O I L S E A R C H L I M I T E D On the cusp Oil Search Update June 2 0 0 9 1 On the Cusp � Oil Search and its partners are on the cusp of com m itting to the w orld scale PNG LNG Project, a thirty year plus legacy project: � Aim ing for Final I nvestm ent Decision by end 2 0 0 9 , w ith first LNG in late 2 0 1 3 / early 2 0 1 4 . Strong m om entum building � W ith ~ 3 0 % interest, PNG LNG w ill result in OSH booking ~ 5 8 0 m m boe reserves ( cf 6 7 m m boe now ) and w ill triple production and Com pany profitability. Positively im pacts oil field values � W ill facilitate com m ercialisation of other discovered gas – econom ics of additional LNG train/ s extrem ely strong � Share price significantly discounts oil assets plus assessed PNG LNG value ( underscored by AGL & I PI C transactions in late 2 0 0 8 ) and reflects no value for further gas developm ents or discovery of additional reserves 2
Oil Search Location Map 3 Strong 5 Year Share Price Perform ance OSH has delivered consistent top quartile perform ance. TSR for five years to end 2 0 0 8 of 3 9 6 % , 7 th out of ASX 1 0 0 7 .0 0 Share price ( rebased to OSH) 6 .0 0 Oil Search 5 .0 0 4 .0 0 3 .0 0 W oodside Santos 2 .0 0 W TI oil ASX 1 0 0 1 .0 0 0 .0 0 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 Jul 0 8 Jan 0 9 4
Financial Perform ance Share price underpinned by positive financial perform ance 9 0 0 US$ m 8 0 0 8 1 4 .3 EBI TDAX 7 1 8 .6 7 0 0 6 6 4 6 4 4 .5 6 9 8 .0 6 0 0 5 9 8 .2 5 5 4 .3 5 4 4 .8 Revenue Operating 5 0 0 5 0 7 .4 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 4 0 .0 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 2 0 0 8 5 Balance Sheet Prepared for Major I nvestm ent � US$ 4 6 2 m illion in cash at the end of April 0 9 ( including US$ 6 m illion share of JV cash balances) , no debt � Cash invested w ith highly rated bank counterparties � Am ortising revolving facility established in October 0 8 w ith a syndicate of 1 6 banks. Achieved im proved pricing and term s despite global financial crisis. Current facility size US$ 4 0 6 m illion, undraw n � No oil hedging undertaken in 2 0 0 8 or currently in place 6
W orld Class Safety Perform ance Total Recordable I ncidents ( TRI s) 1 9 9 8 – 2 0 0 8 1 4 12 12.7 .7 1 2 Australian Com panies TRI / 1 ,0 0 0 ,0 0 0 Hours 10.6 10 .6 10.7 10 .7 ( APPEA) 9.8 9. 1 0 9.4 9. 8. 8.3 9.3 9. 8. 8.5 9 .1 7. 7.8 8 8. 8.2 7. 7.0 7. 7.3 6.8 6. 6.8 6. 6.3 6. 6 5. 5.8 5.2 5. 4. 4.7 I nternational Com panies 4 ( OGP) 3.1 3. 4. 4.0 2.9 2. 2.7 2. 2. 2.04 2 Oil Search 1.7 1. 2 .4 2 .3 1 2. 2.05 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 2 0 0 8 7 Strategic Priorities � Continue to add significant shareholder value through: � Developm ent of PNG LNG Project � Delivery of further grow th through additional LNG trains and other gas based developm ents � Optim isation of value and operational synergies betw een existing oil operations and new LNG developm ent � Measured exploration in PNG and MENA and continued optim isation of PNG gas portfolio 8
Strategic Priorities � Previous strategic review s have been instrum ental in adding shareholder value and achieving sustained top quartile perform ance � 2 0 0 9 Strategy Update now taking place w ith three tim e horizons: 9 Strategic Priorities � 6 – 1 2 m onths: PNG LNG delivery � Definition of w hat w e can do to ensure delivery � Optim al financing � Corporate and operating structure � FI D to first gas production � Support construction operations and financing � Definition of further grow th options − Developm ent of 3 rd LNG train − Other LNG train and gas developm ent options − Exploration � Oil and gas integration options � Partner alignm ents � Positioning organisation for legacy cashflow � Post first gas � Options for further grow th and return expectations � A New Oil Search 1 0
PNG LNG Project Platform for Major Grow th 1 1 PNG LNG Project Juha Production Juha facility 2 5 0 m m scfd 9 6 0 m m scfd Hides Gas Hides & Conditioning Plant Angore 1 1 0 km 8 ” Kutubu & Agogo condensate line 6 5 km 1 4 ” gas line & 8 ” liquids line Gobe Existing 2 7 0 km 2 0 ” crude pipeline 3 1 0 km 3 2 ” gas onshore Kopi pipeline Kum ul ~ 4 0 0 km 3 4 ” subsea gas line LNG Facility 7 5 km Port Moresby 1 2
PNG LNG Project Status Project m om entum continues to build tow ards year end FI D � FEED activities on track, early w orks decision im m inent � Markets being confirm ed � Financing negotiations and due diligence on schedule � Um brella Benefits Sharing Agreem ent ( BSA) signed � Other legislation and approvals on track Meeting Milestones Building Mom entum Progress on All Fronts 1 3 Project Status - Marketing � PNG LNG seen as quality project, m oving ahead, w ith high probability of delivery in 2 0 1 3 / 1 4 tim efram e: � Quality, conventional proven resource � Excellent operator, ExxonMobil, augm ented by Oil Search w ith local know ledge � Aligned Joint Venture and supportive Governm ent � Key term s of HOA agreed w ith m ajor Asian buyer for 2 m m tpa � Aw aiting buyer’s Governm ent approvals � Detailed term s being negotiated w ith a num ber of other potential buyers, m ore than enough dem and to cover initial production � Confident of confirm ing 6 .3 m m tpa offtake through HOAs around m id-year 1 4
LNG contract pricing Analysis of Recent Contracts to Japan, Korea and China ( DES) 1 8 Crude Oil Parity RasGas to KOGAS (from 2007) 1 6 Dec 06 Shell (QG) to PetroChina Apr 08 1 4 Bontang (Renewals) Mar 08 1 2 Average Australia to PetroChina (Estimated) Sep 07 1 0 Pluto to Japan (Estimated) Aug 07 8 6 Gorgon to Japan (HOA)* Oct 05 – Mar 06 4 NWS NWS-T1-3 Renewal Price (Bilateral Renewals) Apr – May 06 Mar – May 06 * Contractual price will likely be renegotiated. 2 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 JCC ($/bbl) 1 5 Source: FACTS GLOBAL ENERGY, FEB 2 0 0 9 Source: F ACTS G LOBAL E NERGY, Feb 2009 Asian LNG Markets Outlook LNG Uncontracted Dem and ( m m tpa) 1 2 0 Other 1 0 0 New Markets I ndia 8 0 China Taiw an 6 0 Korea 4 0 Japan 2 0 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 2 2 0 1 5 2 0 2 0 Source: F ACTS G LOBAL E NERGY, Feb 2009 Source: FACTS GLOBAL ENERGY, FEB 2 0 0 9 � Dem and soft in the short term , but not im pacting 2 0 1 3 / 1 4 offtake � Conservative approach by custom ers, w ith flight to quality 1 6
Project Status – FEED & Contracting � FEED activities targeting com pletion end 3 Q0 9 : � Upstream contracting bids due early 3 Q0 9 � Dow nstream EPC bids due m id 3 Q0 9 . Com petition betw een Chiyoda ( APCI ) and Bechtel ( Phillips Cascade) � Signs of dow nw ard pressure on costs, particularly steel and equipm ent � I nflationary cycle broken, w ith costs m ore predictable � Recent BSA paves w ay for ‘early w orks’ decision: � Early w orks com prises sizeable investm ent in upgrade/ construction of infrastructure, enabling full scale construction to com m ence early 2 0 1 0 � W ould represent a m ajor vote of confidence in the Project by participants if approved � Early w orks contracts ready to be aw arded 1 7 CAPEX for LNG Projects 1 ,8 0 0 US$ / tonne Iran (Persian LNG) Projects in operation 1 ,6 0 0 Australia (Browse) Cost Escalation Indonesia (Donggi LNG) Nigeria (Brass LNG) Algeria (Gassi Touil) Projects under construction Iran ( Pars LNG) 1 ,4 0 0 Projects planned ( pending FI D) Australia (Ichthys) Australia (Gladstone) Algeria (Skikda Rebuilt) Australia (Pluto) 1 ,2 0 0 PNG LNG Angola LNG Indonesia (Tangguh LNG) Indonesia (Tangguh LNG) Australia (NWS, T5) 1 ,0 0 0 Qatar (Qatargas II ) Trinidad (Atlantic LNG, T4) Equatorial Guinea Yemen LNG Qatar (RasGas T3 & T4) 8 0 0 Egypt (Damietta) Peru LNG Egypt (Idku) 6 0 0 Oman LNG 4 0 0 2 0 0 0 1 9 6 5 - 1 9 7 0 1 9 7 1 - 1 9 8 0 1 9 8 0 - 1 9 8 5 1 9 8 6 - 1 9 9 0 1 9 9 1 - 1 9 9 5 1 9 9 6 - 1 9 9 9 2 0 0 1 - 2 0 0 6 2 0 0 0 2 0 0 3 2 0 0 4 - 2 0 0 5 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 0 9 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 3 2 0 1 4 2 0 1 4 2 0 1 4 2 0 1 4 - 2 0 1 5 2 0 1 3 - 2 0 1 4 2 0 1 5 2 0 1 5 - 2 0 1 6 Startup Source: F ACTS G LOBAL E NERGY, Feb 2009 1 8
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