging currently in place

9

Share Price Performance

Oil Search Woodside Santos HardmanASX 200 Energy ASX 200

Origin

Jul-0

2Se

p-02

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2Ja

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-03

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-03

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tive P

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ROC Oil TAP Oil

Jul-0

5

STRATEGIC REVIEW COMPLETED

CPSCONVERSION

OSH ELECTED OPERATOR OF

PNG OIL FIELDSASSUMPTION OF OPERATORSHIP& ACQUISITIONOF CT ASSETS GAS

PROJECT FEED

10

O I L S E A R C H L I M I T E D

11

PNG Oil Field Optimisation

Mature fields have been rejuvenated :

Added 10,000 bopd to Kutubu, 5,000 to 8,000 bopd to Moran and over 3,000 bopd to Gobe fields production levels through new initiatives and more focused field management practicesReduced direct field operating costs by 8%New reserves found at Kutubu, Moran and SE GobeReduced drilling costs by 15% Discovered and commenced development of NW Moran Commenced development of SE ManandaDevelopment of Nabrajah Field

– Base project 15,000 bopd– Reviewing major expansion

12

Kutubu ImprovementReservoir History Plot - Kutubu including Agogo

0

5,000

10,000

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20,000

25,000

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40,000

45,000

50,000

01/99 01/00 12/00 12/01 01/03 01/04 12/04 12/05

Rate

(b

op

d)

Before Oil Search After

Oil Search has added

10,000 bopd to Kutubu Production

Decline trend established over the 4

years prior to Oil Search becoming involved in

field management

13

SEG Wedge Development

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807500 810000 812500 815000 817500

807500 810000 812500 815000 817500

92425009245000

9242

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0 500 1000 1500 2000m

SEG 11

SEG 11 drilled in May 2005, proved a 61m oil column in the SE Gobe wedge areaSEG 11 onstream and producing at ~1600 bopd with low GOR and no waterRevised mapping indicates 50-60 mmbbl oil-in-placeDevelopment plan is being finalised, will add >10 mmbbl reserves Devt Plan assumes SEG 11 and an additional 2-3 prodn wells supported by gas injection drilled from a central wellpadDrilling to commence late 2005

14

NW Moran EPT Development

Completed installation of NW Moran flowline, production facilities at NWM and APF, commissioning underwayProject cost = $US 25 million, significantly delayed, impacted by Landowner issues and weather

EPT to commence in Sept. at 3,000 bopdGas injector to support NWM 1, mid 2006

Boundary of 3D image

Moran

NW Moran

NWM injectorNWM 1X ST5

M6XST2

M4X

M10ST1

B Block wells

M2XST2

M5XST2

Summary

Outlook

15

SE Mananda Development

SE ManandaMoran

Agogo Processing Facility

Field was discovered in 1991, deemed uncommercial by previous operatorOil Search developed innovative plan to bring SEM into production and negotiated appropriate fiscal terms with PNG GovernmentDevelopment commenced in late 2004

16

SE Mananda DevelopmentHegigio Gorge – Bridge Site

Artist’s Impression

17

SE ManandaConstruction Progress

South Abutment A-frame

Tower Roll Up

18

SE ManandaConstruction Progress

SEM Bridge Cable

Launching

19

SE ManandaBridge Comparison

MillauRoad bridge

France

20

Production Outlook

PNG Fields deliver production growth over next 2 yearsPNG Pipeline Project provides sustained production for many years

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Oil Production Gas Project Liquids Gas Project Gas

21

Block 43 Nabrajah FieldFirst Non - PNG Oil Production

First oil from Qishan reservoir July ’05Discovered oil in Basement, tested up to 10,000BOPD

22

NabrajahBasement Depth Mapping

(mSRD) with Nab-5 HC Shows

Oil in Structural

Closure

Oil Down To

23

Block 43 Nabrajah Field

Block 43

Nabrajah

Block 14Block 43 Development AreaProspects and Leads Map

Nab-1 Al Haglah-1

Structural projection tentative

~2000 m SRDGas/oil contact

N-5 2225 m SRDDST 1B oil 5,800 bopd

N-5 TD 2568M SRD~Base of greater oil column

N-2 gas test15 Mscfg/d

Nab-5Nab-2

210m Gas column

250m oil column

500-600m oil column

Nab-1 Al Haglah-1

Structural projection tentative

~2000 m SRDGas/oil contact

N-5 2225 m SRDDST 1B oil 5,800 bopd

N-5 TD 2568M SRD~Base of greater oil column

N-2 gas test15 Mscfg/d

Nab-5Nab-2

210m Gas column

250m oil column

500-600m oil column

Limits of constraint

Area of Planned 3D

Seismic Survey

Nab-9 Nab-8

24

Block 43 NabrajahFacilities Under Construction

Tie-in to Block 14 Separator at CPF

Storage tanksManifold at CPF

25

Masilah Basin Play Fairway

Marib-ShabwahBasin Play Fairway

New Yemen Exploration Blocks

Blocks 3, 7 and 74 consolidate OSH’s position in Yemen’s two oil productive basinsNew blocks provide additional exposure to successful oil productive Basement play fairwayBlock 3 - 300km of 2D seismic data 1Q 2006 & one exploration well in late 2006Block 7 - 250km of 2D seismic data 3Q 2006. 4 well drilling program commences in 1Q 2007 Block 74 - 250km of 2D seismic data 4Q 2006. 3 well drilling program commences in 3Q 2007

Block S2: OMV Habban -1New Basement Discovery

>250,000bopd Pipeline

>120,000bopd Pipeline

26

Arakubi Prospect

2004 seismic has de-risked ArakubiArakubi sits above and NE of UsanoMay share common fluid contactsStructurally simpler2km from infrastructure

Mean reserves ~18 mmstbSite underwayInformation from well will aid in 2006 Usano re-development

Arakubi

27

Juha Appraisal

Currently 0.5 tcf Proven gas-in-place (GIIP)Two wells being considered

– one appraisal of Juha discovery

– one exploration of mega-Juha prospect

Target post-wells GIIP >2.5 tcf Proven2 tcf meets threshold for recycle scheme with later sales gas for methanol, DMESite surveys underway

PRL2

Mega-Juha - Exploration

Juha Main – Appraisal

Juha 2 Baia 1

Proven, crestal accumulation

Untested prospect

x-section

10km

Juha – Current 1P

28

For the Next Generations

29

A Long Time Coming

PNG Project has taken a step change towards commerciality over

the past 12 monthsAlignment of key stakeholders for risk mitigation and growthFEED entry a pivotal pointFront End Engineering and Design almost 60% completeNow secured over 200PJ/a of conditional gas sales agreementsMajor customers in NT, Gladstone, Southern Queensland, NSW and SAAPC (AGL/Petronas) entered FEED for Australian pipeline

30

A Generational Change

Gas Supply fundamentals for East Coast Australia are changing

The Cooper Transition

– Maturity brings higher expense

– A struggle to remain competitively priced

A healthy and growing CSM supply

– Significant growth in past 5 years

A major supply source from PNG, with new pipeline network

A struggle for the next 30 year supply picture

31

Project Scope

Joint venture betweenExxonMobilOil SearchMRDC/StateMerlin (JPP)

Gas Sales with condensate exportConversion of Kutubu oil fields to gas productionDevelopment of Hides Gas FieldFacilitates integrationGas pipeline from Highlands to PNG border

39.43%54.15%

3.02%3.39%

32

PNG Gas Project Configuration

600 mmscfd Sales GasFull Condensate Recovery

AGOGO/MORAN

Production

HIDESPRODUCTION

Additional condensate oil up to 18,000

bbls/day through existing export pipeline

Subject to FEED review

KUTUBU CPFOil production & 165 mmscfd gas

AGOGOCPF

LP

G

New sales gas pipelineCapacity 250 PJ/a600 mmscfd sales

KUTUBUReinject

150mmscfddry gas GOBE

Production

GOBECPF

HIDES PRODUCTION

FACILITY700mmscfd

Condensatepipeline

Gaspipeline

New CENTRALGAS CONDITIONING

PLANT (CGCP)

Pipelineto POM

33

Project Scope

Final pipeline configuration and route being determined by customer demandAbundant competitively priced gas to NT, Queensland and southern marketsInterconnected pipeline system promoting competition and enhanced security of supply

34

Project Activities

Focus on Successful Project DeliveryFEED– Final design and facilities configuration– Pipeline design– Cost optimisation– Operating parameters

Government and Fiscal– Licencing submissions and regulatory

approvals– Landowner benefits distribution and

business development

35

Project Activities

Focus on Successful Project DeliveryMarketing– Focus on confirming gas sales agreements– Present indicative agreements for 190 to

>200 PJ/a, with further markets targeted– Possible integration of in-country activities

Financing– Coordinated approach from all stakeholders– Positive bank and insurer response

36

Project Timetable

FEED activities due for completion late ’05– Early works decision by year end

Project Sanction 2Q ’06– Commitment to long lead items etc.

Financial Close 2H ’06– Major construction commences year end

First Gas 2009

37

Targeted Alignment– The Key to Project Success

Deliberate strategy to achieve stakeholder alignment– Project FEED Decision – Joint Venture

Alignment– Market / Customer and Downstream

Alignment– The importance of AGL

– Largest east coast energy retailer– Major gas customer– Pipeline and infrastructure– Downstream development potential

– Santos ?

Powerful Combination for Next Generation of Supply

38

Targeted Alignment – The Key to Project Success

Landowners in PNG– Excellent production reliability in oil projects, based

on oil equity ownership and business development partnerships

– Mature process for ownership

Lessons for Australia?

Government in Papua New Guinea– Strongly motivated to deliver– Committed to in-country development after core

Pipeline Project delivered

39

Clear need for gas in Eastern Australia

Wood Mackenzie analysis suggests even with PNG, Coal Bed Methane & Yet-to-Find (YTF) gas there is a clear need for new sources of gas supply to meet demand

Eastern Australia - Supply & Demand Base Case

The Opportunity

40

Oil Search a leader in in-country gas development– World Scale Petrochemical Plant in Port

Moresby– Final feasibility stage– Indicative Terms Sales Agreement ~80PJ/a– Timing parallel to PNG Pipeline Project

– Compressed Natural Gas– Export and domestic use

– Power Projects– AGL Alliance

Gas Commercialisation

41

Investment in PNG –Delivering Returns

Since taking operating control in 2003 :– Oil Search has invested over US$400m in oil

and gas business in PNG

Delivered :– Increased production– Record revenues– Record profits– Excellent returns to shareholders

42

Investment in PNG –Delivering Returns

Investment bringing unprecedented growth opportunities

Measured diversification provides good risk reward balance– Early success at Nabrajah– Major new oil play being pursued– Further acquisitions likely in building

portfolio