UBS Energy & Utilities Conference. June O I L S E A R C H L I M I T E D Delivering value-added growth

Transcription

1 1 UBS Energy & Utilities Conference June 2007 O I L S E A R C H L I M I T E D Delivering value-added growth

2 Overview Three Strategic Elements for growth Deliver value from the existing oil fields Highly profitable barrels Continued upside identification Extract value from discovered gas and liquids resource Nearly 1 billion boe Create value through an active exploration programme in PNG and Middle East/North Africa Midway through programme for both oil and gas Attractive LNG options matured, highly competitive 2

3 World Class HSES Performance Total Recordable Incidents (TRIs) TRI / 1,000,000 Hours International Companies OSH OGP Australian Companies Oil Search APPEA

4 Oil Search Net Production 40,000 35,000 30,000 Kutubu Moran Gobe Main SE Gobe Hides Nabrajah SEM +25% +6% +10% Post AGL sale Forecast stb/d 25,000 20, % 15,000 10,000 5, Production in 2007 forecast to increase to between 10.5 and 11.0 mmboe 4

5 Financial Strength 2006 represented fifth year of growth in core profitability. Higher oil prices and stable costs offset lower production post AGL asset sale Shareholders rewarded by an eight US cents/share dividend, representing a 14% increase on the 2005 dividend of seven US cents/share As at end May 2007, zero debt and US$465m in cash Financial strength to fund internal programmes and acquisitions 5 US$ m US$ m Cash Debt Gearing * 2004 profits were restated for the new International Financial Reporting Standards Net Profit EPS* US cents Gearing %

6 Share Price Performance OSH Relative Share Price Performance (last 3 years) OSH WPL ASX200 Energy AWE ROC STO WTI Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 May-04 Share price (rebased to OSH)

7 7 DELIVER VALUE

8 PNG Oil Production Outlook (gross bopd) 80,000 70,000 OSH Assumes Field Operatorship Added over 34mmbbls in production Oil Production (stb/d) 60,000 50,000 40,000 30,000 20,000 10,000 Decline before Oil Search Incremental Development Aspiration 0 Jan-2000 Jan-2001 Historical Production Jan-2002 Jan-2003 Jan-2004 Jan-2005 Jan-2006 Jan-2007 Jan-2008 Forecast Base Production Jan-2009 Jan-2010 Jan-2011 Jan-2012 Jan-2013 Jan-2014 Jan Expect to continue to invest in PNG fields, targeting to maintain gross production around 50,000 bopd through to 2009 Requires investment of approx US$100m pa net to OSH

9 Near Field Drilling Activity Moran development drilling, 1-3 wells Agogo development drilling, 1-4 wells Usano development drilling, 3-7 wells Kutubu workovers and development drilling, 2-8 wells Gobe/SE Gobe workovers and development drilling, 1-2 wells 9

10 Usano Development Focus SE nose Kutubu Field Arakubi IDTG Arakubi 1 Pad Location UDT1 pad UDT2 pad UDTC UDT3A pad Usano Main Block UDTG UDTB UDTF UDT7 UDTD UDTJ UDTH Potential UDT4/6 Block Pad Location UDTE Usano East Block UDT 7 drilled Proven oil in eastern extension to Usano 1/2/3 Block Potential for between 3-9 additional wells ( ) 10

11 11 EXTRACT VALUE

12 Gas Commercialisation In late 2006, undertook major review of PNG Gas Project and other commercial options Comparison of potential value strongly favours LNG over petrochemicals and pipeline Major change in world gas market pricing Significantly higher value and returns, with larger investment Potential for wider field involvement Greater in-country development and financial return to PNG 12

13 LNG for PNG Major growth in global LNG market and strong increase in gas prices over past 2 years makes LNG in PNG attractive Unprecedented interest from range of LNG developers PNG has all the requirements for LNG development: Discovered reserve base plus upside Existing infrastructure base Excellent location to exploit strong Asian markets Competitively priced labour Stable fiscal regime 13

14 Asia-Pacific Supply & Demand Environment 14 mmtpa Asia-Pacific Supply Demand Demand (Alternate 3rd Party View) Source: WoodMac, Oil Search Demand (WoodMac) Supply Under Construction (Peru LNG, QatarGas 2/3/4, RasGas3, Sakhalin 2, Tangguh, Yemen LNG) Onstream Supply Probable Supply (includes Gorgon, Ichthys & Pluto) Regional market fundamentals are robust Steady expansion from existing markets Burgeoning growth from emerging markets of India & China Projected supply/demand imbalance has created a Sellers market Inevitable delays to announced projects Escalating development costs & environmental issues Questions over domestic requirements in Indonesia A number of Possible projects looking to fill demand gap Demonstrates importance of early commitment

15 NE Asia LNG Price Trend Average LNG Price in Northeast Asia Mar-96 Sep-96 Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 $/mmbtu Minimum-Maximum Price Range Average Northeast Asia Price Sep-92 Mar-93 Sep-93 Mar-94 Sep-94 Mar-95 Sep-95 Source: FACTS Global Energy

16 P nyang Juha Angore Existing gas fields, gas exploration and appraisal opportunities Korobosea Kimu Iehi Barikewa Uramu Pandora 16

17 Gas Resources (Gross PNG) tcf Recoverable Gas 1P 2P 3P Yet to Find Elevala Ketu Pandora Uramu Kimu Barikewa P'nyang Angore Juha Hides SE Gobe Gobe Main Moran Agogo SE Mananda Kutubu 17 Current 3P gas resources approximately 24 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 Key Fields Hides / Angore Fields (OSH 27.5%) ~ 6.5 tcf of Proven and Probable resource Kutubu Complex Fields (OSH %) ~ 1.5 tcf plus liquids, largely developed Key strategic resource and infrastructure hub, high value Juha Field (OSH 31.5%) Post Juha 5 resource ~ 0.8 tcf (2P) Potential upside to 2 tcf, dependent on Juha 4 Liquids rich Other fields include: Kimu 0.8 tcf (OSH 44.6%) Barikewa 0.8 tcf (OSH 42.5%) Uramu 0.4 tcf (OSH 49.6%) 18

19 19 LNG for PNG Competition to develop first plant Several development approaches being reviewed and matured ExxonMobil model - total value chain approach upstream, pipeline, plant, marketing/shipping Merchant plant approach specialist developer purchases gas from fields Combination of both, with multiple trains OSH reviewing merits of different approaches, driving competition

20 LNG with ExxonMobil ExxonMobil review indicated a economically robust LNG project from Hides/Angore fields Economics are enhanced if other fields (Juha, Kutubu) included Cost sharing agreement to conduct feasibility study signed in April between Hides/Angore/Juha JVs. PDL 2 (Kutubu) has option to join studies Gross cost of studies US$60m. OSH share 32% / 37% if PDL 2 joins Studies will include reviewing optimum size project (range mmtpa train), negotiation of fiscal terms, unitisation framework Capex dependent on train size total likely to be in range US$7bn - $10bn Target end 2007/early 2008 to enter FEED, end 2008 for FID, 2013 for first deliveries 20

21 Full Foldbelt 6.3mmtpa ExxonMobil LNG Option Estimated life of project capital cost (US$bn): -Upstream& Pipeline 5.0 -LNG Plant km 14-inch gas line Juha 250 mmscfd (nominal) Hides & Angore 960 mmscfd Conditioning Plant 8-inch condensate line Kutubu & Agogo Gobe Total 9.5 Reserves required (20 yrs): 7.7 tcf 311 km 32-inch Hides-Kopi pipeline Kopi Valve & Pigging Station ~300 km 32-inch subsea gas line to LNG Plant at Cape Possession Port Moresby 21

22 LNG with BG OSH and BG have been working since mid-2006 on evaluating LNG development options. Studies have included reviews of: Resource base Capital costs for 7.0mmtpa (2 x 3.5mmtpa) Ideal project structure BG excellent potential partner with development track record and strong marketing capabilities Strategic fit for Asian customers 22

23 Liquefaction Plant Costs $/tpa Greenfield Brownfield PC Phillips Cascade Gorgon Pluto Yemen Olakola QG 1 PC NLNG Base NLNG Trinidad Oman RG 1 MLNG Tiga NWS 4 Damietta Bontang H PC Trinidad PC PC PC Tangguh Darwin NLNG Egypt Trinidad PC Sakhalin Qalhat EG NLNG QG 2 RG 2 Gassi Touill QG 3 RG 3 NWS 5 NLNG PC Brass EPC Awarded 23 Source: FACTS Global Energy

24 OSH objectives: LNG for Oil Search Number of credible development options with excellent partners Striving for early development certainty and best long term value Excellent position in all major fields with likely interest around 30% in any development Decision on options in next three months 24

25 Other Complementary Gas Activities Ongoing dialogue with petrochemical proponents Significant expansion of appraisal and exploration programme for gas, aimed at increasing contractable gas Juha wells Kimu Korobosea Barikewa Potential Juha development despite J-5 results, liquids cycling project as precursor to LNG still possible. Subject to resource delineation by J-4 well 25

26 26 CREATE VALUE

27 PNG Exploration Juha NW Paua Oil exploration mmbbl net risked reserves being tested in 2007 Mananda Attic Korobosea Kutubu 2, Arakubi Cobra Barikewa Gas - Co-ordinated programme to add reserves to support commercialisation projects PNG 2007 exploration budget up to US$120m net (firm) Continued seismic for gas and oil exploration/appraisal, in Highlands, Forelands and Offshore Offshore licencing round bid submitted in April 2007 Ongoing review of farm-in opportunities onshore and offshore 27

28 MENA 2007 Remaining Drilling Programme Exploration wells drilled in 2007 so far: 4 wells in Egypt 5 wells in Yemen 1 in Iraq Total wells still to be drilled: 17 (13 Exp + 4 Dev) EGYPT IRAQ YEMEN Egypt Onshore operated Wells 3 Exploration 2 Development Onshore Non-operated Wells 3 Exploration/Appraisal Total= 8 wells Iraq (Kurdistan) Onshore Non-operated wells 1 Exploration/Appraisal Bina Bawi-2 Yemen Onshore operated Wells 2 Exploration Onshore Non-operated Wells 4 Exploration 2 Development Total= 8 wells 28

29 29 Outlook

30 Outlook Deliver Value PNG development opportunities mean extended plateau, with gross production capable of continuing at around 50,000 bopd for next three years Very strong Tapis-related oil prices being realised Costs under control In Yemen, Nabrajah area drilling programme is underway. 3D seismic has identified a number of intra-field and near-field opportunities First contribution from Egypt Area A and East Ras Qattara expected in 2007 Production forecast for FY 2007 is unchanged at between mmboe 30

31 Outlook Create Value 2007 biggest programme in Company s history Most of PNG oil targets close to existing infrastructure, high value due to fiscal regime MENA programme has potential to add to production, short lead times Gas exploration/appraisal activity a key part of 2007/08 activities Four oil discoveries made in programme to date, focus on early development 31

32 Outlook Extract Value PNG LNG the focus for gas with all the prerequisites for commercialisation Development options being refined Credible options and strong partner interest Oil Search likely to have ~30% in major new development, with growth based on discovered resource FEED decision end 2007/early

33 33 Outlook 40,000 35,000 30,000 25,000 20,000 15,000 Net Oil Production (stb/d) 10,000 MENA Production PNG Development PNG Production 5,000 ACTUAL FORECAST Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Exploration activity and gas developments have potential to add substantially to production

34 Summary Oil Search remains on strong growth trajectory Existing oil production generating strong cash flows Large discovered gas resource will be commercialised. 30% interest in LNG project unique in a company of our size Upside potential from exploration US$465 million in the bank Provides muscle for development and acquisition opportunities Have a proven skilled workforce able to build the oil and gas business Rigs being purchased for PNG, fully contracted for MENA 34

35 35 O I L S E A R C H L I M I T E D