O I L S E A R C H L I M I T E D. European Road Show

Transcription

1 O I L S E A R C H L I M I T E D European Road Show June

2 Oil Search - Profile Established in PNG in 1929 Operates all of PNG s producing oil and gas fields In 2005, generated approx 22% of PNG s export revenue and 10% of its GDP. Largest investor and taxpayer. PNG Government is 18% shareholder. Has major interest in substantial undeveloped PNG gas resource Growing presence in Middle East/North Africa, with production in Yemen, Egypt Employs approx 800 staff and over 1,800 contractors Third largest listed E & P company in Australia with market capitalisation of around US$3.5 billion 2

3 3 Oil Search Where We Operate

4 6 producing oil fields (Kutubu, Moran, NW Moran, Gobe Main, SE Gobe & SE Mananda) 1 producing gas field (Hides) Major gas development opportunities Extensive exploration acreage Oil Search in PNG 4

5 5 Oil Search Where We Operate

6 Oil Search in Yemen 6 1 producing oil field (Nabrajah, Block 43) Nabrajah Basement development 6 concession areas (5 as Operator)

7 Oil Search in Egypt East Ras Qattara Area A - comprises 2 development leases (5 small oil fields) and four exploration leases Umm El Yusr Exploration Area A Kareem, Yusr, Kheir & Shukheir Development Also: Libya - Area 18 Wadi Dara Exploration 7

8 Core Expertise Developing country specialist Ability to work co-operatively with host governments and local communities Culturally sensitive and diverse Experienced in operating in challenging environments Low cost, innovative, regionally significant operator 8

9 Achievements - Production Growth stb/d 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Kutubu Moran Gobe Main SE Gobe Hides Nabrajah SEM +23% +25% +6% +10% +17% Pre AGL -8% Post AGL sale Forecast Focussed management of PNG oil fields has had positive results on production PNG production is now at highest levels since 2001 Production is being boosted by Nabrajah, Oil Search s first non-png development 9

10 Achievements Growth in Net Profit After Tax US$ m Net Profit EPS US cents % CAGR in net profit over last four years Driven by higher production and strong oil price, and good cost control 10

11 Achievements - Top Quartile Total Shareholder Returns Four fold increase in Market Capitalisation since 2003 % th out of ASX th out of ASX th out of ASX

12 Growth - The Next Phase Strategic Review in 2002 Five year plan to double market capitalisation, and to generate top quartile returns Delivered : operating control of core business : significant production increase : operating cost reductions : major steps towards commercialising discovered gas resource : development of quality exploration portfolio : very strong balance sheet All key objectives have been achieved 12

13 Growth - The Next Phase New Strategic Review underway Objective to more than double market capitalisation by 2010 Starting from a position of strength Excellent asset base, with large discovered gas resource and quality exploration portfolio Capture of latent value potential will deliver target Focus on gas commercialisation Increased exploration Continued production optimisation 13

14 Growth - The Next Phase Business in a New Environment Oil prices around/above US$50/bbl Unprecedented demand for gas (especially Asia-Pacific) delivering new price environment Shortage of equipment, services and people cost escalation and pressures on timely delivery Essential to Drive Business to Manage these Influences 14

15 Growth - The Next Phase Oil Search positioning itself to take advantage of opportunities created by the new market fundamentals Key part of Strategic Review Targeted value extraction in producing fields Tight cost controls Procurement and services alliancing Equipment ownership to control costs and availability and people 15

16 16 Growth - The Next Phase Focus for Growth Deliver Value Substantial remaining potential in PNG oil fields Further Yemen developments Cost controls and improved profitability Extract Value Commercialise our 1.1 billion boe gas and liquids resource PNG Gas Project LNG / Petrochemical Create Value Acceleration of exploration activity in PNG and Middle East / North Africa Mix of low risk moderate impact, higher risk high impact programme

17 Vision for 2011 Market capitalisation above US$7 billion Continuation of world class health, safety and environment performance Oil production growth through PNG and Middle East optimisation and new developments Development of multiple gas offtake projects Strong Balance Sheet / Active Capital Management 17

18 18 DELIVER VALUE

19 PNG Oil Production Outlook Summary Programmes postoperatorship change have been successful Current gross PNG production 80,000 70,000 60,000 STB/D PNG Gross Production History and Forecast 2006 At 2001 levels 50,000 Double the level predicted by previous Operator for 2006 Opportunities exist, with continuous programme for the foreseeable future 3 drilling rigs in drilling rigs in ,000 30,000 20,000 10, Trend Before Oil Search Operatorship Forecast 19

20 PNG Oil Production 50,000 40,000 Oil Production (stb/d) History Forecast KUTUBU History Forecast 35,000 Oil Production (stb/d) 30,000 25,000 GOBE 30,000 20,000 20,000 15,000 10,000 Trend Before Oil Search 10,000 SE Gobe 5,000 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Gross daily production currently around 18,000, down from highs in 2005 of over 22,000 bopd 8 workovers planned in 06, four development wells in Jan-00 Jan-01 Jan-02 Jan-03 Gobe Main Jan-04 Jan-05 Jan-06 Jan-07 Production decline from Gobe fields reversed - currently > 10,000 bopd Further development of SE Gobe Wedge area ongoing and infill well in Gobe Main expected 2H06 20

21 PNG Oil Production Oil Production (stb/d) 30,000 History Forecast MORAN 25,000 20,000 15,000 10,000 5,000 0 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Currently holding plateau rates above 23,000 bopd Two additional production / injection wells in 2006, another two planned in 2007 NW Moran pipeline 21

22 SE Mananda Development First Oil on 26 March with production currently on ramp up to 7,000 bopd Reserves downgrade in early 2006 partly offset by recent drilling at SEM 3. Current gross reserves estimated at around 8 mmbbl, further appraisal work planned SE Mananda NW Moran Moran Total project cost $US145m, above budget due to weather & scope changes Excellent safety achievement throughout duration of project however overall a disappointing result and a major learning experience with respect to project development Agogo Processing Facility 22

23 23 SE Mananda Bridge

24 24 SE Mananda Bridge

25 Yemen Production - Nabrajah Nabrajah gross production currently averaging around 9,000 bopd Facilities expansion to 25,000 bopd nearing completion Field still under appraisal Nab-10 testing underway Following completion of Nab-10, will drill Nab-11, 1km west of Nab-5 in same terrace Drilling will re-commence 2H 06, post interpretation of 3D seismic Nabrajah 2 Nabrajah 9 DEPTH (m) Nabrajah 11 Surface location Top Basement location Naifa Reservoir Nabrajah-10 Nabrajah 8 Nabrajah 10 DNO mapping Possible fractured Basement m Nabrajah-8 Top Qishn Top Qishn S2 Top Saar Top Basement 25

26 26 EXTRACT VALUE

27 Gas Commercialisation Oil Search has over 1 billion boe of proven and probable uncontracted gas and associated liquids Resource is of considerable potential value, as world prices continue to climb Approximately 40% of resource dedicated to PNG Gas Project low Australian gas prices an anomaly in the developed world Considerable new interest in PNG s static gas resources Strategic approach designed to capture phased value in new market regime 27

28 Gas Resources (Gross PNG) Recoverable Gas (bcf) 30,000 25,000 20,000 15,000 10,000 5,000 Recoverable Gas (bcf) Yet to Find Elevala Ketu Pandora Uramu Kimu Barikewa P'nyang Angore Juha Hides SE Gobe Gobe Main Moran 0 1P 2P 3P Agogo SE Mananda Kutubu 28 Current 3P gas resources approximately 25 TCF Yet to Find potential a further 25 TCF from multiple basins (estimate only) Maturing the resource ahead of market demand will require a prudent mix of appraisal and exploration

29 PNG Gas Project 29 Sale of gas from PNG Highlands to Australia through over 4,000 km of pipeline Conditional & firm contracts signed for total gas sales of PJ pa Pipeline in Australia to be constructed by APC (JV between AGL and Petronas) Interests: Oil Search 37.18% ExxonMobil (op) 25.67% PNG Govt/landowners 14.27% Nippon Oil 3.39% AGL 10.00% Santos 9.49% Estimated CAPEX for PNG component: US$2.5 billion based on initial capacity of approx 250 PJ pa, capable of expansion

30 PNG Gas Project Status Markets are largely underwritten. Likely to be close to/at initial build plant capacity. Not actively seeking additional markets Government/landowner agreements - substantial activities in PNG to finalise regulatory and landowner agreements with unanimous support from all parties Progress being made on tariff negotiations with APC critical path item Bankable finance plan IM to be released shortly Environmental management plan well advanced Discussions with Santos progressing to positive conclusion Mid-year 2006 target for project sanction is aggressive, more likely to be second half, project participants pushing ahead aggressively Still targeting late 2009 for first gas 30

31 East Coast Gas Supply / Demand PJ CSG PNG OPPORTUNITY VOLUME GIPPSLAND OTWAY COOPER BASIN The market always ensures that commercially available reserves will be deployed to meet demand 31 SOURCE: Origin Energy Presentation Australia & PNG Gas Conference Dec 2005

32 Gas Commercialisation Phase 2 PNG Gas Project commercialises significant volume of reserves and delivers major infrastructure spine Opens way for further gas development in PNG, for in-country projects and LNG New initiative recognising world market realities substantial price differentials, strong demand Significant interest for petrochemicals, GtL, fertiliser and new LNG developments Targeting higher returns and reviewing opportunities to get involved in more points of value chain Requires resource conversion to contractable gas 32

33 Phase 2 Gas Strategy Aiming for 150 PJ pa initial market load in Port Moresby, growing to over 300 PJ pa FEED on pipeline from Kopi to Port Moresby underway Flexible gas supply options but to include potential development of: Juha (OSH 31.5%) Barikewa (OSH 42.6%) Kimu (OSH 44.6%) Uramu (OSH 49.5%) Subject to further appraisal success - accelerated appraisal programme seeking to convert 4-8 tcf into contractable status in 3 years 33

34 Current Oil Production and PNG Gas Project 34

35 P nyang Honinabi Juha Angore Current Oil Production and PNG Gas Project Mogulu North Mogulu South Kimu Iehi Uramu Including Phase 2 Gas Barikewa Pandora 35

36 New Appraisal and Development Programme Dedicated exploration / drilling resources Juha drilling programme Barikewa seismic acquisition then appraisal drilling Kimu / Korobosea seismic then drilling Engineering and FEED activities Pipeline to POM Konebada Petroleum Park Individual field development engineering and economics Progressive development of potential customers 36

37 Juha Engineering feasibility study on Juha gas and liquids cycling plant completed Juha cycling looks attractive, particularly in high oil price environment Planning to drill two Juha wells, with activity to commence in good weather in 4Q06 Sites identified, construction imminent Current proven gas-inplace of 0.6 tcf, aim to increase to 2tcf and confirm potential upside Juha 3 Juha 2 Juha 1 Important source of gas for non-png Gas projects During 2006 will progress Pre-FEED and FEED work on cycling 37

38 38 CREATE VALUE

39 2006 PNG Exploration PNG up to 5 exploration wells planned for 2006 Mix of low risk/near field opportunities and higher risk/large potential wells Arakubi expected to spud shortly Planning well advanced for late 2006 Juha drilling Onshore seismic planned for Mogulu area (2Q), and in the Foldbelt (4Q) Offshore seismic in the Papuan Gulf (2,000 km) 1-2Q Juha Damami River seismic (Mogulu) Foldbelt seismic Mananda Attic NW Paua Arakubi Lahara seismic acquisition Murray Deep Drilling Seismic 39

40 Arakubi Prospect Arakubi due to spud 20 June Located 2km from infrastructure, and sits above and NE of Usano, may share common fluid contacts Mean reserves ~18 mmstb Information from well will aid in Usano redevelopment Arakubi 40

41 Yemen 2006 Appraisal/Exploration Complete appraisal programme on Nabrajah: Nab-10 testing underway, Nab-11 to follow Complete acquisition/processing of Block 43 seismic Up to six exploration wells planned late 06/early 07 2 Block 15 wells: ~150 mmbbl 1-2 Block 3 wells: mmbbl 1 Block 43 well: Naifa/Saar /Basement 1 Block 35 well Rig availability will dictate timing Proposed Al Harsh-2 NABRAJAH Proposed Shaibah-1 Proposed Riyan-1 Proposed Suad-1 41

42 Egypt & Libya Egypt - East Ras Qattara 3D has substantially increased block potential 2 wells commencing 3Q06 Egypt - Area A 15 well/3 years committed development /exploration programme Exploration commences early 2007 Focus on prolific Nubian play Umm El Yusr Exploration Two Wells Area A Libya - Area 18 : Seismic acquisition during 2006, drilling 2007 Further growth options being pursued in both Egypt and Libya during 2006 Kareem, Yusr, Kheir & & Shukheir Development Wadi Dara Exploration 42

43 Production Outlook (net) mmboe Nabrajah Yemen Hides Area 'A', Egypt Gobe + SEG SEM Moran PNG Gas Project gas PNG Gas Project liquids Kutubu Upside from further gas developments 2011 onwards 43

44 Summary Capturing latent value in existing portfolio will deliver material growth Strategic review will set the scene for growth over the next five years Continue to optimise existing producing assets, recognising challenges and opportunities presented by high oil price environment Gas priority is to deliver PNG Gas Project and progress next phase of gas developments Exploration mix of low risk/near field opportunities and higher risk/large potential exploration wells, in PNG and Middle East / North Africa. Unhedged exposure to high oil prices Financially very strong, with cash of nearly US$500 million 44

45 45 O I L S E A R C H L I M I T E D