Merrill Lynch 25 th Australian Investment Conference

Transcription

1 O I L S E A R C H L I M I T E D Merrill Lynch 25 th Australian Investment Conference (New York & Boston) September Oil Search Profile Established in Papua New Guinea (PNG) in 1929 Operates all of PNG s producing oil and gas fields. Current gross production ~40,000 boepd, net share ~21,000 boepd Proven reserves base of 344 mmboe, proven and probable of 567 mmboe plus 281 mmboe in the 2C resource category still to be commercialised 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$7 billion. Listed on ASX (Share Code OSH) and POMSOX, plus ADR programme (Share Code OISHY) 2

2 Oil Search Locations Tunisia Tunis Iraq Sulaymaniyah Dubai Sana a Yemen Papua New Guinea Kutubu Ridge Camp Port Moresby (Head Office) Australia Brisbane Sydney 3 Oil Search Locations - PNG P nyang Proposed Juha Facility Juha Hides Proposed Hides Conditioning Plant Huria Wabag Madang LEGEND Oil Field Gas Field 6 S Mananda Attic Moran Mendi Agogo Moro Airport Kutubu Mt. Hagan Kundiawa Goroka Prospect Lead Oil Pipeline Gas Pipeline CSG Exploration SE Mananda Gobe/SEG Proposed Gas Pipeline OSH Facility 7 S Barikewa Proposed LNG Facility Major Road Uramu Secondary Road 8 S 100km Kumul Terminal Kerema Flinders Daru 9 S Pandora Proposed LNG Facility Port Moresby 143 E 144 E 145 E 146 E 147 E 4

3 Oil Search Locations Middle East/North Africa (MENA) Tunis Office Dubai Office 5 PNG LNG Project Update 6

4 PNG LNG Fields PDL9 JUHA PDL1 HIDES PDL8 Power Plant Proposed Juha Facility PDL7 Nogoli Hides Camp ANGORE PDL7 Proposed Hides Conditioning Plant PDL8 PDL6 PDL5 MORAN PDL2 AGOGO APF KUTUBU Ridge Camp CPF GOBE 7 PNG LNG Project Overview 6.6 MTPA, 2 train development, operated by ExxonMobil Fully contracted to quality Asian customers, 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 Based on commitment of 9.3 tcf proven and probable reserves Fiscal stability agreement in place for 10.5 tcf of production APT at 17.5% ROR and 20% ROR. Max case tax rate of 41.7% 8

5 PNG LNG Project Overview Initial Equities: ExxonMobil 33.2% Oil Search 29.0% Kroton2 (PNG Government) 16.8% Santos 13.5% Nippon Oil 4.7% MRDC (PNG Landowners) 2.8% 9 PNG LNG Project Overview Construction underway, major ramp up in activity levels following Financial Close in March 2010 First LNG sales targeted for 2014 Estimated investment for initial phase unchanged at US$15 billion (ex. shipping & finance costs) Capital cost being funded 70:30 debt: equity At end June 2010, US$1.7 bn gross (US$503m net to OSH) had been drawn down from US$14bn project finance facility 10

6 PNG LNG Project Construction Activities Planned/Underway PNG LNG Project Activities Work to date has focused on: Opening supply routes (north, south, air bridge) Building/improving roads, bridges, camps, site preparation and training facilities Ordering long lead items and placing purchase orders Procurement and pre-fabrication of pipelines Mobilisation of people and equipment by key contractors Associated Gas (AG) construction in oil fields progressing well 12

7 PNG LNG Logistics 13 Highlands Highway Bridge construction 14

8 PNG LNG Plant site 15 PNG LNG Project Kopi Wharf 16

9 PNG LNG Project Training Centre, Port Moresby 17 PNG LNG Project Graduates 18

10 Proposed LNG Plant Layout Future Expansion 19 Proposed Hides Gas Conditioning Plant and Well Pads 20

11 Mananda-5 Growth Opportunities 21 PNG Gas Growth Key strategic priority for Oil Search is to grow gas business in PNG, with LNG the optimum commercialisation route PNG LNG will provide infrastructure and capacity to facilitate expansion and provide excellent cost structure: Use of capacity in pipeline, jetty, tanks and services Trained local work force Further synergies available if T3 follows T1/2 Government is very supportive of, and expects, future gas growth Competitive and positive position in the LNG market 22

12 PNG Gas Growth Two core development strategies: Train 3 Development PNG LNG Expansion Brown fields development leveraging synergies Underwritten by PNG LNG fields resource base Train 4 Development Utilising discovered gas resource base Augmented by exploration, concentrating on offshore licence base 23 Sources and Timing of Gas Resource Maturation Resources required to underpin LNG expansion being considered at present: Studies underway Likely to be less than T1/2 threshold volumes Potential sources of gas PNG LNG dedicated fields Existing discoveries outside PNG LNG dedicated fields Exploration licences Building integrated programme to test best onshore gas prospectivity through 2011 and 1Q12 Building strong offshore licence position and testing with seismic in 2010/1Q11, followed by drilling in 4Q11 and 1H12 24

13 Requirements for LNG train growth in PNG tcf PNG LNG 3C Upside Other Highlands JV Partner Resources 1 3C 2C Forelands & Offshore Resources 2 3C 2C Exploration 4 th Train Threshold 3 rd Train Threshold P nyang PRL03 Juha Hides Deep PPL239 PPL260 Juha North Mananda Attic PRL02 PRL12 PDL1 Agogo Kimu Hides Angore PRL11 Huria PPL240 PDL2 PDL6 PDL5 PPL233 PRL08 Moran Kutubu PPL219 PDL4 PDL3 PRL09 Gobe Main APDL14 PPL190 PNG LNG Project Gas Resources Non PNG LNG Gas Resources Exploration Gas Resources SE Gobe Barikewa Uramu PRL10 7 S 5 0 PNG LNG 2P Base Volume OSH Operated Licence OSH Interest Licence Petroleum Development Licence Petroleum Retention Licence Licence Application Oil Field Gas Field Oil & Gas Field Oil Pipeline Proposed Gas Pipeline Offshore Prospects Flinders Pandora Kumul Terminal PPL234 9 S 142 E 50km PRL E 1. P nyang, Juha North, SE Gobe 2. Barikewa, Kimu, Pandora, Uramu, Cobra, Iehi 25 PNG LNG Dedicated Fields Potential upside possible in all PNG LNG fields Near term focus on: Associated Gas Fields (Kutubu/Moran/Gobe/Agogo) Hides Recent wells and additional production history indicate increased gas resource. Recertification required Yet to test depth of gas water contact or northern segment Two development wells scheduled to test both in 2012 Currently considering accelerating these two wells 26

14 Onshore Exploration and Appraisal Huria (PRL 11/PDL 8) ExxonMobil (Op) & Oil Search Seismic recently completed over Huria prospect and Angore Currently being interpreted Targeting drilling decision by year end with potential drilling in 4Q11 Barikewa (PRL 9) Oil Search, Santos & Cue Increased Oil Search equity with option to increase further depending on drilling options pursued Seismic recently acquired & being interpreted at present Commitment appraisal well targets, location & timing being reviewed Target timing is 4Q11 P nyang (PRL 3) ExxonMobil (Op), Oil Search & Noex Potential step out development from Juha to achieve infrastructure & timing synergies Small focused seismic programme in 1Q11 Appraisal drilling in Offshore Strategy 8 S 9 S 4,700 km 2 3D Optimisation of licence holdings taking place Proven gas bearing area (Pandora, Uramu & Pasca) 4,700km 2 3D seismic acquisition to identify and derisk prospects. First phase complete, second phase complete by 4Q10 Targeting multi well drilling programme in 2011/12 Partner alignment (T4) prior to drilling campaign. Target equity 30-35%, shared risks and upside Pandora (PRL 1) Talisman, Oil Search, ExxonMobil, ENI, Beach Multiple development options being considered 145 E 28

15 PNG CSG Exploration CSG effort run as small low cost team Three firm wells commencing September Low cost wells, high risk, potentially large prize Preliminary results by end km 29 PNG Oil Exploration PPL233 Mananda Attic APPL350 MANANDA ATTIC PDL6 PDL5 PPL233 APPL 349 Moran 219 SE Mananda PPL219 Agogo APF Moro Kutubu 10km SW PDL2 PPL219 Ridge Camp CPF NE Darai Ieru Toro Digimu Iagifu Koi-Iange PPL 219 WI % Oil Search JX Nippon Oil & Gas Near field exploration opportunity along trend with SE Mananda & Agogo oil fields Toro sandstone primary objective recovered oil, gas & water when tested at Mananda 3x Koi-Iange sandstone secondary objective Reserves: 30 mmbbl COS: 45% Opportunity to deepen well and further constrain Mananda Forelimb lead analogues to Agogo Forelimb Rig move underway. September spud after Moran 15 30

16 MENA Exploration Tunis Office Tajerouine + Le Kef - Currently shooting 600km 2D - 2 commitment wells by 2Q 2012 K42 & Shakal - Recently completed 200km of 2D in K42 - Currently shooting 50km of 2D in Shakal Dubai Office Block 3 & 7 - Al Meashar oil discovery in Block 7 - Tubb a gas condensate discovery in Block 3 - Currently drilling Jebel Al Milh in Block 7 - Rig will move back to Al Meashar for appraisal well - Exploration/production options will be reviewed post Al Meashar appraisal 4Q Production 32

17 Production Summary 6.0 Oil Search Net Production (mmboe) MENA Hides GTE SE Mananda SE Gobe Gobe Main Moran Kutubu H 07 2H 07 1H 08 2H 08 1H 09 2H 09 1H Excellent safety performance 1H10 Performance Strong production performance 3.95 mmboe (3.81 mmboe in 1H09) Kutubu and Agogo Production enhanced by ~ 1,500 bopd from ADT2 ST3 well Sustained contribution from new development wells drilled in 2008/09, particularly at Usano Moran and Gobe Main base production exceeding forecasts Agogo forelimb discovery has opened up new structural play concepts along trend, which are being actively progressed PNG oil field costs: PNG oil field costs averaged US$9.20/bbl in 1H10 (US$10.74/bbl in 1H09) due to reduced discretionary work programmes and higher liftings 34

18 Operational Outlook Following PNG LNG sanction, facilities life (and oil field life) will be extended. Particular focus on oil export system which will also be used for PNG LNG Project condensate storage and export Strong near field production opportunity portfolio identified providing basis to continue production decline attenuation to 1 st LNG production High return business, with high success rates Establishing a good track record in gas conservation, with minimal oil production impact to date Ongoing focus on costs and capital efficiency /11 Development & Near- Field Appraisal Drilling Activity PRL02 PPL260 Hides PPL239 Juha PDL1 PRL 12 PRL12 PRL11 PPL233 Angore PDL6 PDL5 Moran: 2010 : 1 well 2011: ±1 well PPL219 SE Mananda PPL219 Kutubu: 2011: 1 well Agogo: 2010 : 1 well 2011: 1 well PDL2 Usano: 2011 : 1+ wells Gobe Main PPL219 PDL 4 PDL 3 PDL 4 SE Gobe PPL190 Cobra Iehi PPL240 PRL09 APRL14 Barikewa 50km Kimu PRL08 36

19 FY10 Production Outlook 2H10 production expected to be impacted by: ADT2 ST3 off line for further testing of deep zones Potential reduced offtake at Hides GTE due to water shortage at Porgera mine site Natural decline Production guidance for 2010 of mmboe, unchanged Recent and planned incremental production activity expected to reduce decline curve in Rig strategy: Balancing and prioritising in-field oil, near field oil/gas appraisal and gas growth opportunities Optimisation of rig utility using third party opportunities 37 Production Outlook Despite maturity, recent development drilling success expected to reduce oil production decline curve prior to first LNG. High value barrels PNG LNG adds ~18 mmboe pa to OSH at plateau in 2015 onwards. 30 year Project life T3 could add an additional ~9 mmboe pa, with T4 of similar magnitude 90,000 Net Production (boepd) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 Potential T3 LNG Condensate Potential T3 LNG Gas LNG Condensate LNG Gas 10,000 0 PNG Development

20 Strategic Review 39 Strategic Review Major strategic review underway to optimise growth path and prepare for substantial production and revenue growth. Dedicated review team in place Focus areas : PNG oil and gas operations interface PNG LNG delivery Gas New Business (T3 & T4) plus other options Growth and business development Capital management, pre and post LNG cash flows Organisation capability Provide programmes and organisation to deliver value and maximise shareholder returns through to, and beyond, first LNG production 40

21 Summary PNG LNG T1/2 construction progressing steadily, timing and budget estimates unchanged. Project is in good hands With PNG LNG underway, new OSH strategic objective is LNG expansion: De-risking/appraisal of existing gas discoveries to underpin T3 Gas exploration/reserves growth for further expansion Core oil production remains solid. Focus on life extension, near field value adds and gas conservation Measured oil exploration in PNG and MENA Activities underwritten by strong balance sheet and ample liquidity to meet LNG obligations, T3/T4 41 O I L S E A R C H L I M I T E D 42

22 PDL 1, PDL 7 and PDL 8 Hides & Angore 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% PL 7 - Juha Pipelines ~55km Gas & Liquids Construction PDL 8 Angore Field 2 New Wells PL 4 HGCP to LNG Plant ~690km Gas Pipeline Construction PL 5 HGCP to Kutubu 88km Condensate Pipeline Construction 2013 Hides Field 22km gathering lines PDL 7 South Hides Hides Gas Conditioning Plant 295 ksm 3 /hr Construction 2012/13 10km PL 6 Angore to HGCP Gas Pipeline Construction PDL 9 - Juha JUHA NORTH PDL 9 Juha Field 4 New Wells PL 7 - Juha Pipelines ~55km Gas & Liquids Construction km PDL 9 ExxonMobil Oil Search PNG Govt Nippon Oil Gas Resources Juha No.1 Ltd.(L/O) 43.39% 24.42% 20.50% 9.69% 2.00% Juha Facility 1,133 ksm 3 /hr Construction

23 PDL 5 & 6 Moran PDL5 ExxonMobil Oil Search Eda Oil (PNG Govt) Petroleum Resources Moran (L/O) PDL6 ExxonMobil Oil Search Nippon Oil Petroleum Resources NW Moran Ltd. (L/O) 36.81% 40.69% 20.50% 2.00% 18.36% 71.07% 8.57% 2.00% PL 4 HGCP to LNG Plant ~690km Gas Pipeline Construction SE Mananda Oil Field Moran Oil Field PL 5 HGCP to Kutubu 88km Condensate Pipeline Construction km Agogo Oil Field Agogo Facility Additional Gas Treatment & ~19km pipeline Construction 2011/12 Moro Airstrip & Camp 45 PDL 2 Kutubu Field Complex (Iagifu, Hedinia, Usano, Agogo) Moro Airstrip & Camp Agogo Oil Field Kutubu Facility Additional Gas Treatment & ~2km pipeline Construction 2011/12 Kutubu Oil Field PL 2 Kutubu Export Pipeline PL 4 HGCP to LNG Plant ~690km Gas Pipeline Construction PDL2 10km Oil Search ExxonMobil Nippon Oil Petroleum Resources Kutubu Ltd. (L/O) 60.05% 14.52% 18.69% 6.75% SE Hedinia Field 2 New Wells 46

24 PDL 4 Gobe Gobe Facility Additional Gas Treatment & ~10km Pipeline (PL 8) Construction 2011/12 PL 3 Gobe Export Pipeline PDL4 ExxonMobil Oil Search Nippon Oil Petroleum Resources Gobe Ltd (L/O) Gobe Airstrip & Camp 14.52% 10.00% 73.48% 2.00% PL 4 HGCP to LNG Plant ~690km Gas Pipeline Construction km 47 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. 48