Oil Search Update June 2014 Oil Search Limited ARBN 055 079 868 - - PowerPoint PPT Presentation

Oil Search Limited

ARBN 055 079 868

Oil Search Update

June 2014

Oil Search Licence Interests, PNG

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Port Moresby

Kumul Terminal

Juha Moran Agogo SE Mananda Uramu P’nyang Kimu Kutubu Proposed Juha Facility Hides Angore LNG Facility SE Gobe Mananda 6,7 Gobe Main

PNG LNG Project Gas Fields

Hagana Flinders Juha North Barikewa Hides Gas Conditioning Plant & Komo Airfield

Elk/Antelope

PNG LNG Project Facilities Non PNG LNG Gas/Oil Fields

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

Corporate Transformation Underway

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Oil Search is in excellent position to build further value for

• shareholders. Platform of unprecedented strength:

»

PNG LNG Project sales commenced in May 2014. Transforms OSH into significant LNG exporter with steady 20+ year cash flow stream, sufficient to fund both growth opportunities and pay materially higher dividends

»

Highlands and PRL 15 LNG expansion opportunities being matured. Potential involvement in two, possibly three, additional high returning LNG trains by end of decade:

– Possibility of more than doubling production over next 5 – 7 years, off 2015 base

»

Taza oil discovery in Kurdistan being appraised, positive results to date

»

Balance sheet strengthened by recent placement to PNG Government and SPP

»

Strategic Review underway. Will set direction for next five years

Core Strategies Have Delivered Steady Long-Term Share Price Appreciation

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• 1

2 3 4 5 6 7 8 9 10 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Share Price (A$)

Acquisition of ChevronTexaco’s PNG assets. Assume Operatorship Manage transition to PNG LNG Project PNG LNG FID PNG LNG production and sales commence PRL 15 acquisition

PNG LNG Project

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Project Update

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» PNG LNG Project Train 1 commenced production in

April, Train 2 in May, both ahead of schedule

» Ramp up to full capacity (6.9 MTPA) in progress » LNG shipments to Asian markets commenced late

May, with first cargos being sold on spot market, prior to start of long term contract sales

» Project expected to be delivered within November

2012 budget of US$19 billion

» Hides liquids being blended with oil field production

and sold as Kutubu Blend

PNG LNG – first shipment delivered to TEPCO, Japan

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Spirit of Hela

PNG LNG Plant site

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Feb 2011 Feb 2014

Jetty

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Jun 2011 Nov 2013

Offshore and Onshore Pipelines

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Laying Highlands pipeline Pipeline rehabilitation, March 2014 Pipeline rehabilitation, March 2014 Offshore Pipeline Pipeline burial

Associated Gas (CPF)

11 PNG LNG Project Facility Major Road

Nov 2010 Feb 2013

Komo Airfield

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First Antonov 124, May 2013 Dec 2010 Nov 2013

Hides Gas Conditioning Plant

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Mar 2014 Aug 2012 Dec 2010

Drilling

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Rig 702 Rig 703

Gas Growth Strategy

» Oil Search looking to

leverage existing LNG infrastructure and skills developed by foundation PNG LNG Project

» Upside in 1P reserves at

Hides plus substantial discovered undeveloped gas resources

» Oil Search well positioned to

realise value from future phases of development, as significant resource and infrastructure owner and proven operator

» PNG remains an attractive

investment location

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Port Moresby

Kumul Terminal

Juha Moran Agogo Kutubu Proposed Juha Facility Hides Angore LNG Facility Gobe Main Hides Gas Conditioning Plant & Komo Airfield

Undeveloped Gas Fields

Uramu (100%) P’nyang (38.5%) Kimu (60.7%) SE Gobe (25.6%) Hagana (40%) Flinders (40%) Juha North (24.4%) Barikewa (45.1%) Elk/Antelope (22.8%)

Hides Drilling

» Six production wells at three wellpads (B,C and D)

complete

» Drilling ongoing: two wells at wellpad G (NW Hides)

and PWD well. Will help constrain gas volume in Hides field

» Hides 5 planned to explore Koi-Iange reservoir

(~700m below Toro), with drilling scheduled to commence in 4Q14

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Hides 4 Hides 3 Hides 2 Hides 1 Hides G

Toro Koi-Iange Ieru

5km

PDL 1/7 – Hides Field 8 New Production Wells PDL 8 – Angore Field 2 New Wells Hides Gas Conditioning Plant Komo Airfield Hides Nogoli Camp Hides GTE Plant

PWD Well Hides Well Pad G Hides 5

Hides 5

P’nyang - PRL 3

»

Key resource to support potential growth from PNG LNG:

– Total 2C recoverable gas resources in P’nyang field of 2.5 tcf

»

Concept selection work well advanced – engineering, environmental and social mapping

»

Development work to continue through to submission of PDL application in early 2015

PRL 3 WI % ExxonMobil affiliates (operator Esso PNG P’nyang Ltd) 49.0 Oil Search 38.5 JX Nippon 12.5

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Elk/Antelope - PRL 15

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» 22.8% gross interest in PRL 15,

containing Elk/Antelope gas fields

» Up to three appraisal wells to

be drilled, to prove up sufficient gas resources to support LNG

• development. First well

expected to spud in 3Q14

» Substantial exploration and

appraisal upside in PRL 15

» Dispute resolution process

underway relating to sale of interest in PRL 15 from InterOil to Total SA. Negotiations to achieve commercial resolution

• ngoing

Port Moresby

Kumul Terminal

Juha Moran Agogo SE Mananda Uramu P’nyang Kimu Kutubu Proposed Juha Facility Hides Angore LNG Facility SE Gobe Mananda 6,7 Gobe Main

PNG LNG Project Gas Fields

Hagana Flinders Juha North Barikewa Hides Gas Conditioning Plant & Komo Airfield

Elk/Antelope PNG LNG Project Facilities Non PNG LNG Gas/Oil Fields

Triceratops 5km

Source: InterOil

Strong production from PNG oil fields

» Reservoir performance from

key oil fields remains strong

» Continued success of

development drilling and field management activities

» Commissioning gas delivered

from Kutubu to PNG LNG Plant (September) and HGCP (December)

» PNG LNG Hides liquids being

blended with oil field production and sold as Kutubu Blend

1 9

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PRL8 PRL 11 PDL7 PDL1 PPL233 PPL219 PDL2 PDL5 PDL6 PRL9 PRL 14 PPL260 PDL 4 PDL 3 PDL 4 PDL7 PPL233 PPL277 PDL8 PDL9 PRL 11

Kutubu Moran

Cobra Iehi Barikewa Kimu

SE Gobe Gobe Main Agogo SE Mananda

Mananda 5,6 & 7 Juha

Hides

Angore Juha North Oil Field Gas Field Oil Pipeline PNG LNG Gas Pipeline OSH Facility PNG LNG Project Facility Proposed PNG LNG Gas Pipeline

Production Outlook

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5 10 15 20 25 30 2011 2012 2013 2014F 2015F

Kutubu(2) Moran(2) Gobe

SE Mananda

Hides GTE(3) PNG LNG (T1+T2)(1,3)

Net Production (mmboe)

6.38 6.69 17 – 20 6.74 6.4 – 6.9

1 LNG sales products at outlet of plant, post fuel and flare 2 Oil forecast assumes planned new development wells beyond 2013 3 Gas:oil conversion rate used in 2014/15: 5,100 scf = 1 barrel of oil equivalent (prior years 6,000 scf/boe)

» Total production guidance for 2014

increased from 14.5 – 17.5 mmboe to 17 – 20 mmboe, due to commencement of LNG production from Train 1 (April) and Train 2 (May) ahead of schedule

» Production from oil fields of 6.4 – 6.9

mmboe (unchanged), up slightly from 2013

» In first full year (2015), PNG LNG will

add ~21 mmboe net to Oil Search production

Oil Discovery at Taza, Kurdistan: Appraisal Underway

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IRAN TURKEY SYRIA IRAQ JORDAN SAUDI ARABIA Caspian Sea Persian Gulf Red Sea

KURDISTAN REGION OF IRAQ Taza PSC

Erbil Office Sulimaniyah Office

IRAN TURKEY IRAQ KURDISTAN

Taza PSC

Kirkuk Miran West Chemchemal Shaikan Tawke Hamrin Chia Surkh Jambur Kor Mor Taq Taq

36°N 37°N

SE Jambur Lead Pulkhana Jambur Kor Mor

Taza 3 Proposed Taza 2 Taza 5 Proposed Taza 4 Proposed

Taza

Taza 1ST2

Oil Discovery at Taza, Kurdistan: Appraisal Underway

» Taza 2 appraisal well has found oil in Jeribe,

Dhiban and Euphrates Formations. Presently drilling towards deeper Shiranish Formation, not penetrated by Taza 1

» Taza 3, to appraise southern part of field, planned

to spud in 3Q14, plus two more wells and 3D seismic

» Plan to install Early Production Facility (EPF) on

• ne well in 2015

» 3D seismic acquisition underway, including over

SE Jambur lead

»

New export pipeline through Kurdistan to Turkey

• perational. Operations have not been impacted

by recent unrest in Iraq

NOTE: Proposed well locations subject to change

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Positioning for Next Phase of Growth

» Major Strategic Review underway to set objectives and programmes for

Oil Search over next five years

» Review will analyse:

– Asset values and ways to capture full value – Balance of asset portfolio to deliver growth projects and capital management initiatives – Company structure, cost base and operating model – Development of our people and organisation, to deliver continued top quartile returns

» Results to be communicated to shareholders in 3Q14

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Summary

Oil Search has unprecedented platform for further growth:

» Delivery of PNG LNG will more than quadruple production 2013 – 2015:

– Delivers material cash flow to invest in high returning projects and fund higher dividends

» Assets have potential to underwrite at least two further LNG trains and

expansions

» Taza oil discovery has significant potential. Appraisal taking place » Oil business remains strong » Balance sheet will strengthen rapidly with LNG revenues » Strategic Review will provide programme to deliver continued superior returns

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Appendix 1: Key metrics

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2009 2010 2011 2012 2013 8.1 7.7 6.7 6.4 6.7

Production (mmboe)

2009 2010 2011 2012 2013 133.7 185.6 202.5 175.8 205.7

NPAT (US$m)

2009 2010 2011 2012 2013 65 76 116 114 111

Oil Price (US$/bbl)

2009 2010 2011 2012 2013 4 4 4 4 4

DPS (US cents)

Appendix 2: Treasury Update

» Total liquidity of US$711.2 million at end 1Q14 comprising US$411.2 million cash and US$300 million available under non-amortising corporate revolving facility » Additional A$184 million raised under SPP in May » US$250 million of funding lines, including L/C facilities to access cash in LNG Project secured accounts, have been established to provide additional near-term funding flexibility » US$3.91 billion (OSH share) drawn down under PNG LNG Project finance facility at end 1Q14 » 2013 final unfranked dividend of two US cents per share, fully funded via underwritten DRP

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2009 2010 2011 2012 2013 1Q 14 1,289 1,265 1,047 488 210 411

Cash (US$m)

2009 2010 2011 2012 2013 1Q 14 363 304 247 500 300 300

Corporate Facility Available (US$m)

Appendix 3: Investment Outlook

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2009 2010 2011 2012 2013 2014F

Other PP&E Production PNG LNG Exploration & Evaluation

586 1,364 1,568 1,861 1,673

US$m

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Guidance Range (US$1,175 – 1,415m)1 US$25 – 35m US$100 – 130m US$650 – 800m US$400 – 450m2

1 Excludes US$900m upfront payment for acquisition of 22.835% interest in PRL 15, completed March 2014. 2 Includes capex associated with appraisal activity in PRL 15

Appendix 4: 2014 Guidance Summary

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Previous Guidance Updated Guidance Production Current operations (oil and GTE) 6.4 – 6.9 mmboe1 6.4 – 6.9 mmboe1 PNG LNG Project LNG 34 – 43 bcf 45 – 57 bcf Liquids 1.5 – 2.1 mmbbl 1.7 – 2.0 mmbbl Total PNG LNG Project 8.1 – 10.6 mmboe1 10.5 – 13.2 mmboe1 Total Production 14.5 – 17.5 mmboe 17 – 20 mmboe Operating Costs Normalised cash opex (incl corporate costs) US$21 – 26 / boe US$18 – 22 / boe Hides GTE gas purchase costs US$37 – 40 million US$37 – 40 million Business development US$10 – 15 million US$10 – 15 million Depreciation, amortisation and site restoration US$13 – 15 / boe US$13 – 15 / boe

Numbers may not add due to rounding

1 Gas volumes have been converted to barrels of oil equivalent using an Oil Search specific conversion factor of 5,100 scf per boe, which represents a weighted average, based on Oil Search’s reserves portfolio,

using the actual calorific value of each gas volume at its point of sale. The change to a specific boe conversion factor more closely reflects the energy content of the Company’s gas reserve portfolio compared to the previous conversion factor of 6,000 scf per boe.

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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

• ther government issues and approvals.

Oil Search's estimates of petroleum reserves, contingent resources and prospective resources are based on information prepared by Dr Jon Rowse, Oil Search’s General Manager - Subsurface, who is a full-time employee of the Company and a member of the Society of Petroleum Engineers. Dr Rowse is qualified in accordance with ASX Listing Rules 5.41-5.44, and confirms that the statements are based

• n and fairly represents information and supporting documentation which has been prepared by him. He has consented to publish this

information in the form and context in which it is presented in this presentation.

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