O I L S E A R C H L I M I T E D Oil Search Roadshow Septem ber 2 0 0 8 1
Sum m ary � Oil Search has delivered sustained top quartile grow th over past five years ( 5 3 % annualised return) � Delivery of PNG LNG Project over next four years, together w ith progressive developm ent of 2 nd and 3 rd tier gas, has potential to m ultiply Com pany value over this period � PNG LNG – The Prem ier AsiaPac LNG Project: � On track to deliver FI D tow ards end 2 0 0 9 , w ith first LNG in late 2 0 1 3 / early 2 0 1 4 � Thirty+ year legacy project, w ith capacity to triple OSH production. Also positively im pacts oil field life, value and reserves � Current share price discounts assessed PNG LNG value and reflects no value for further gas developm ents or exploration 2
Profile � Established in Papua New Guinea ( PNG) in 1 9 2 9 � Operates all of PNG’s producing oil and gas fields. Current gross production ~ 4 4 ,0 0 0 boepd, net share ~ 2 3 ,0 0 0 boepd � As operator, responsible for generating 2 2 % of PNG’s export revenue and 1 6 % of its GDP in 2 0 0 7 � PNG Governm ent is largest shareholder at 1 7 .6 % � PNG’s largest investor and taxpayer � At 1 .1 .0 8 , 7 3 .5 m m boe 2 P reserves plus 9 5 0 m m boe undeveloped 2 C gas and liquids resource. ~ 6 0 % of gas resource is dedicated to PNG LNG, a w orld scale LNG developm ent operated by ExxonMobil. Significant resources still to be com m ercialised � Range of m aterial exploration interests in PNG and Middle East/ North Africa � Market capitalisation ~ US$ 5 .5 billion. Listed on ASX ( Share Code OSH) and POMSOX, plus ADR program m e ( Share Code OI SHY) 3
Location Map Oil Search 4
Consistent strong perform ance over past 5 years Ranked No.5 TSR Perform er am ongst current ASX 1 0 0 for 5 year period to Dec 2 0 0 7 ( 5 3 % annualised return) 7 .0 0 Share price ( rebased to OSH) 6 .0 0 Oil Search 5 .0 0 4 .0 0 W oodside W TI oil 3 .0 0 Santos 2 .0 0 ASX 2 0 0 1 .0 0 0 .0 0 1 Aug 0 8 Jul 0 3 Jan 0 4 Jul 0 4 Jan 0 5 Jul 0 5 Jan 0 6 Jul 0 6 Jan 0 7 Jul 0 7 Jan 0 8 Jul 0 8 OSH 5 .5 6 0 .8 4 1 .0 2 1 .3 3 1 .8 1 3 .0 0 3 .6 9 4 .2 2 3 .3 5 4 .1 6 4 .8 5 6 .6 7 ( A$ / share) W TI 3 0 .3 3 3 2 .5 1 3 8 .6 7 4 2 .1 7 5 9 .2 5 6 1 .0 6 7 3 .8 5 6 0 .8 5 7 1 .1 0 9 5 .9 5 1 4 0 .9 7 1 2 3 .2 6 ( US$ / bbl) ( Actual values of the 1 st of the m onth) 5
W orld Class Safety Perform ance Total Recordable I ncidents ( TRI s) 1 9 9 8 – 2 0 0 7 TRI / 1 ,0 0 0 ,0 0 0 Hours OSH OGP APPEA 1 4 12.7 12.7 1 2 10.6 10.6 10.7 10.7 9.8 9. Australian Com panies 1 0 9. 9.4 8. 8.3 9. 9.3 8. 8.5 9 .1 7. 7.8 8 7. 7.0 8.2 8. 7. 7.3 6.8 6. 6.3 6. 6 5. 5.8 5.2 5. 4.7 4. I nternational Com panies 4 3. 3.1 2. 2.7 4. 4.0 2.9 2. 2. 2.05 05 2 Oil Search 1. 1.7 2 .4 2 .3 0 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 6
Strategy � 2 0 0 7 / 0 8 Strategy Review defined initiatives to drive continued top quartile returns, by unlocking value w ithin existing asset base � Major strategy objectives � Ensure Final I nvestm ent decision for PNG LNG Project Transform s Oil Search into significant LNG producer, 3 0 + year legacy project � Position Com pany to drive 2 nd phase gas developm ents using existing 2 C, 3 C gas resources and through gas exploration � Optim ise PNG oil field operating perform ance to sustain production and cashflow s up to and beyond first gas � Pursue m aterial exploration opportunities in PNG and MENA 7
AsiaPac’s next PNG LNG developm ent Project LNG 8
Prim ary Focus - PNG LNG � PNG LNG Project represents PNG’s cornerstone gas developm ent, w ill m ore than double country's GDP � “Affects econom y of PNG and its balance of trade situation profoundly” ( ACI L Tasm an report, Feb 2 0 0 8 ) � W ill underpin Oil Search’s production and profits for 3 0 + years � W ill com m ercialise ~ 5 5 0 m m boe of Oil Search’s 2 C gas resources and add ~ 2 0 m m boe to annual net production, tripling current production � W ill unlock value for OSH and shareholders � New gas developm ents at prem ium prices ( BG & Origin, Petronas/ Santos, Shell/ Arrow , QGC/ Sunshine Gas) � AGL sale w ill provide m arket a w indow to project value 9
Regional LNG m arkets are robust � Regional m arket Pacific Basin LNG Supply and Dem and to 2 0 2 0 m m pta fundam entals rem ain robust 300 � Steady expansion from “LNG supply unlikely to keep up with demand with existing m arkets ( Japan, high prices set to continue in the medium term” 250 Korea, Taiw an) “Some of these possible projects are tenuous e.g., � Grow th from em erging LNG from Iran, and actual supply will be lower than shown” m arkets of I ndia & China 200 and new m arkets � Decline in existing 150 contracts and concern w ith new project tim ing � Supply and Dem and 100 im balance after 2 0 1 2 � Projects under construction 50 do not m atch capacity � Extensive set of projects in Source Wood MacKenzie Global LNG, April 2008 0 queue from 2 0 1 3 onw ards 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Onstream Under Construction Possible Speculative Pacific LNG Demand Notes 1. Project Under Construction include: Pluto LNG, Tangguh LNG, Yemen LNG, Qatar Gas 2,3,4, RL3, Angola LNG 2. Possible projects include: PNG LNG, Sunrise LGN, Gorgon LNG, Browse, Ichthys, Scarborough, Wheatstone LNG, 4 Gladstone projects, Sulawesi, Abadi, Brunei LNG II, NLNG VII, Brass LNG, OK LNG, Iran LNG 3. Speculative projects include: projects that currently lack any reasonable definition in terms of participants, structure or underlying resources as well as defined supply where major issues are preventing the project from making substantial progress 1 0
LNG Projects Under Construction and Proposed � Large num ber of possible projects under consideration � Not m any possible projects w ill be able to cover the dem and gap in 2 0 1 3 � W estern Australia: strong cost pressures and com petition for resources � Potential first production post 2 0 1 4 / 1 5 � Australian CSG projects: � 4 + projects com peting for 2 0 1 4 w indow , new technology w ith several hurdles to be overcom e � I ncreasing foreign focus PNG LNG is an attractive option relative to others 1 1
LNG Pricing � Strong pricing drivers: LNG ( US$ / m m btu) 2 0 � Supply/ dem and fundam entals � Pull from Europe � Delays in other projects � Environm ental advantages Crude Oil Parity � Pricing and challenges w ith 1 5 com peting energy sources � Recent contract pricing around oil price parity: NW S 2 0 0 7 Contracting 1 0 � Recent contracts: � Sept 0 7 : Petrochina, 2 -3 m tpa, 1 5 - 2 0 years ex Brow se � Sept 0 7 : Petrochina, 1 m tpa, 2 0 years ex Gorgon 5 � Nov 0 7 : CPC, 2 -3 m tpa, 1 5 - 2 0 Traditional Contracting years ex Brow se � April 0 8 : Petrochina, 3 m tpa, 2 5 years from 2 0 1 1 ex QatarGas � April 0 8 : CNOOC, 2 m tpa, 2 5 years 0 from 2 0 0 9 ex QatarGas I I 2 0 4 0 6 0 8 0 1 0 0 JCC ( $ / bbl) 1 2
PNG LNG: The Prem ier AsiaPac LNG Project � W orld Class and W orld Scale LNG Project � 2 C resources of 9 .3 tcf � 6 .3 m m tpa, 2 train LNG project � Clean, liquids-rich gas � No technology issues or concerns � W ell positioned for the Asia m arket � Rapidly advancing in optim al tim efram e to satisfy regional dem and in 2 0 1 3 / 2 0 1 4 period � Joint Venture is strongly aligned w ith supportive Governm ent � Strong Operator � ExxonMobil is the Project operator – excellent record of project delivery on tim e and on budget, assisted by com prehensive pre-FEED process � Oil Search providing PNG experience � Strong Project team � Real Expansion Capacity � New infrastructure w ill stim ulate additional gas developm ent � Substantial existing 2 C and 3 C resources 1 3
PNG LNG Project � I ntegrated developm ent of Hides, Angore and Juha gas fields plus associated gas from the Kutubu, Agogo, Gobe and Moran oil fields � Upstream infrastructure including production w ells, processing facilities and pipeline netw ork linking to the export pipeline � Gas export pipeline from PNG Highlands to LNG plant near Port See schem atic above for detail Moresby � Liquefaction plant, export loading and support facilities located in Portion 1 5 2 , 2 0 km from Port Moresby 1 4
PNG LNG Project Fields Angore Juha Main Hides Moran Kutubu Agogo Gobe Main 1 5
PNG LNG Project Milestones reached in 1 H0 8 � Com m ercial alignm ent achieved, w ith Joint Operating Agreem ent ( JOA) executed in March 2 0 0 8 am ongst the Project Ow ners � I nitial funding interests pre-Governm ent back-in agreed ( OSH 3 4 % ) � Unitisation and redeterm ination procedures agreed � Actionable finance plan agreed � Marketing Representative Agreem ent signed for joint m arketing of 6 .3 m m tpa, led by ExxonMobil, Project rolled-out to buyers at GasTech in Bangkok in March 2 0 0 8 � Gas Agreem ent signed May 2 0 0 8 � Outlines fiscal term s and legal obligations under w hich Project w ill operate over its life � The term s include 3 0 % tax rate and Additional Profits Tax ( APT) w hich applies once a certain threshold level of return has been achieved � Sets term s and m echanism for State equity participation in the Project � Front End Engineering and Design ( FEED) com m enced in May 2 0 0 8 1 6
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