1

PNG Exploration

Review

8th December 2010

2

Outline

1. OSL strategy and exploration’s role2. 2010 Exploration drilling review

• Wasuma• Korka• Mananda• CBM wells

3. 2010 OSL exploration license refocus4. 2011 exploration focus

• ADT2 appraisal and follow-up• Huria• Flinders

5. Summary

3

Oil Search’s Growth Strategy

Optimise existing oil assets with a focus on:Maintaining safety and environmental performanceDelivering gas supply obligations and life extension whilst adding value from reserve adds and cost management

Support delivery of PNG LNG Project:Support ExxonMobil with in country activitiesDeliver Oil Search operated Associated Gas and PL2 life extension projects

Grow LNG business in PNG. LNG is the optimum commercialisation routePursuing a two pronged strategy:

PNG LNG Expansion:Gulf Area LNG Opportunity:

Measured oil exploration.

4

Outline

1. OSL strategy and exploration’s role2. 2010 Exploration drilling review

• Wasuma• Korka• Mananda• CBM wells

3. 2010 OSL exploration license refocus4. 2011 exploration focus

• ADT2 appraisal and follow-up• Huria• Flinders

5. Summary

5

Regional Top Toro Depth Map

100km

6

Regional Structural Cross-Section

Oil Window

Limit of Drilling

7

Papuan Basin Chronostratigraphy

Mesozoic Rift/Sag passive marginEnd Cretaceous Uplift then sagLate Miocene to present day compression

S

?

Main Source Interval

??Gas SourceNext slide

8

Early Jurassic Rift Paleogeography

100km

9

Frontal Fold Belt Seismic Transect

Reprocessing of older seismic data giving better insight into geological evolutionThick and thin skinned compressional structuresHides an inversion structure with a thick syn-rift section under the core of the structure. Possible gas source?.

Darai

Ieru

Toro

Basement Syn-rift Syn-rift?

Toro

Toro

Darai

Basement

Basement

Cecilia Nomad HidesKarius

10

OSL Exploration Activity – 2010

>>

Port M

oresb

y

80km

Juha

Gobe

Kutubu & Agogo

Hides & Angore

144°E

8°S

6°S

146°E142°E

PPL219 OSLMananda Attic

PRL11/PDL8 Exxon85 km 2D (Huria)

PPL234/244 OSL4720km2 3D

PPL233 Exxon45km 2D (Mubi)

Drilling

Seismic

LegendPPL260 OSLKorka

PPL219 OSLWasuma

During 2010 OSL;Drilled 3 wellsAcquired 4,700+ km2 3DAcquired 60+ km 2D

11

Regional Top Toro Depth Map

Fold Belt

Next Slide

PPL219 OSLMananda Attic

PPL260 OSLKorka

PPL219 OSLWasuma

100km

Only proven oil prone area of Foldbelt

Focus for 1986+ oil exploration

12

Top Toro Depth Structure Map

Hedinia Iagifu Usano

Gobe/SE Gobe

Juha

Hides

Angore

Moran

Agogo

SE Mananda

PPL219 OSLMananda Attic

PPL219 OSLWasuma

PPL260 OSLKorka

20km

13

Foldbelt Digital Elevation Model

100’s of wells drilled along fold belt, ~half with image logsDips, fractures and break-outs available for each well in 3D space3D model being constructed of 4 key horizonsStress regime varies along strike and sometimes within wellsFracture patterns and stress regime never analysedCould be related back to present plate dynamics and earthquake patternsTied to 3D geology, could constrain plate models and stress through Neogene

6°S

143°E

7°S40km

144°E

Hides Mananda Moran Kutubu SE Hedinia SE GobeGobeJuha

14

3D Structural Models Unlock Complexity of the Foldbelt

Toro

View looking NW. Toro is shaded by elevation

Mananda Attic

Top Darai

Top Ieru

SE Mananda

Agogo Forelimb

Agogo

15

PPL219 - WasumaPre-drill vs Post-drill Interpretations

Pre-drillHangingwall trap analogous to SE GobeDeeper Footwall trap (Wasuma Deep) as secondary objective

Post-drillNo valid Hangingwall trapFootwall trap (Wasuma Deep) valid

Logs indicate charge to Iagifu sandstone~5m net reservoir

Wasuma Deep

Wasuma Hangingwall

Wasuma Deep

16

PPL260 Korka Results

Elevated gas (including C5) on mudlogResistivity separation and mudcake build-up indicative of permeability.

Confirmed by RDT pressure and sampling data.Initial Petrophysical interpretation indicated presence of hydrocarbons - not supported by pressure data, which returned an unambiguous water gradient.Absence of Cross fault seal SE of Korka has allowed communication and flushing between Lavani 1, Muller 1X, Egele 1X/1XST1, and Korka 1.

8.5”

6”

Darai

Ieru

Toro

Koi-Iange

NESW Korka 1

Korka

Korka

17

PPL219 – Mananda 5Mananda Attic

28.75JX Nippon Oil & Gas

71.25Oil Search

WI %PPL 219

Near field exploration opportunity along trend with SE Mananda & Agogo oil fieldsToro sandstone primary objective -recovered oil, gas & water when tested at Mananda 3xKoi-Iange sandstone secondary objective Reserves: 30 mmbblCOS: 45% Opportunity to deepen well and further constrain Mananda Forelimb lead – analogues to Agogo ForelimbWell drilling ahead

APF

SE ManandaMoran

Agogo

MANANDA 5

PDL6

PPL219

PPL233

PDL5

PDL210km

PPL233

PPL219

219

APPL349

APPL350

KutubuCPFRidge Camp

Moro

Darai

Ieru

ToroDigimu

Koi-Iange

Iagifu

NESW

Mananda 5

18

Mananda - 3D model of Top Toro

Mananda-3

Mananda-4

Fault Plane

Mananda 5 Well

Mananda-Forelimb

View looking towards south-east

Libano

NE SWMananda-Attic

19

Mananda 5 well padNovember 2010

20

Coal Bed Methane Potential in PNG?

Oil Search has been awarded seven licenses for CBM exploration17500 sq km in areaCurrently drilling 1st well of 3 well campaignObjective - to refine coal location, rank and thickness.

21

Era Bed Coal MeasuresLog Examples

Ketu ST-1 Kiunga-1Elevala-1

22

PNG Licence size comparison

Source Origin

Eastern Australia Comparison

23

Outline

1. OSL strategy and exploration’s role2. 2010 Exploration drilling review

• Wasuma• Korka• Mananda• CBM wells

3. 2010 OSL exploration license refocus4. 2011 exploration focus

• ADT2 appraisal and follow-up• Huria• Flinders

5. Summary

24

Gulf Area LNG Opportunity

Gulf Area has relatively untested prospectivity, in a proven setting, across a range of play types:

Pinnacle reefsPlatform carbonatesEarly and late Pliocene turbidites

Oil Search has high graded acreage and built a broad position:

Increased equity in Pandora (PRL01) to 24%Increased equity in PPL244 as a result of the swap with Talisman for PPL239Recently completed farm in arrangements to 4 additional licences, subject to Ministerial approval

25

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

Kumul Terminal

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

Elk/Antelope

26

Gulf Area Regional PlaysGas in Reefs + Turbidites + Fault Blocks

TertiaryDelta

NW SE

PPL244, 312

PPL338, 339

PPL276

PPL234, 244, 312

27

Offshore Regional Seismic Line

200m

1000m

Pasca Miocene Build-up

AureFold-belt

Pliocene Deltaic Wedge

FlindersDaraiPlatform edge

Pasca

28

Flinders ProspectPPL244

4 way dip closure coinciding with strong amplitude anomalyInterpreted as Basin Floor Fan Observed AvO response may be caused by gas bearing sandMost powerful argument for gas: Low Acoustic Impedance coinciding with structural closurePlanned to be drilled in 2011

Spillpoint

2.4 my Intra Pliocene MarkerDepth map

Acoustic Impedance overlay

Base Pleistocene

Line 98-200-407~10km

NW SE

FlindersDepth in m tvdss

29

PPL244 Lead Examples – 2D Seismic

SENW SW NE

Pasca Discovery

Flinders Prospect

Leads

30

PPL338 & 339

PPL 338 and PPL339 farm-in details:

Oil Search earns an initial 30% stake from Dabajodi International Energy for funding 2D seismic surveys

Seismic to be acquired in Q1 2011

If seismic is promising, Oil Search has option for additional 40% equity for part-funding a well and becomes Operator

6°S

PPL312

PPL338

PPL339

PPL339

339

339

338

338

338339

339

339

PPL 339

PPL 338

PPL 339

31

Indicative PPL338 Reefal Lead

Sparse coverage of 1960’s vintage seismic dataStrong indication of reefal build-ups

32

PPL276

PPL 276 farm in details:Oil Search earns an initial 30%stake from Rockwell Energy for funding a 3D seismic survey in the licence

3D Seismic to be acquired in Q1 2011

If seismic is promising, Oil Search has option for additional 50% equity for funding a well and becomes Operator

PPL 276

New 3D seismic

33

Offshore Mesozoic Plays

Somewhere in Gulf of Papua:Mesozoic play potential does exist offshore PNGFlat-spot conformable with structureNeeds 3D seismic to fully evaluate prior to drilling

34

PPL312

PPL312 farm in details: Oil Search earns an initial 30% stake and operatorship from Hillsborough for funding a 3D seismic survey in the licence

Seismic to be acquired in Q1 2011

If seismic is promising, Oil Search has option for additional 45% equity for funding a well

Kumul Terminal

PPL234

PRL10

PPL312

PPL339

339

339

339

339

Uramu

8°S

PPL 312

New 3D seismic

PNG LNG Pipeline

35

Gulf of Papua Evaluation Plan

6285km2 3D seismic over all known offshore Leads plus Flinders Prospect

Nov-Jan 20104700 km2

Jan 2011400 km2

Feb 20111185 km2

2D program Q1/2 2011

36

Gulf of Papua 3D seismic

Processed MC 3D seismic available from July 2011

Progress of PPL234/244 3D seismic survey Actual position of seismic vessel Wednesday, 1 Dec, 14:43 AEST

37

Outline

1. OSL strategy and exploration’s role2. 2010 Exploration drilling review

• Wasuma• Korka• Mananda• CBM wells

3. 2010 OSL exploration license refocus4. 2011 exploration focus

• ADT2 appraisal and follow-up• Huria• Flinders

5. Summary

38

OSL Exploration Activity –2011-12

>>

Port M

oresb

y

80km

Juha

Gobe

Kutubu & Agogo

Hides & Angore

144°E

8°S

6°S

146°E142°E

PDL2 OSHAgogo Forelimb Appraisal

PRL9 STOBarikewa 3

PRL11/PDL8 ExxonHuria

PPL276 OSH3D seismic

PPL244 OSHFlinders

PRL3 Exxon55km 2d (P’nyang)

Drilling

Seismic

Legend

PRL3 ExxonP’nyang Appraisal

PDL2 OSHHedinia Forelimb

PDL2 OSHKube Kabe

PPL312 OSH3D seismic

PPL338 OSH2D seismic

PPL339 OSH2D seismic

PPL234 OSHLead X

During 2011-12 OSL will participate in;7 wells~2,000+ km2 3D200+ km 2D

PDL4 OSH2D seismic

39

ST3

2400

2600

2800

3200

OverturnedForelimb

HangingwallmTVD

Alene

3000

DigimuToro A

SW NE

Hedinia Sand

Toro B/C

PDL2 - Agogo Forelimb

Drilled 1100m+ overturned & steeply dipping ForelimbUnderlies Agogo field & facilitiesProducing ~1,500 stb/dForelimb trend can be traced 75km from Mananda in NW to Hedinia in the SE suggesting that Toro to Koi-Iange targets may be present beneath other producing fields

Digimu

7”

ST1 5”ST2

40

3D Structural ModelAgogo Forelimb – Mananda Attic

Toro

View looking NW. Toro is shaded by elevation – red high, blue low

Mananda Attic

Koi-Iange

Agogo Forelimb

Agogo

SE Mananda

SW NE

41

PDL2 – Near Field Exploration

This section is constrained by the IAG-2 seismic line, numerous wells and surface outcrop dataThe Hedinia forelimb is constrained by the Hedinia-4X well and analogy with AgogoThe forelimb is likely to be over 10 km long and ~1 km highOpportunity could be tested by deepening an existing wellThe Koi-Iange sandstones, if present, beneath the Iagifu Anticline provide another attractive target for deepening of an existing well

Iagifu Koi-Iange

Hedinia Forelimb

42

PDL2 – Koi-Iange play under the Iagifu Field

Iagifu FieldHedinia Field

Darai

Ieru

Toro

Koi-Iange

NESWIDT B Well

IDT B Well

GOC

OWC

Top Toro A Surface

Top Koi Iange

North

Testing the Koi-Iange fairway at IDT-B offers the potential to unlock significant further potential within PDL21 additional drill ready prospect (Agogo hanging wall) and 5 Leads with indicative cumulative recoverable reserves in the range of 50 -100mmstb + 500-1000Bcf

43

Huria ProspectPRL11 / PDL8

Near field opportunity located adjacent to Angore and Hides gas fields

Large, broad surface anticline

Multi tcf potential

Initial seismic completed, additional dip line currently being acquired

Target drilling 4Q11

47.50Exxon

52.50Oil Search

WI %PRL 11

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

44

Outline

1. OSL strategy and exploration’s role2. 2010 Exploration drilling review

• Wasuma• Korka• Mananda• CBM wells

3. 2010 OSL exploration license refocus4. 2011 exploration focus

• ADT2 appraisal and follow-up• Huria• Flinders

5. Summary

45

Summary

Oil Search’s ongoing exploration programme is closely linked to our strategy:

Grow our LNG Business:Derisking and testing the Gulf Area LNG OpportunityMaturing reserves in the Foldbelt for PNG LNG expansion

Adding value to our existing oil business:Targeting near field exploration

Agogo ForelimbKoi-IangeHedinia Forelimb

Measured oil explorationMananda 5

We remain committed to material exploration to the benefit of both OSL shareholders and PNG