O I L S E A R C H L I M I T E D 7 7 th Annual Meeting 2 May 2 0 0 8 1
Perform ance in 2 0 0 7 STRONG UNDERLYI NG OPERATI NG PERFORMANCE � Total production of 9 .7 8 m m boe, just 4 % low er than in 2 0 0 6 despite PNG oil field m aturity � Realised oil price of US$ 7 7 .7 8 / bbl, 1 6 % above 2 0 0 6 � Record revenue of US$ 7 1 8 .8 m illion, up 1 2 % on 2 0 0 6 � Record EBI TDAX of US$ 5 9 8 .2 m illion, up 1 0 % on 2 0 0 6 2
Perform ance in 2 0 0 7 � Net profit after tax ( before significant item s) of US$ 1 4 0 .8 m illion, dow n 3 2 % on 2 0 0 6 � I m pacted by higher exploration expense, higher non- cash item s and higher effective tax rate � First NPAT fall in 5 years � Final dividend for 2 0 0 7 of four US cents/ share w as paid in March, m aking eight US cents/ share for the year ( 2 3 toea/ share) , the sam e as in 2 0 0 6 3
W orld Class Safety Perform ance Total Recordable I ncidents ( TRI s) 1 9 9 8 – 2 0 0 7 OSH OGP APPEA 1 4 12.7 12.7 1 2 TRI / 1 ,0 0 0 ,0 0 0 Hours 10.6 10.6 10.7 10.7 9.8 9. Australian Com panies 1 0 9. 9.4 8. 8.3 9.3 9. 8. 8.5 9 .1 7. 7.8 8 8. 8.2 7. 7.0 7.3 7. 6. 6.8 6.3 6. 6 5.8 5. 5.2 5. 4.7 4. I nternational Com panies 4 3.1 3. 4. 4.0 2. 2.9 2.05 2. 05 2 Oil Search 1.7 1. 2 .4 2 .3 0 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 4
Share Price out-perform ance Aug 2 0 0 6 : APC w ithdraw s from April 0 7 : Signs Cost Sharing Australian leg of PNGGP Pipeline Agreem ent for LNG project 5 0 0 July 2 0 0 5 : Announcem ent of Share Price ( rebased to OSH) AGL GSA and PNGGP equity sale 4 .0 0 3 .0 0 Oct 2 0 0 4 : PNGGP enters FEED July 2 0 0 3 : Acquisition of 2 .0 0 Chevron’s PNG I nterests 1 .0 0 0 Jan-0 3 Jul-0 3 Jan-0 4 Jul-0 4 Jan-0 5 Jul-0 5 Jan-0 6 Jul-0 6 Jan-0 7 Jul-0 7 Jan-0 8 OSH ASX 2 0 0 ASX 2 0 0 Energy W TI 5
6 CAGR 1 0 % 2 0 % 3 0 % 4 0 % 5 0 % 6 0 % 7 0 % 0 % Source: I RESS Fortescue Metals Paladin Energy Ranked No.5 TSR Perform er am ongst current ASX WorleyParsons Total Shareholder Returns Caltex Australia 5 3 % Oil Search 1 0 0 for 5 year period to Dec 2 0 0 7 United Group Oxiana Leighton Holdings ASX Limited David Jones Computershare CSL ( TSR) Newcrest Mining Macquarie Airports QBE Insurance Woodside Petroleum Allco Finance Rio Tinto BHP Billiton OneSteel Sims Group Bluescope Steel Macquarie Group Orica Macquarie Communica.
Financial perform ance 2 0 0 3 - 2 0 0 7 US$ m 8 0 0 7 1 8 .6 EBI TDAX 7 0 0 6 6 4 6 4 4 .5 6 0 0 5 9 8 .2 5 5 4 .3 5 4 4 .8 Revenue Operating 5 0 0 Cash Flow 4 1 6 .3 3 9 9 4 0 0 3 5 7 .7 3 5 0 .8 3 3 0 3 2 6 .8 3 0 0 2 3 9 .1 2 7 6 .7 2 0 7 .5 2 0 0 .2 2 0 0 1 9 1 .3 1 0 7 .3 1 4 0 .8 1 0 0 Core 8 5 .7 Net Profit 0 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 7
2 0 0 7 Core Profit Drivers US$ m 9 7 9 7 3 0 0 1 4 1 4 ( 1 1 ) ( 1 1 ) ( 3 7 ) ( 3 7 ) ( 7 ) ( 7 ) ( 3 3 ) ( 3 3 ) 2 0 0 2 7 2 7 2 0 7 2 0 7 1 0 0 ( 1 1 7 ) ( 1 1 7 ) 1 4 1 1 4 1 0 6 n x 7 e s x . . X t p a 0 v c o c e e 0 F T e i x 0 i l p a 0 t r a R E 2 e p O a 2 P S r m s . r p l h i l l i e p i t O s I O h r x a X o t E C O F m A � Cash opex im pacted by global industry cost pressures and resurgent Australian dollar, fuel costs � US$ 6 5 .2 m illion ( 4 0 % ) of total 2 0 0 7 exploration expense incurred in MENA w ith no associated tax benefit. Prim ary driver of effective tax rate of 5 6 % 8
Treasury Review � US$ 3 4 4 m illion in cash at year end, no debt � Current cash position of US$ 4 0 7 m illion � US$ 1 0 0 m illion tranche of corporate facility expired at year-end. Rem aining undraw n bank lines of US$ 3 1 m illion � W ork underw ay to refinance corporate facility increasing funding com m itm ent to ~ US$ 4 0 0 m illion and group liquidity to in excess of US$ 7 0 0 m illion. Facility is for general corporate purposes but w ill be used to cover a portion of PNG LNG developm ent costs � No oil hedging currently in place 9
2 0 0 7 / 2 0 0 8 Strategic Review CONCLUSI ON: Existing portfolio can “Delivering PNG LNG is the deliver superior TSR Highest Priority” � Substantial unrealised value exists w ithin Oil Search’s current asset portfolio, capable of generating s a G superior shareholder returns over r e h t O next five years and beyond � Delivery of PNG LNG alone can bring Value 1 5 % plus annual TSR grow th w ith PNG LNG upside exposure to higher oil and gas prices. PNG LNG is the key future value driver � Further value grow th can be delivered through com m ercialisation Oil & Other of other gas resources � Value of PNG gas w ill increasingly Dec '0 7 Dec '0 8 Dec '0 9 Dec '1 0 Dec '1 1 Dec '1 2 Dec '1 3 dom inate portfolio over tim e 1 0
Key Conclusions of Review � Gas Com m ercialisation the key to grow th � Delivery of PNG LNG is highest priority � Significant value can be derived from com m ercialising rem aining gas resources � Optim ise cash generation from oil fields � PNG oil essential part of OSH’s business � I nitiatives identified to enhance cash flow s � Refocus MENA � Rationalisation of MENA portfolio required to focus on assets w ith m ore m aterial potential ( com pleted) � Close m anagem ent of cash � Financial position is strong but LNG project funding w ill consum e large proportion of cash flow s � Discretionary spending w ill be rationed I MPLEMENTATI ON OF 1 5 CORE STRATEGI C REVI EW RECOMMENDATI ONS HAS COMMENCED 1 1
A Com pany Transform er PNG LNG Project 1 2
W hat is LNG? � LNG ( Liquefied Natural Gas) is natural gas cooled to a liquid state. LNG takes up 1 / 6 0 0 th of the volum e com pared to gas in its gaseous form , so can be m ore easily transported long distances � LNG is produced by cooling gas to below -1 6 1 ° C using a pressurised refrigerant process. LNG is stored in special insulated tanks � LNG is transported by sea from the liquefaction plant to gas consum ing countries, in specialist LNG tankers � W hen it arrives at its destination, the LNG is converted back to natural gas in regasification facilities and enters the country’s gas distribution netw ork for use in pow er stations, industrial processes and com m ercial and dom estic use � LNG is priced relative to oil. The LNG price has risen sharply over past few years, reflecting oil price strength and increasing dem and, particularly from the Asia Pac region 1 3
PNG LNG Project The PNG LNG Project com prises: � Upstream infrastructure including production w ells, processing facilities and pipeline netw ork linking to the export pipeline � Gas export pipeline from PNG Highlands to LNG plant near Port Moresby � Liquefaction plant, export loading and support facilities located in Portion 1 5 2 near Port Moresby 1 4
PNG LNG Project Status � Milestones reached: � Com m ercial alignm ent ( JOA) am ongst the Project Ow ners − Joint Operating Agreem ent executed in March − I nitial funding interests pre-Governm ent back-in ( Oil Search 3 4 % ) − Unitisation and redeterm ination procedures agreed − Actionable finance plan agreed � Marketing Representative Agreem ent signed for joint m arketing of 6 .3 m m tpa, led by ExxonMobil − Endorsed m arketing plan, Project rolled-out to buyers at GasTech in Bangkok in March, strong interest received � Pre-FEED w ork and updated capital costs com pleted − First phase capex to 2 0 1 4 of US$ 1 0 -1 1 bn ( real 2 0 0 7 prices) − Project is FEED ready � I m m inent events: � Execution of Gas Agreem ent � Com m encem ent of FEED 1 5
Delivering PNG LNG � Follow ing FEED entry, focus shifts to achieving Sanction in late 2 0 0 9 by: � Securing m arket off-take � Securing debt and state equity funding � Executing agreem ents on benefit sharing, environm ental plans � Oil Search w ill support operator ExxonMobil, utilising its long in-country experience and skills. Key areas for Oil Search are: � Delivering Oil Search’s com ponent of the upstream FEED � Optim ising delivery of gas to LNG Project from oil fields � Supporting ExxonMobil on: − Landow ner Benefits Sharing Agreem ent − Business Developm ent opportunities − Training and localisation − Providing in-country project m anagem ent skills � Financing: − Coordinating key parts of the project debt finance process w ith ExxonMobil − Securing OSH equity funding. I ncludes refinancing and internal cost m anagem ent 1 6
Recommend
More recommend
