120508 2012 annual meeting - oilsearch.com · safety is our top priority 6 total recordable injury...

1

2012 Annual Meeting Agenda

Overview

2011 Financial Results

PNG LNG Project Update

Expansion Opportunities

Production/Near Field

Other Material Exploration

Local Issues

Summary

2

3

Significant Growth Phase

Oil Search has been top quartile performer for past six years

Significant growth opportunities have been identified, capable of driving future value

Largest ever development, appraisal and exploration programme has commenced, to deliver this growth:

PNG LNG T1 & 2 construction well underway

PNG Highlands resource base being evaluated

Gulf area potential to be assessed through drilling programme

Material oil prospects in Middle East to be drilled

Results will be progressively delivered over next 18 months

Built off steady production, strong cash flows and healthy balance sheet

4

Consistent Strong Share Price Performance

5

Woodside

Santos

ASX 200

Brent

Oil Search

Share price (rebased to OSH)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12

Safety is our Top Priority

6

Total Recordable Injury Frequency Rate of 1.85 in 2011

TR

I /

1,0

00

,00

0 H

ou

rs

Oil Search

Australian Companies (APPEA)

InternationalCompanies

(OGP)

Australian Benchmarking

7

Total Recordable Injury Frequency Rate Data for 2011per Million Hours Worked (All Reported Data)

Fletcher Building

BramblesTreasury Wine Est.

OZ Minerals

Downer EDI

United Group

Origin

Incitec Pivot

Boart Longyear

Contact Energy

James Hardie

Stockland

Transfield

Newcrest

AWE

BHP Billiton

Amcor

Santos

Orica

Woodside

Oil Search

Source: Company data, Citi Investment Research and Analysis Note: TRIFR – Total Recordable Injury Frequency Rate per million hours worked

0 5 10 15 20 25 30 35 40 45 50

CSRQantas

Wesfarmers

WorleyParsons

CaltexPanAust

AGL Energy

Monadelphous

Hastie Group

FY11Dec YE

8

2011 Financial Performance

Full year revenue benefited from higher realised oil prices (US$116/bbl vs US$80/bbl in 2010), partially offset by 11% lower oil and gas sales Increase in non-cash charges balanced by lower exploration expense9% increase in profit after tax, 64% rise if significant items (one-off tax items, impairments) are excluded

9

(US$’m)RevenueCash ExpensesEBITDAXNon-cash itemsExploration Expense / BDInterest income/(expense)Pre-tax ProfitTaxNPAT**Core Profit**

583.6 (111.8)

471.7 (62.7)

(131.2)(0.8)

277.2 (91.6)185.6

144.1*

2010 2011

732.9(137.0)

595.9(84.4)(70.9)(0.7)

439.9(237.4)

202.5235.6*

+26%

+26%

+59%

+9%

2011 NPAT Drivers

10

0

185.6

202.5

209.1

(25.1)(145.8)

US$m

50

100

150

200

250

300

400

350

(64.9)

20

10

NP

AT

Cash

OP

EX

Reven

ue -

Pri

ce

Reven

ue -

Vo

lum

e

Tax

Exp

lora

tio

n

DD

&A

20

11

NP

AT

64.4

(1.4)

Imp

air

men

t

(4.1)

Bu

sin

ess

Dev

(17.4)

2.3

Oth

er

EBIT growth driven by higher oil prices and lower exploration expense (Wasuma and Korka wells written off in 2010), partially offset by lower volumes, Shakal impairment and higher tax expensePrior year NPAT impacted by one off benefit associated with restatement of deferred tax balances

1111

Cost Management

FY11 FY10US$’m US$’m

Field Costs - Oil: PNG- Hides

85.96.5

73.38.0

Other Prod’n Opex

92.4 81.3

- Oil- Hides

16.80.7

15.40.6

17.5 16.0

Net Corp Costs 21.8 16.6

FX Losses/(gains) 1.2 (2.2)

Total 132.9 111.8

Costs within guidance (US$20.16/boe)Adverse impact of A$ and Kina movement against US$ impacting operating and corporate costsPNG capacity constraints placing pressure on costsProgramme activities actively managed

Field cost per boe changes

0

4

8

12

16

2010 FY 2011 FY

Volume

BaseIncrease

External/Non-recurring

US$m/boe

Liquidity

Strong balance sheet, augmented by strong cash flows from operationsLiquidity at 31 March 2012 ~US$1.1 billion (US$0.9bn cash plus US$232m within corporate facility)At end March 2012, US$2.01 billion drawn down under PNG LNG project finance facilityCompany remains well placed to meet existing commitments, with sufficient liquidity to deliver on strategic plan initiatives

12

2014

US

$m

Liquidity (cash plus undrawn bank debt)

Dec 2011

13

PNG LNG Project Overview

1414

Kumul Terminal

Port Moresby

7°S

145°E

HidesWells

Kutubu CPF

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

Daru

Wabag

Lae

Offshore pipeline

Onshore pipelineand Infrastructure

Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility

PNG LNG Project Facility

Major Road

LNG Facility

Juha Facility

Komo Airfield

Hides Gas Conditioning Plant

( Feb 2012)


1515

Kumul Terminal

Port Moresby

7°S

145°E

HidesWells

Kutubu CPF

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

Daru

Wabag

Lae

Offshore pipeline


Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

LNG Facility

Juha Facility

Komo Airfield


SEMAC I – Offshore pipelay vessel


1616

Kumul Terminal

Port Moresby

7°S

145°E

HidesWells

Kutubu CPF

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

147°E

Daru

Wabag

Lae

Offshore pipeline


Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

LNG Facility

Juha Facility

Komo Airfield


Pipe stringingPipeline route clearingPipe burial

Pipe welding team


1717

Port Moresby

7°S

145°E

HidesWells

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

Daru

Wabag

Lae

Offshore pipeline


Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

LNG Facility

Juha Facility

Komo Airfield


Kutubu CPF

Kumul Terminal

New CALM Buoy being lowered into position.First offtake March 2012

TEG Dehydration Unit installation

New Control Room at CPF - commenced operations in January 2012


1818

Kumul Terminal

Port Moresby

7°S

145°E

HidesWells

Kutubu CPF

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

Daru

Wabag

Lae

Offshore pipeline


Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

LNG Facility

Juha Facility

Komo Airfield


Komo AirfieldHides Gas Conditioning Plant and

Hides well pad access road


1919

Kumul Terminal

Port Moresby

7°S

145°E

HidesWells

Kutubu CPF

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

Daru

Wabag

Lae

Offshore pipeline


Gobe PF

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

LNG Facility

Juha Facility

Komo Airfield


Timetable

2020

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

PROJECT REMAINS ON TRACK FOR FIRST LNG SALES IN 2014

21

Gas Maturation Activities, PNG Highlands

Four facets to Highlands gas growth strategy, focused on converting proven and probable to proven contractable reserves plus new exploration :

P’nyang South – recent success, has materially increased gas resource

Trapia exploration well

Hides development and appraisal drilling

Associated Gas reserves expansion and certification

Additional seismic to be acquired over Angore and adjacent areas

2222

Angore anticline, PNG Highlands

P’nyang South

P’nyang South 1 discovered 184m gas zone gas in southern fault block

Sidetrack, P’nyang South 1 ST1, drilled to define gas:water contact. Intersected contact ~200m below lowest gas in P'nyang South, extending known gas column to ~380m

Seismic and structural data suggests additional potential up-dip, taking total gas column >650m

Result materially increases total estimated 2C gas resources in P’nyang field, potential key underpinning volume for LNG expansion

PRL 3: ExxonMobil 49%, Oil Search 38.5%, JX Holdings 12.5%

23

P’nyang 1X

P’nyang South 1

P’nyang 2X

ST1

6°S

8°S

144°E142°E

Hides

Kutubu

SE Gobe

Moran

Agogo

Juha

Angore

100km

P’nyangSouth

Trapia 1

Trapia exploration well scheduled to spud shortlyPRL 11: Oil Search 52.5%, ExxonMobil 47.5% Series of prospects in area with multi-tcf potential 2D seismic programme in 2012/13 to further mature prospectsRecent acquisition of adjacent licence, PPL 277, 50:50 with ExxonMobil

24

6°S

8°S

144°E142°E

Hides

Kutubu

SE Gobe

Moran

Agogo

Juha

Angore

100km

P’nyangSouth

Trapia

Trapia 1

Tagari

Huria

NW Angore

Hides

25

36.81%16.66%24.03%20.50%2.00%

PDL 1ExxonMobilOil SearchSantosPNG GovtGas Resources Gigira Ltd.(L/O)

36.81%40.69%20.50%2.00%

PDL 7ExxonMobilOil Search PNG GovtGas Resources Hides No.4 Ltd.(L/O)

36.812%40.69%20.50%2.00%

PDL 8ExxonMobilOil SearchPNG GovtGas Resources Angore Ltd. (L/O)

Hides development/ appraisal drilling programme:

Part of PNG LNG developmentScheduled to commence in mid 2012, with GWC well planned for early in drilling sequenceGWC well has potential to increase overall Hides resource volume significantlyDrilling timing adjusted to accommodate Project critical path optimisation

Hides Nogoli Camp

GTE PL 1 Hides GTE PlantPDL 1 – Hides Field10 New WellsDrilling 2012+

PDL 7 – South Hides

Hides Gas Conditioning PlantConstruction 2012/13

PDL 8 – Angore Field2 New Wells

10km

Komo Airstrip

Further Resources from Oil Fields

26

6°S

8°S

144°E142°E

Kutubu

Gobe

Moran

Agogo

100km

SE Mananda

Reserves and deliverability review underway for oil and gas in existing oil fields

Will provide optimal production management plan post commencement of gas production for PNG LNG

Number of recent discoveries, identification of areas for potential new reserves and success in gas conservation ahead of original prognosis will provide further reserves for PNG LNG

Potential upside for both gas and ongoing oil production

2003 2004 2005 2006 2007 2008 2009 2010 2011

50

CPF, APF, GPF Flare History

0

10

20

30

40

2012F

60

70

Dail

y A

vera

ge (

mm

scf/

d)

PNG LNG Project Sanction

Forecast

27

Kumul Terminal

Port Moresby

7°S

145°E

LNG plant site

145°E 146°E144°E143°E

6°S

8°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

100km

147°E

Daru

Wabag

Lae

Offshore pipeline

Kopi Wharf

Oil Field

Gas Field

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

Prospect

Gulf Area LNG

Multi-licence, multi play type, multi well opportunity with material equityLarge, initial seismic programme completed in 2011:

~6,300 km² 3D offshore and 95 km 2D onshore

Significant resource potential identified in proven hydrocarbon (gas & condensate) province

Over 30 opportunities identified across multiple play typesPotential to support two LNG trains

Additional 3D seismic acquisition underway over neighbouring areaSemi-sub recently contracted to drill 2 firm wells + 2 options, commencing 4Q12Bids from potential partners to farm-in under review, farm-down likely mid-year

28

PRL01

PPL234

PRL10

9°S

145°E 146°E144°E

Gobe

PPL276

PPL312

PPL338

PPL339

PPL339

339

339

338

338

338

339

339

339

8°S

7°S

339

PPL244

50km

Elk/Antelope

KumulTerminal

Pandora

Flinders

2011 3D Seismic Regions

2D Seismic Lines

2D Seismic 2011 Lines

Uramu

Hagana

TadivaLade

New 2012 3D Seismic

Region 2011 3D Seismic Regions

Example of Offshore 3D Seismic PPL 234

29

?

Faulted Miocene

Faulted Miocene

Is gas migrating

from the deep kitchen

through faults in the

Miocene section?

30

Moran, SE Mananda, Agogo 6 wellsite & Agogo Production Facility

31

Oil Search Production Outlook -existing fields

0

1

2

3

4

5

6

7

8

9

10

2009 2010 2011 2012 2013

Net Production (mmboe)

7.668.12

(Forecast)

6.2-6.76.69

Hides GTESE ManandaSE Gobe

Gobe MainMoranKutubu

Production guidance range for 2012 of 6.2 – 6.7 mmboe, unchanged from 2011Production in 2013 expected to be broadly flat, subject to success of work programmesRig 103 to be mobilised back to PDL 2, to provide optionality to pursue exploration and appraisal opportunities as well as development programme

2012/13 Development & Near-Field Appraisal Drilling Activity

32

PRL08

PPL240

PRL11

PDL7

PPL239 PDL1

PPL233

PPL219

PRL2

PDL2

PDL5PDL6

PRL09

PRL14

PPL260

PDL4

PDL3

PDL4

PDL7

50km

Juha

Hides

SE Mananda

Barikewa

Kimu

Cobra

Iehi

PPL240

PPL233

6°S

143°E 144°E

7°S

Mananda 5

PPL277

PDL8

PDL9

PRL11

Angore

Oil Field

Gas Field

Prospect

Oil Pipeline

PNG LNGGas Pipeline

OSH Facility


Major Road

Usano2012 : ± 1 well, 1 workover

Kutubu2012 : ± 1 well, 4 workovers2013 : 1 well, 2 workovers

Agogo2012 : 1 well2013 : 1 well

Moran2012 : 1 well2013 : 1 well

SE Gobe2012 : 2 well interventions

33

Kurdistan Region of Iraq- Taza PSC

Taza PSC: Oil Search 60% (operator), ShaMaran 20%, KRG 20%

Very prospective location adjacent to four fields

Large, simple 4-way dip closure identified from 2010 seismic

Well planning underway for mid-2012 spud

Recoverable resources in success case: 200 - 400 mmbbl (mean estimate), dependent on recovery factors and phases present

3434

Taza PSC

TazaProspect

Up to 180km2

Kor MorGas Field

PulkhanaOil Field

JamburOil Field

Open

Taza Seismic

35

Four regional reservoir targets:Jeribe - Euphrates/Serikagni - Kirkuk Group - Jaddala

Lower Fars

Upper Fars

Saliferous

2km

SW NE

Kor MorGas Field

PulkhanaOil Field

Jambur OilField downdip

Taza 1

Tunisia – Tajerouine PSC

Tajerouine PSC: Oil Search 100%Seismic acquired in 2010, with additional infill seismic shot in late 2011Proven oil plays present and new deeper gas play developedFiscal regime favourable – discovery would be materialSemda-1 planned for 4Q12, after Taza. Has potential for >100 mmboe

3636

~10km

Tajerouine

37

PNG Issues

Unprecedented political uncertainty in PNG over past year:

No impact to operations with continued progress on all projects

Security and safety of staff in run up to election is paramount

Looking forward to election in June/July 2012 with new government formed in August/September:

Anticipate no change to operating status but cautious and watchful

Oil Search likely to be PNG’s largest single investor in 2012, with over US$2bn to be spent on development, appraisal, exploration and operations:

Significant vote of confidence in quality of assets and ability of Company to work with Government, bureaucrats and community and manage operating and investment risks

Future consistency of fiscal terms vital for sustained investment

38

Sustainability Focus

Desire to play a role in long term development and wellbeing of people of PNG – to ‘give back’Continued push towards improved transparency and governance of:

Benefits distributionTaxesLanco payments

Investment in community health programmes has doubled, driven by Oil Search Health Foundation. Major focus areas:

Expansion of existing health programmes. Now working in 9 provinces across PNGCore public health programmes in Malaria, HIV/Aids, Child and Maternal HealthSupported by The Global Fund, AusAid, Asian Development Bank

Active community development programmes:Education and training AgricultureHealth and sport development

39

Summary

2012 is a potentially transformational year for Oil Search. Unprecedented opportunity to underscore long term value growth from OSH’s portfolio of assets

Peak activity year for PNG LNG Project delivery

Largest drilling programme ever undertaken by Oil Search underway, will continue through 2012 into 2013

Continued strong oil field production performance and active pursuit of near field opportunities

Activities underwritten by strong cash flows, solid balance sheet

Remain confident that country risks and challenges can be managed

40

Oil Search Production Outlook, including PNG LNG T1/2

41

2008 2009

8.607.66

2010

8.12

2011

6.69

2012 2013 2014 2015 2016 2018

25Net Production (mmboe)

0

5

10

15

20

MENAHides GTESE ManandaSE GobeGobe MainMoranKutubu

2017

6.2-6.7

(Forecast)

42

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.

43

120508 2012 annual meeting - oilsearch.com · safety is our top priority 6 total recordable injury...

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