STRATEGY ON TRACK Oil Search 2013 Annual Meeting 2013 Annual - - PDF document

Oil Search 2013 Annual Meeting

STRATEGY ON TRACK

2013 Annual Meeting Agenda

Overview 2012 Results PNG LNG Project Update Gas Expansion Opportunities Production/Near Field MENA Oil Exploration Commitment to PNG Summary

2

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

• pportunities

Optimise capital and financial structure Operate safely and sustainably

4

Core Strategies Deliver Consistent Share Price Appreciation

Share price (A$) January 2003 – April 2013

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 assets Assume Operatorship Manage transition to PNG 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

% TSR

• 60
• 40
• 20

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

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1 2 3 4 5 6 7 8 9

2004 2005 2006 2007 2008 2009 2010 2011 2012

TRI / 1,000,000 Hours Oil Search International Companies (OGP)

1.76 1.68 1.75 1.85 1.96 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 growth

8

2012 Results

9

2012 Performance

9.8 8.6 8.1 7.7 6.7 6.4

07 08 09 10 11 12

Production (mmboe)

78 100 65 76 116 114

07 08 09 10 11 12

Oil Price (US$/bbl)

Production of 6.38 mmbboe within guidance range Good result given maturity of

• il 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

137.9 313.4 133.7 185.6 202.5 175.8

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 items Exploration expenses include write-off of drilling costs of Trapia and IDT-25 Koi Iange test and higher geological and geophysical, general and admin costs Pre-tax profit from sale of assets relating to Block 3, Gulf farm-out and sale of 10% of PPL 260 Impairment expense of US$23.8m relating to PRL 1 – Pandora

US$m

202.5

2011 NPAT

(53.0)

Cash OPEX/BD

(8.3)

Revenue

(83.4)

Exploration 175.8

2012 NPAT

Tax

65.6

DD&A

1.9

50 100 150 200 250

Other

(4.0)

Profit on Asset Sales /Impairment

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

2012 2011

US$24.82 US$20.16 US$6.00

Gas 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 1,265 1,047 488

08 09 10 11 12

Cash (US$m)

435 363 304 247 500

08 09 10 11 12

Corporate Facility (US$m)

14

Investment Outlook

500 1,000 1,500 2,000 2,500 2008 2009 2010 2011 2012 2013F

Other PP&E Production PNG LNG Exploration & Evaluation

451 586 1,364 1,568 1,861 2013 Guidance US$1.93-2.0bn US$20 – 30m US$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

Hides Gas Field Angore Gas Field Juha Production Facility 250 Mcfd

60km x 8” liquids line 109 km x 8” condensate line

LNG Facility

6.9 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 Plant 960 Mcfd

292 km x 32” gas pipeline onshore 60km x 14” gas line

Juha Gas Field Port Moresby

Gulf of Papua

17

PNG LNG Project

Oil Pipeline PNG LNG Gas Pipeline OSH Facility PNG LNG Project Facility 100km

Offshore pipeline

Juha Moran Agogo

Gobe Main Kutubu Hides Angore

LNG Facility

Onshore pipeline and 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

• f 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

Offshore Pipeline

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

Onshore Pipeline 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 Airfield Dec 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 Plant PDL 1/7 – Hides Field 8 New Production Wells Drilling 2012+ Hides Gas Conditioning Plant PDL 8 – Angore Field 2 New Wells

Komo Airfield

27

PNG LNG Project Timetable Unchanged

Financial Close » 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

• ther Highlands areas. Aiming

to mature prospects for possible drilling in late 2013/2014

• Mt. Hagen

PNG LNG Project Gas Resources Non PNG LNG Gas Resources

Juha Moran Agogo P’nyang Gobe Main Kutubu Hides Angore SE Gobe Juha North Hides Gas Conditioning Plant & Komo Airfield

100km

Barikewa Kimu 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

Hides Kutubu Gobe Moran Agogo Juha Angore

P’nyang

100km

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

LNG Facility

Uramu

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

Flinders Prospect Hagana Prospect Kidukidu Prospect

Jurassic & Cretaceous Jurassic & Cretaceous Flinders Hagana Flinders 1 Hagana 1 Triassic & older Triassic & older Miocene Miocene Pliocene Pliocene Pleistocene Pleistocene Late Miocene Late Miocene Pasca Ridge Pasca Ridge 50km

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

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 Rate (bopd)

Oil Search takeover

• peratorship

Kutubu Agogo Moran SEG Wedge Moran

Decline under previous operator

Oil Search Added Value

• peratorship

Usano Kutubu Moran

34

PRL08 PRL 11 PDL7 PDL1 PPL233 PPL219 PRL 02 PDL2 PDL5 PDL6 PRL09 PRL 14 PPL260 PDL 4 PDL 3 PDL 4 PDL 7

Juha SE Mananda Barikewa Kimu Cobra Iehi

PPL233

Mananda 6

PPL277 PDL8 PDL9 PRL 11

Angore Juha North

PNG Production and Near Field Opportunities

Oil Field Gas Field Oil Pipeline PNG LNG Gas Pipeline OSH Facility PNG LNG Project Facility Major 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

• f 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

1 2 3 4 5 6 7 8 9 2009 2010 2011 2012 2013 2014 Forecast Hides GTE SE Mananda SE Gobe Gobe Main Moran Kutubu

Net Production (mmboe)

(Forecast)

7.66 8.12 6.38 6.69

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 Darai Darai Ieru Ieru

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

Taza-1 Taza 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

200km

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

• f 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

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

Kutubu Moran Gobe Main SE Gobe SE Mananda Hides GTE Base oil production PNG LNG (T1+T2) Mananda

7.66 8.12 6.38 6.69 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.

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