STRATEGY ON TRACK. Oil Search 2013 Annual Meeting Annual Meeting Agenda

Transcription

1 STRATEGY ON TRACK Oil Search 2013 Annual Meeting 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

2 Overview 3 Optimise performance of existing producing PNG oil fields Strategies for Growth 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 opportunities Optimise capital and financial structure Operate safely and sustainably 4

3 Core Strategies Deliver Consistent Share Price Appreciation Share price (A$) Merger of Oil Search & Orogen Acquisition of Chevron Texaco s PNG assets Assume Operatorship Manage transition to PNG LNG Project PNG LNG FID Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 January 2003 April TSR performance Oil Search ranked 14th in S&P/ASX 200 for TSR over five years to 31 December % TSR Year 3 Year 5 Year Median TSR ASX 200 Median TSR ASX 200 Energy OSH TSR Source: Orientcap 6

4 Committed to Achieving World Class Safety Performance 9 Total Recordable Injury Frequency Rate of 2.64 for 2012 TRI / 1,000,000 Hours International Companies (OGP) Australian Companies (APPEA) * 1 0 Oil Search *PNG Asset TRIFR: 2.71 MENA Asset TRIFR: 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

5 2012 Results Performance 9.8 Production (mmboe) Production of 6.38 mmbboe within guidance range Good result given maturity of oil fields and unplanned and planned shut-downs during year 78 Oil Price (US$/bbl) Strong underlying field performance Realised oil price marginally lower than in No hedging in place 10

6 2012 Performance NPAT (US$m) Net Profit after tax of US$175.8 million Key drivers included lower sales volumes and oil prices DPS (US cents) Higher exploration expense, reflecting increased levels of exploration and evaluation activity Total dividend of 4 US cents (8.4 toea), unchanged from Profit Drivers 250 US$m (8.3) (53.0) 54.5 (83.4) 65.6 (4.0) Revenue 1.9 Other NPAT Cash OPEX/BD DD&A Profit on Asset Sales /Impairment Exploration Tax 2012 NPAT 50 0 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 12

7 Cost Management Actively working to control costs US$/boe 35 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 Gas purchase costs US$0.62 US$20.16 US$6.00 US$ Strong Financial Position 536 Cash (US$m) 1,289 1,265 1, Strong balance sheet, able to fund remaining equity share of PNG LNG Project as well as active exploration and development programme US$3.06 billion drawn down under PNG LNG project finance facility Corporate Facility (US$m) 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) 14

8 Investment Outlook 2,500 US$m Other PP&E 2013 Guidance US$ bn 2,000 1,500 Production PNG LNG Exploration & Evaluation 1,364 1,568 1,861 US$20 30m US$ m 1,000 US1,500 1,600m US$ m F 15 PNG LNG Project Update 16

9 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 Juha Gas Field 60km x 14 gas line Hides Gas Field Angore Gas Field 292 km x 32 gas pipeline onshore Juha Production Facility 250 Mcfd 60km x 8 liquids line Hides Gas Conditioning Plant 960 Mcfd 109 km x 8 condensate line Agogo/Moran* Kutubu* Gobe* Existing 270 km x 20 crude oil export line 407 km x 34 subsea gas pipeline Gulf of Papua *Existing Facilities LNG Facility 6.9 MTPA Port Moresby 17 PNG LNG Project Angore Juha Hides 6 S Juha Facility Hides Gas Conditioning Plant Komo Airfield Agogo Moran Kutubu Gobe Main 7 S Onshore pipeline and Infrastructure 8 S Kumul Terminal Oil Pipeline PNG LNG Gas Pipeline OSH Facility Offshore pipeline LNG Facility PNG LNG Project Facility 9 S 100km 141 E 142 E Port Moresby 143 E 144 E 145 E 146 E 147 E 18

10 PNG LNG Plant Site LNG Facility PNG LNG plant site, March 2013 Engineering and procurement substantially complete. Preparations underway to ready plant for receipt of commissioning gas 19 PNG LNG Plant Site LNG Facility Export Jetty 20

11 PNG LNG Plant Site Storage tanks LNG Facility 21 PNG LNG Offshore Pipeline Offshore Pipeline Offshore pipelay SEMAC I Offshore pipelay SEMAC I Offshore pipeline completed in

12 PNG LNG Onshore Pipeline Highlands section pipeline Onshore Pipeline Pipeline burial Onshore pipeline welding 258km of onshore pipeline welded at end March 2013, with 197km of pipeline hydrotested 23 Associated Gas/PL 2 Life Extension TEG Dehydration Unit installation Kutubu Kutubu Kumul Upgrade of Kumul Marine Terminal New CALM Buoy at Kumul 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

13 PNG LNG Project - Upstream Hides Gas Conditioning Plant (HGCP) HGCP Mar 2013 Mar 2013 Apr 2013 Completed HGCP foundations and erection of structural steel substantially complete 25 PNG LNG Project - Upstream Komo Airfield South Terminal North Komo Airfield Dec 2012 Construction of Komo Airfield complete First Landing of Antonov 124 May

14 PNG LNG Project - Drilling PDL 1/7 Hides Field 8 New Production Wells Drilling Hides GTE Plant Hides Nogoli Camp PDL 8 Angore Field 2 New Wells Hides Gas Conditioning Plant 10km Komo Airfield 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 PNG LNG Project Timetable Unchanged» Continued early works» Detailed design» Order long leads and place purchase orders» Open supply routes» Contractor mobilisation» Commence AG construction» Continue onshore pipe lay» Complete offshore pipe lay» Start Hides plant installation» Start Hides drilling» Complete key AG items First Gas from Train 1, then Train Financial Close» Ongoing procurement and mobilisation» Airfield construction» Drilling mobilisation» Start offshore pipeline construction» Onshore line clearing and laying» Start LNG equipment installation» Complete pipe lay» Ongoing drilling» Construction of HGCP» Commission LNG plant with Kutubu gas 28

15 Gas Expansion Opportunities 29 Gas Growth - PNG Highlands 6 S 7 S 8 S PRL3 Juha North P nyang Juha Hides Gas Conditioning Plant & Komo Airfield 100km 142 E PPL PDL9 PRL02 PDL1 PDL7 PDL8 PPL219 Agogo Kimu Hides PRL11 PPL233 PDL6 PRL E PDL2 PDL5 Angore PPL233 Wabag Moran PDL3 Mendi PPL277 Kutubu Barikewa PRL09 PNG LNG Project Gas Resources Non PNG LNG Gas Resources PDL4 Gobe Main PRL14 Mt. Hagen SE Gobe PPL277 Iehi/Cobra PPL276 Kumul Terminal 144 E 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 other Highlands areas. Aiming to mature prospects for possible drilling in late 2013/

16 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 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 5km Juha Hides 100km 6 S P nyang Angore Moran Kutubu Agogo Gobe 8 S 142 E 144 E 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 D Seismic Region 144 E Kumul Terminal 2D 2D Seismic Lines Lines Uramu 145 E Elk/Antelope Kerema D Seismic Regions LNG Facility 146 E 100km 8 S 9 S Port Moresby Experienced LNG operator 32

17 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 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 1 Hagana 1 Pleistocene Pliocene Hagana Kidukidu Prospect Hagana Prospect Flinders Prospect Miocene Jurassic & Cretaceous Triassic & older 50km Flinders Late Miocene Pasca Ridge 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 Life of oil fields extended by 30+ years 80,000 70,000 Kutubu SEG Wedge Moran Usano Kutubu Moran Agogo Moran 60,000 Oil Rate (bopd) 50,000 40,000 30,000 20,000 Oil Search takeover operatorship 10,000 Decline under previous operator Oil Search Added Value operatorship

18 PNG Production and Near Field Opportunities PRL 02 Juha 6 S 7 S PDL9 Juha North Oil Field Gas Field Prospect PDL1 PDL 7 PPL260 PDL7 Mananda 6 SE Mananda Oil Pipeline PNG LNG Gas Pipeline OSH Facility PNG LNG Project Facility Major Road PRL 11 PDL8 PPL219 Agogo Kimu Hides PRL 11 PPL233 PRL08 Angore PDL2 PDL6 PPL277 PDL5 Moran PPL233 Kutubu PDL 4 Iehi PDL 3 PRL09 Barikewa Gobe Main PDL 4 PRL 14 SE Gobe Cobra 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 40km 143 E 144 E 35 Production Outlook (ex-png LNG) Expect 2013 production to be similar to Guidance range of mmboe Active workover and development drilling programme planned for Net Production (mmboe) Forecast Hides GTE SE Mananda SE Gobe Gobe Main Moran Kutubu 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 (Forecast) 36

19 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 NE Mananda 6 Mananda 6 Darai Ieru SW 5km 2012 Seismic 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

20 Taza-1 Taza PSC, Kurdistan Taza-1 reached total depth in April 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 mmbbls Follow-up drilling programme in 2H13, to further appraise Jeribe, Dhiban and Euphrates Formations and drill Cretaceous Shiranish and possible deeper targets 36 N Jambur Oil discovery 1953 by IOC. Reserves in excess of 1BBL Export via Kirkuk Euphrates & Qamchuqa Kor Mor 300mscfd gas/condensate to Local power stations Taza PSC Kurdamir Gas condensate discovery Kurkuk & Jaddala Shiranish Baghdad Oil Discovery by IOC Tested max 2180bopd from Euphrates And 700bopd Shiranish Taza-1 Qamar Oil Discovery by IOC 1980 Tested 2000bopd from Jeribe Chia Surkh Tested 11,950 bopd from Jeribe Open hole test of lower zone of Taza 1 well, Kurdistan 40 E 200km 46 E 30 N Shakal Oil discovery. Tested 2700bopd from Jaddala Sarqala Gas/Oil discovery 9000bopd from Jeribe 39 Commitment to PNG 40

21 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

22 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 of 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

23 Production Outlook Including Possible Mananda Development Net Production (mmboe) PNG LNG (T1+T2) Mananda Base oil production Hides GTE SE Mananda SE Gobe Gobe Main Moran Kutubu (Forecast) 45 46

24 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. 47