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

Transcription

1 O I L S E A R C H L I M I T E D 1 Oil Search Profile Established in Papua New Guinea (PNG) in 1929 Operates all of PNG s producing oil and gas fields. Current gross production ~33,500 boepd, net share ~18,500 boepd At December 2010, proven reserves were 337 mmboe, proven and probable 559 mmboe plus 318 mmboe 2C resources, taking 2P reserves and 2C resources to 877 mmboe PNG Government is largest shareholder with 15%. In early 2009, Govt issued exchangeable bond over shares to IPIC of Abu Dhabi 29% interest in PNG LNG Project, world scale LNG project operated by ExxonMobil. Project in construction, first LNG sales expected 2014 Exploration interests in PNG and Middle East/North Africa Market capitalisation ~US$8 billion. Listed on ASX (Share Code OSH) and POMSOX, plus ADR programme (Share Code OISHY) 2

2 Oil Search Locations Iraq Tunis Tunisia Sulaymaniyah Dubai Sana a Yemen Papua New Guinea Kutubu Ridge Camp Port Moresby (Head Office) Australia Brisbane Sydney 3 Key Oil and Gas Fields, PNG P nyang PPL260 Madang Hides LEGEND Wabag PRL3 PPL260 Juha 6 S Kiunga Hides Gas Conditioning PlantPRL02 Komo Airstrip Oil Field PDL8 PDL9 PPL239 Trapia PRL11 PDL1 APPL250 PDL6 PDL7 Angore PPL219 Prospect Mendi 233 Mananda 5 Kundiawa APPL249 PDL5 PPL233 Gas Field Mt. Hagan Oil Pipeline Kutubu, Agogo & Moran V. PDL2 Proposed Gas Pipeline PPL SE Mananda APPL386 PRL14 PNG LNG Project Gas Resources 7 S Non PNG LNG Gas Resources Gobe PDL4 338 PDL3 Kimu Barikewa PRL Major Lae Road Elk/Antelope 338 PRL08 PPL240 Kopi Wharf PPL338 Exploration Gas Resources Uramu PPL Gulf Onshore PRL10 PPL312 8 S Kerema 100km PPL276 Kumul Terminal PPL234 APPL385 PPL244 Gulf Offshore 9 S Daru PRL01 Pandora LNG Facility Port Moresby 143 E 144 E 145 E 146 E 147 E 4

3 OSH Strategies to Create Value Optimise current oil and gas production: Through improved efficiencies and pursuit of near field opportunities Maximise value of PNG LNG Project (T1 & T2): By utilising in-country knowledge to assist Operator Develop LNG and other gas expansion opportunities: Build gas resources for both PNG LNG expansion and standalone LNG project/s Measured programme of other growth options: Optimise exploration portfolio Ensure Oil Search s Sustainability: Operate business in transparent and sustainable manner to ensure long term operating stability and enhance social licence to operate 5 Strong Performance in 1H11 Production (mmboe) Oil Price (US$/bbl) US$m % 86% 83% NPAT* Operating cash flow EBITDAX Margin 83% % H H 11 *NPAT before significant items 1H 2011 NPAT increased by 117% to US$114.5 million Result driven by 53% increase in realised average oil price of US$ per barrel, more than offset 10% lower production of 3.56mmboe Cash operating margin stable against back drop of inflationary pressure in PNG coupled with adverse currency movements and declining volumes 6

4 World Class Safety Performance Total Recordable Injury Frequency Rate of 1.47 in 1H11 12 TRI / 1,000,000 Hours International Companies (OGP) Oil Search Australian Companies (APPEA) H Share Price Performance Aug Share price (rebased to OSH) Oil Search WTI oil Santos ASX 100 Woodside Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11

5 Treasury Update - 30 June 2011 US$1.23 billion in cash at end June Cash invested and actively managed with highly rated bank counterparties US$275.5 million available from term revolving facility, nil drawn down. Facility doesn t expire until 2013, will refinance prior to expiry No oil hedging undertaken during 1H11 or currently in place - realised earnings uplift from 2011 oil price recovery US$1.32 billion has been drawn down under the PNG LNG project finance facility 2011 interim dividend of two US cents per share to be fully underwritten via DRP 9 Liquidity US$mm Liquidity (cash plus undrawn bank debt) Outlook updated for first half cash generation, investment spend and forward prices Liquidity (including escrowed cash) at the end of 1H 2011 ~ $1.5 billion Company is well placed to meet existing commitments / base business plan with sufficient liquidity to deliver on strategic plan initiatives Key Assumptions: 1. Brent Forward curve pricing as at 1 July PNG LNG Project on schedule and budget 3. Includes T3 pre FEED costs 4. Production, operating costs and investment spend based on strategic review business plan 5. Existing oil facility refinanced 10

6 PNG LNG Project Overview 6 S Juha Facility C1 HGCP Hides Wells Wabag EPC4 Hides Gas Conditioning Plant Mendi Mt. Hagan Kundiawa Goroka EPC5B Komo Airfield Kutubu CPF Gobe PF Lae 7 S C1 South complete EPC5A Onshore pipeline and Infrastructure Kopi Wharf LEGEND Oil Field Gas Field Oil Pipeline 8 S EPC2 Offshore pipeline Kumul Terminal Kerema LNG Gas Pipeline Oil Facility LNG Facility 100km Major Road Daru C2 Complete 9 S 143 E 144 E 145 E 146 E EPC3 LNG Facility Port Moresby 147 E 11 PNG LNG Project Overview 6.6 MTPA, 2 train development, operated by ExxonMobil Over its 30-year life, PNG LNG expected to produce over 9 tcf of gas and 200+ million barrels of associated liquids Initial Equities: ExxonMobil % Oil Search % Kroton2 (PNG Government) -16.8% Santos % Nippon Oil - 4.7% MRDC (PNG Landowners) - 2.8% Fully contracted to Asian buyers, with continuing strong market interest Sinopec (China) ~2.0 MTPA TEPCO (Japan) ~ 1.8 MTPA Osaka Gas (Japan) ~1.5 MTPA CPC (Taiwan) ~ 1.2 MTPA 12

7 PNG LNG Project Overview Main EPC contractors: LNG Plant: Offshore Pipeline Hides Gas Plant Onshore Pipeline Infrastructure Early Works Associated Gas (OSH only) Chiyoda/JGC Saipem CBI/Clough JV Spiecapag McConnell Dowell/CCC JV Clough/Curtain JV Aker Solutions Different labour environment to Australian LNG projects Four-year construction period. First LNG sales expected 2014, capital cost US$15 billion 13 Milestones achieved in 1H 2011 Ground-breaking and pouring of first foundations at the LNG plant site Commencement of welding and burial of onshore pipeline, continued clearing and stringing of pipe along the route Construction of Caution Bay offshore pipeline support site Completion of training facilities at Juni in Highlands Continued early construction activities both in Highlands (incl. earthworks at Hides plant site and Komo airfield, road and bridge upgrades) and at PNG plant site near Port Moresby Ramp-up in PNG workforce and use of PNG suppliers. Total workforce at end June of 9,300, of which 6,600 were PNG nationals (71%) 14

8 Focus items for 2H 2011 Community engagement and downtime management Working with new Government to ensure continued alignment and delivery of obligations Wellpad and Hides spine road development First stage of Associated Gas project at CPF (successfully completed) Commencement of work on Kumul rejuvenation following completion of fabrication of new Single Point Mooring (SPM) for Kumul loading terminal Onshore pipeline installation Commencement of offshore pipelay Continued progress at LNG Plant site Rig mobilisation and arrival and site preparations Strong A$ 15 Timetable Continued early works Detailed design Order long leads and place purchase orders Open supply routes Contractor mobilisation Commence AG construction Complete AG Continue onshore pipe lay Complete offshore pipe lay Start Hides plant installation 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 Complete Hides plant Commission LNG plant with Kutubu gas 16

9 PNG LNG Project Onshore Pipeline Construction Kopi Scraper Station Pipeline stringing, onshore pipeline Completed Mubi River crossing PNG LNG Project Onshore Pipeline Construction 17 First weld Pipe Welding Pipe Lowering-in 18

10 PNG LNG Project Hides Conditioning Plant - Pioneer camp construction Drilling Rig Ribbon cutting ceremony, Houston Texas 19 PNG LNG Plant Site July 2011 February

11 PNG LNG Plant Construction Process pipe rack construction Marine jetty piling 21 Gas Growth and Exploration Key strategic priority for Oil Search is to grow gas business in PNG Pursuing two pronged strategy: PNG LNG Expansion Gulf Area LNG PNG near field oil exploration High graded exploration outside PNG 22

12 Drilling Programme Embarking on one of the largest drilling programmes ever undertaken, starting 4Q11 continuing through 2012, into 2013 Multi-TCF risked potential for gas and several hundred millions of barrels of oil potential Appraisal and development drilling Hides P nyang Kutubu, Moran and likely Mananda Exploration Trapia (PRL 11) Near field oil exploration Gulf Area drilling, subject to final seismic results Taza, Kurdistan Potential to underwrite continued gas commercialisation and short-medium term oil production 23 PNG LNG Expansion Integrated exploration and appraisal drilling programme in the Highlands Results by mid/late 2012 Upside in Associated Gas fields: Detailed evaluation ongoing by Oil Search Targeting alignment with PNG LNG Co-Venturers in 2012 Hides Gas Water Contact Well: Hides development drilling scheduled to commence in late 2011, Gas:Water Contact well planned early in drilling sequence Optimisation with logistics and construction (Komo and HGCP) P nyang and Trapia (formerly Huria) wells targeted for 4Q11 and 1Q12 spud respectively 24

13 PNG LNG Expansion P nyang PPL260 Hides Wabag Madang LEGEND 6 S PRL3 Juha PPL260 PDL9 PPL239 Hides Gas PRL02 Conditioning Plant Komo Airstrip Kiunga Mananda 5 PDL1 PDL7 PDL8 PRL11 PDL6 PPL V. PPL219 PDL2 APPL250 PDL5 Trapia Angore APPL249 Mendi Mt. Hagan Kundiawa Kutubu, Agogo & Moran Oil Field Gas Field Prospect Oil Pipeline Proposed Gas Pipeline PNG LNG Project Gas Resources 7 S Non PNG LNG Gas Resources Exploration Gas Resources Kimu SE Mananda 240 PRL08 PPL240 APPL386 PDL4 PDL3 PRL PRL14 Gobe 338 Barikewa 338 Elk/Antelope 338 Kopi Wharf PPL338 PPL Uramu PPL PRL10 Gulf Onshore Major Lae Road PPL312 8 S 100km PPL276 Kumul Terminal Kerema PPL234 APPL385 PPL244 Gulf Offshore 9 S Daru PRL01 Pandora LNG Facility Port Moresby 143 E 144 E 145 E 146 E 147 E PDL 1, PDL 7 and PDL 8 Hides & Angore 25 PDL 1 Hides Field 8 New Wells Drilling GTE PL 1 Hides GTE Plant Hides Nogoli Camp PDL 1 ExxonMobil Oil Search Santos PNG Govt Gas Resources Gigira Ltd.(L/O) PDL 7 ExxonMobil Oil Search PNG Govt Gas Resources Hides No.4 Ltd.(L/O) 36.81% 16.66% 24.03% 20.50% 2.00% 36.81% 40.69% 20.50% 2.00% PDL 8 ExxonMobil Oil Search PNG Govt Gas Resources Angore Ltd. (L/O) % 40.69% 20.50% 2.00% PDL 7 South Hides Hides Gas Conditioning Plant Construction 2012/13 10km PDL 8 Angore Field 2 New Wells 26

14 PNG LNG Expansion P nyang (PRL 3) ExxonMobil 49%, Oil Search 38.5%, JX Holdings 12.5% Appraisal well scheduled for 4Q11 Targeting southern fault block Aim is to move 3C to 2C and increase 1C resource Potential 2C of ~2 tcf P nyang 100km Hides Juha 6 S Angore Moran Agogo Kutubu SE Gobe 7 S 8 S Kumul Terminal 142 E 143 E 144 E 145 E 27 PNG LNG Expansion Juha 6 S Angore 7 S 8 S Hides PRL11 Moran Agogo Kutubu SE Gobe Kumul Terminal 10km Trapia 1 (PRL 11) Oil Search 52.5%, ExxonMobil affiliates 47.5% Exploration well scheduled for 1Q12 Series of prospects in area: Reasonable seismic but structural uncertainty remains Multi-tcf potential in area Partial dependency. Exploration potential remains in event of success or failure at Trapia 142 E 143 E 144 E 145 E 28

15 Gulf Area LNG Opportunity Gobe PPL260 PPL Multi-licence, multi play type, multi well opportunity being developed PPL338 2D Seismic Lines Elk/Antelope PPL 7 S Large, modern 3D seismic dataset acquired to unlock potential of Gulf Processing of data almost all complete and being interpreted. Results of initial interpretation are encouraging PPL276 PRL10 PPL312 Kumul Terminal PPL234 Uramu 8 S 2D onshore in PPL 338 and complete and being processed Rig options and timing being assessed 3D Seismic Regions Flinders PPL244 Long lead item procurement process commencing 9 S PRL01 Pandora 144 E 50km 145 E 146 E 29 Gulf Area LNG Opportunity Prospectivity: Targeting 4Q for initial assessment of prospectivity across all licences Final views by year end Partnering: Discussions initiated and ongoing with potential strategic farm-in partners Drilling: Planning ongoing: Well design commenced Long lead item procurement process commenced Site survey planning Rig selection and sourcing discussions ongoing Timing: Targeting Timing dependent on: Prospectivity Rig selection and availability Strategy selected Status of partnering discussions 30

16 Analogue Comparison Kokomo Prospect - Gulf of Papua vs. Sequoia Field - Nile Delta Channel Sands 6 km Kokomo Prospect Gulf of Papua, PNG Oil Search High Amplitude Anomalies Sediment flow-direction Sequoia Field Nile Delta, Offshore Egypt British Gas 9Tcf Kokomo Prospect Reservoir Lower Channel 31 L Amplitude H 6 km Map view of horizon slice 32

17 Kurdistan - Taza PSC PSC signed after exercising Option Agreement Oil Search entry as Operator in extremely active Kurdistan Region of Iraq Very prospective location adjacent to three fields Large, simple 4-way dip closure identified from 2010 seismic Well scheduled to spud in 1H12 Jambur Oil Field Pulkhana Oil Field Kor Mor Gas Field Taza Prospect 33 Tunisia 2010 seismic evaluation complete Large structures mapped Proven plays present and new deep gas play developed Prime prospect in Tajerouine permit has potential for >100 mmstb oil and >400 bcf gas Fiscal regime favourable Prospect sizes commercially attractive Exploration well in Tajerouine to be drilled in late 2012 ~10km 34

18 Oil Search Production Net Production (mmboe) MENA Hides GTE SE Mananda SE Gobe Gobe Main Moran Kutubu Production Outlook Production in 1H of 3.56 mmboe, solid performance with underlying production from oil fields generally consistent with expectations Gas injection well at Usano, UDT 13, drilled successfully. Providing support to key production well in Usano East IDT 25 development well successfully drilled in Kutubu Main Block Toro: Good indications of hydrocarbons in Toro reservoir Well deepened to exploration target in Koi Iange horizon, with hydrocarbon indications - will be flow tested in 4Q11 2H11 production will be impacted by: Two week shutdown for tie-in of Associated Gas facilities (successfully completed) Natural decline Repairs to HP compressor at APF Workover programme using the Hydraulic Workover Unit (HWU) underway at Gobe Full year estimate remains consistent with guidance ( mmboe) Production out to first LNG broadly flat, subject to success of work programmes 36

19 Near Field Exploration Detailed review of near field exploration potential in and around existing producing fields as part of 2010 strategic review More than 25 opportunities currently identified Potential: 125 mmboe net (approximately half oil, half gas) Higher risk than historical development drilling: Difficulty imaging Untested reservoir properties Complex geology Risk management: Integrating with existing pads and wells to reduce cost Fall back of safer, conventional proven targets Step wise approach, building out from known positions 37 Near Field Exploration Deeper targets e.g. Koi Iange Footwalls Forelimbs Focused on: Deeper Koi-Iange play: Potentially underlies all producing reservoirs Penetrated by IDT 25, due to be tested in 4Q 2011 Forelimb play: ADT 2 look alikes Currently drilling Hedinia 10 forelimb Agogo 6 well in 4Q Play extensions: Based on detailed remapping and 2011 seismic Potentially SE Mananda and Kube Kabe (north of Kutubu) Footwall targets: Hedinia, Moran, Mananda 38

20 2H11 Drilling Activity Hedinia Forelimb ST1 ST2 ST3 Agogo Forelimb Hedinia 10 targeted ADT2 lookalike forelimb structure under producing Hedinia field within Kutubu. Well found thin oil column in Toro reservoir, successfully proving structural model. Well now being sidetracked updip to appraise size of discovery Agogo 6 is follow-up to ADT2 targeting Agogo Toro forelimb and extent of Digimu forelimb 2011/12 Development & Near- Field Appraisal Drilling Activity 39 PRL02 PPL260 Hides 6 S PPL239 Juha PDL1 PRL 12 PRL12 PRL11 PPL233 Angore PDL6 PDL5 APPL350 Moran: 2012 : 1-2 wells Mananda 5 SE Mananda PPL219 PPL233 Kutubu: 2011 : 1 well, 1 workover Agogo: 2011 : 1 well 2012 : ±1 well PDL2 APPL386 Gobe Main: 2011 : 1 workover 7 S Usano: 2011 : 1 well, 1 workover 2012 : 1 well PPL240 SE Gobe: 2011 PPL240: 3-4 workovers PDL 4 PDL 3 PRL09 PDL 4 PRL14 Cobra Iehi Barikewa 50km Kimu PRL E 144 E 40

21 2H11 Focus Areas Maintain OSH s industry-leading safety performance in high activity environment Strong commitment to cost effectiveness PNG LNG Project commitments driving operational developments: Deliver the Associated Gas Project as planned Improved reliability and long term integrity Life extension programmes for facilities Upgrade of key systems and processes Enhanced development of personnel Continued focus on capturing additional in-field and near field reserve opportunities Mananda 5 Discovery 25 mmboe discovery, ~50:50 oil:gas Confirmed oil in Toro A, B & C Ambiguous in Imburu & Digimu Location application lodged with DPE 6 10'S 6 15'S ªk Mananda 2SMananda 3X Mananda 3XST1 µy Mananda 5 PPL 219 Potential Pipeline Route k Mananda 4X PPL ' MORAN PDL 6 PDL 5 SE Mananda 4SE Mananda 5 SE Mananda 2X SE Mananda 3 SE Mananda 1X ADT 'S AHT 1APF Km PPL 287 ADT ' 1 ADD %, 3 AHT 'E SE MANANDA 143 0'E 1 PDL 2 ª'1' APPL 350 NW Moran 1 Moran 14 Moran 13 Moran 12 ª'ª' Moran 14A Moran 12A Moran 6XMoran 9 ª' ' Moran 8 Moran 4X Moran 'E ª 1' ª' ª ' ª' ' AGOGO Subsurface, engineering and incountry issues evaluation ongoing Decision on development or further appraisal by end

22 PNG Operating Environment PNG has built enviable investment record of fiscal stability in resources sector over past 15 years Unprecedented investment now taking place in oil, gas and mining, encouraged by attractive fiscal policy and stability History of constructive dialogue between industry and Government to manage issues and expectations Anticipate that this will continue with new Government, led by Prime Minister Peter O Neill 43 PNG Operating Environment Rapidly changing economic and social landscape Changes in traditional tribal culture Increased expectations and opportunities Education and communications Focus on improving benefits distribution system, transparency and service delivery Strong support from landowner leaders and key institutions 44

23 Managing Operating Risk Oil Search has increased its focus on managing incountry issues Seen as key way to mitigate operating risk Expanded Sustainability Group is focusing on: Government/regulatory Promoting transparency Sovereign wealth funds Supporting benefits distribution process Providing support to PNG Government bodies, when appropriate Relationship building between Government, Landowners and other businesses Oil Search Health Foundation: Expanding the successful OSH model for health programmes to other areas of PNG Nominated as Principal Recipient for grants from The Global Fund to deliver HIV and malaria programmes 45 Summary Delivery of PNG LNG underway: Robust project Outside crowded Australian LNG space, conventional onshore gas, limited technical risks High quality Operator, making good progress towards first sales in 2014 Largest ever drilling programme Oil fields generating strong cash flows. Production impacted by associated gas construction in 2H, but expect production to remain flat in 2012/13 despite field maturity PNG challenging environment, increased focus on managing risk Balance sheet remains strong, ample liquidity to meet LNG obligations and to mature expansion activities 46

24 Appendix 2011 Full Year Guidance Summary 47 Production: mmboe Similar performance in 2012 and 2013, subject to success in planned work programmes Operating costs US$19-21/boe (incl corporate costs) Impacted by: Lower production volumes Major workover programme to maximise oil recoveries before gas production FOREX PNG inflation Associated Gas activities Sustainability initiatives Depreciation, depletion and amortisation: US$7-9/boe 48

25 2011 Capital Outlook Update US$ m Investing : Exploration inc gas growth PNG LNG Production Corporate (inc rigs) 1H H ,200-1, Financing : Dividends 0 * 0 * 0 * * Dividend fully underwritten 49 Other Key Players in PNG Talisman Equity Participation NGE & Interoil Equity Participation 6 S Juha Hides & Angore 6 S Juha Hides & Angore NGE Interoil Kutubu & Agogo Kutubu & Agogo Gobe Gobe 8 S 8 S 100km 142 E 146 E Port Moresby 100km 142 E 146 E Port Moresby 6 S 8 S Oil Search Equity Participation Juha Hides & Angore Kutubu & Agogo Gobe 100km Petroleum Licences Port Moresby 142 E 146 E Talisman and Sasol have significant acreage in Western Forelands. InterOil has strong position in Eastern Forelands OSH strategy focused on core PNG LNG Foldbelt acreage and Gulf - viewed as offering greatest potential for large gas discoveries 50

26 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. 51