O I L S E A R C H L I M I T E D. UBS Conference

Transcription

1 O I L S E A R C H L I M I T E D UBS Conference Sydney, June

2 Managing the New World Order Business in a New Environment Sustained oil prices US$50/bbl and above Unprecedented demand for gas (especially in Asia Pacific) delivering a new price environment Increasing disconnect with East Coast Australian Gas Market Major pressures on equipment supply, services and people. Industry at or above capacity Cost escalation and pressures on timely delivery Essential to manage new business environment 2

3 Four Years of Strong Performance Strategic Review in 2002 Four year plan to double market capitalisation, and to generate top quartile returns All key objectives have been achieved 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 3

4 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 4

5 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 5

6 Achievements - Top Quartile Total Shareholder Returns Four fold increase in Market Capitalisation since 2003 % nd out of ASX th out of ASX 100 3rd out of ASX th out of ASX Annualised July 2002 June

7 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 can deliver target 7

8 Growth - The Next Phase Oil Search positioning itself to take advantage of opportunities created by new fundamentals: Key part of new Strategic Review Targeted value extraction in producing fields Commercialisation of discovered gas resource Exploration activities increased Control of equipment supply/ownership Participation in the full value chain 8

9 Growth - The Next Phase Control of the main value drivers and operational levers: Equipment ownership Drilling equipment Procurement and services alliancing Operations optimisation with tight cost controls People development and investment Value driven investment Spend money to make money 9

10 10 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

11 Vision for 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 11

12 12 DELIVER VALUE

13 PNG Oil Production Outlook Summary Programmes postoperatorship change have been successful Current gross PNG production At 2001 levels Double the level predicted by previous Operator for 2006 Significant opportunities identified increased drilling activity 4 rigs in ,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 STB/D PNG Gross Production History and Forecast 2006 Trend Before Oil Search Operatorship Forecast 13

14 SE Mananda Bridge 14 Innovative engineering opens up new exploration/development trend

15 15 EXTRACT VALUE

16 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 16

17 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 17 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

18 PNG Gas Project 18 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). Pipeline route being optimised Likely 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

19 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 Agreement with Santos progressing to positive conclusion Project Sanction second half 2006, project participants pushing ahead aggressively Still targeting late 2009 for first gas 19

20 Australian 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 20 SOURCE: Origin Energy Presentation Australia & PNG Gas Conference Dec 2005

21 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 21

22 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 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 22

23 Current Oil Production and PNG Gas Project 23

24 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 24

25 25 CREATE VALUE

26 2006 PNG Exploration PNG up to 5 exploration wells planned for 2006/early 2007 Juha Mananda Attic NW Paua Arakubi Drilling Seismic Mix of low risk, near field opportunities and higher risk, large potential wells Damami River seismic (Mogulu) Foldbelt seismic Murray Deep Oil and gas exploration/ appraisal Lahara seismic acquisition 26

27 Yemen 2006 Appraisal/Exploration Up to six exploration wells planned for second half 2006 /early 2007, including: 2 Block 15 wells, offshore: ~150 mmbbl prospect size 1-2 Block 3 wells: mmbbl prospect size 1 Block 43 well: Naifa/Saar /Basement 1 Block 35 well Proposed Al Harsh-2 NABRAJAH Proposed Shaibah-1 Proposed Riyan-1 Proposed Suad-1 Rig contracted Looking at farm-in, acquisition opportunities 27

28 Egypt & Libya Egypt - East Ras Qattara 2 wells commencing 3Q06 Egypt - Area A 15 well over 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 in 2006, drilling 2007 Further growth options being pursued in both Egypt and Libya during 2006 Kareem, Yusr, Kheir & & Shukheir Development Wadi Dara Exploration 28

29 Production Outlook (Net) mmboe Nabrajah Yemen Hides Area 'A', Egypt Gobe + SEG SEM Moran PNG Gas Project gas PNG Gas Project liquids 29 0 Kutubu Base case forecasts Expect to fill in production dip Upside from further gas developments 2011 onwards

30 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 advance 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 30

31 O I L S E A R C H L I M I T E D Well positioned to continue to grow 31