060505 Macquarie Conference PRINT · 2 Oil Search - Profile ¬Established in PNG in 1929 ¬Operates...
Transcript of 060505 Macquarie Conference PRINT · 2 Oil Search - Profile ¬Established in PNG in 1929 ¬Operates...
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Macquarie Conference Sydney, May 2006
O I L S E A R C H L I M I T E D
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Oil Search - Profile
Established in PNG in 1929
Operates all of PNG’s producing oil and gas fields
In 2005, generated approx 22% of PNG’s export revenue and 10% of its GDP. Largest investor and taxpayer
Has major interest in substantial undeveloped PNG gas resource
Growing presence in Middle East/North Africa, with production in Yemen, Egypt
Employs approx 800 staff and over 1,800 contractors
Third largest listed E & P company in Australia with market capitalisation of over US$3.5 billion
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Oil Search– Where We Operate
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Oil Search in PNG
6 producing oil fields (Kutubu, Moran, NW Moran, Gobe Main, SE Gobe & SE Mananda)1 producing gas field (Hides)Major gas development opportunitiesExtensive exploration acreage
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Oil Search in Yemen
1 producing oil field (Nabrajah, Block 43)Nabrajah Basement development6 concession areas (5 as Operator)
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Oil Search in Egypt
Also:Libya - Area 18
East Ras Qattara Area ‘A’ - comprises 2 development leases (5 small oil fields) and four exploration leases
Area A
Wadi DaraExploration
Kareem, Yusr, Kheir
& ShukheirDevelopment
Kareem, Yusr, Kheir
& ShukheirDevelopment
Kareem, Yusr, Kheir
& ShukheirDevelopment
Kareem, Yusr, Kheir
& ShukheirDevelopment
Umm El YusrExploration
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Core Expertise
Developing country specialist
Ability to work co-operatively with host governments and local communities
Culturally sensitive and diverse
Experienced in operating in challenging environments
Low cost, innovative, regionally significant operator
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Achievements - Production Growth
Focussed management of PNG oil fields has had positive results on productionPNG production is now at highest levels since 2001Production is being boosted by Nabrajah, Oil Search’s first non-PNG development
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
stb
/d
Kutubu Moran Gobe Main SE GobeHides Nabrajah SEM
2000 2001 2002 2003 2004 2005 2006Forecast
+23%+23%
+25%+25%+6%+6%
+10%+10%
+17%+17%Pre AGLPre AGL
--8% 8% PostPostAGL AGL salesale
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Achievements – Growth in Net Profit After Tax
102% CAGR in net profit over last four yearsDriven by higher production and strong oil price, and good cost control
US
cen
ts
US
$’m
12.112.1
47.047.0
85.785.7107.3107.3
200.2200.2
4.5
17.9
9.6
7.7
1.8
0
20
40
60
80
100
120
140
160
180
200
220
240
2001 2002 2003 2004 20050
2
4
6
8
10
12
14
16
18
20
Net Profit
EPS
2H2H
136.3136.3
1H1H
63.963.9
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Achievements - Top Quartile Total Shareholder Returns
0
20
40
60
80
100
120
2003 2004 2005
%
5th out ofASX 150
4th out ofASX 150
67%67%81%81%
107%107%
8th out ofASX 150
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How Do We Maintain Growth?
Deliver value: Continue to optimise performance of PNG oil fields, with tight control over costs
Extract value: commercialise our very significant PNG gas resources, through a variety of projects
Create value: Increase exploration activity, both in PNG and in the Middle East/North Africa
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DELIVER VALUE
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PNG Oil Production Outlook
SummaryProgrammes post-operatorship change have been successfulCurrent gross PNG production
At 2001 levelsDouble the level predicted by previous Operator for 2006
Opportunities exist, with continuous programme for the foreseeable future
3 drilling rigs in 2006 4 drilling rigs in 2007
PNG Gross Production History 2000-2005and Forecast 2006
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10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2000
2001
2002
2003
2004
2005
2006
STB/D
Forecast
Trend BeforeOil Search
Operatorship
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PNG Oil Production
Gross daily production at 20,000 bopd, highest level since 20028 workovers planned in ’06, four development wells in 2006-07
Production decline from Gobe fields reduced to 7%Further development of SE Gobe Wedge area ongoing and drilling of infill well in Gobe Main expected mid year
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07
Oil Production (stb/d)
ForecastHistory
Trend BeforeOil Search
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-
06Ja
n-07
Oil Production (stb/d)
Gobe Main
SE Gobe
ForecastHistory
SE Gobe
Gobe Main
KUTUBUGOBE
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PNG Oil Production
Currently holding plateau rates above 22,000 bopd Two additional production / injection wells in 2006, another two planned in 2007
MORAN
0
5,000
10,000
15,000
20,000
25,000
30,000
Jul-0
3Ja
n-04
Jul-0
4Ja
n-05
Jul-0
5Ja
n-06
Jul-0
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Oil Production (stb/d)
ForecastHistory
NW Moran pipeline
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SE Mananda Development
First Oil on 26 March with production currently on ramp up to 7,000 bopd
Significantly more complex geology and reservoirs intersected, leading to reduced oil in place, lower reserves and lower production rates than anticipated
Project cost estimated at $US145m, above budget due to weather & scope changes
Excellent safety achievement throughout duration of project however overall a disappointing result and a major learning experience with respect to project development
SE Mananda
Moran
Agogo Processing Facility
NW Moran
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SE Mananda Bridge
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SE Mananda Bridge
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EXTRACT VALUE
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Gas Commercialisation
Significant change in global gas markets over past few years
Australia an anomaly in the developed world
World prices continue to climb
Considerable new interest in PNG’s static gas resources
Focus to turn optionality into real value in these new market circumstances
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Gas Commercialisation
Oil Search has over 1 billion boe of proven and probable uncontracted gas and associated liquids
Resource is of considerable potential value, approximately 40% of resource dedicated to PNG Gas Project
Strategic approach designed to capture phased value in new market regime
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Gas Resource Status (Gross PNG)
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
Recoverable Gas (bcf) ElevalaKetuPandoraUramuKimuBarikewaP'nyangAngoreJuhaHidesSE GobeGobe MainMoranAgogoSE ManandaKutubu
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5,000
10,000
15,000
20,000
25,000
30,000
1P 2P 3P
Reco
vera
ble
Gas
(bcf
)
Yet
to F
ind
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Gas Commercialisation
Phase 1 : PNG Gas Project Delivery
Significant progress, with markets largely underwritten
Likely to be close to or at initial build plant capacity
Commercialises significant volume of reserves
Delivers major infrastructure spine
Late 2009 delivery
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PNG Gas Project
Sale of gas from PNG Highlands to Australia through over 4,000 km of pipelineConditional & firm contracts signed for total gas sales of 155-229 PJ paMajor buyers: AGL, Alcan, Comalco, QAL, CS EnergyDiscussions underway with Santos to acquire gas and to enter ProjectPipeline in Australia to be constructed by APC (JV between AGL and Petronas)OSH interest is 44.2%, falling to 37.2% if Govt and STO enter projectEstimated CAPEX for PNG component: US$2.5 billion based on initial capacity of approx 250 PJ pa, capable of expansion
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PNG Gas Project
Focus on Delivery
Substantial activities in PNG to finalise regulatory and landowner agreements
Oil Project commitments and agreements being finalised
Developing environment for Landowner Benefits distribution negotiations
Aggressive timetable with mid year target for project sanction
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Requirements for a Project Sanction decision
Conversion of remaining indicative terms agreements into gas sales agreements
Finalisation of local business development plan (NECL) and benefits distribution (GPCSA)
Conclusion of tariff negotiations with APC
Bankable finance plan
Environmental management plan
Economically viable project
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East Coast GasSupply / Demand
The market always ensures that commercially available reserves will be deployed to meet demand
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
0
200
400
600
800
1000
1200
PJ
SOURCE: Origin Energy Presentation Australia & PNG Gas Conference Dec 2005
GIPPSLAND
COOPER BASIN
OTWAY
CSG
OPPORTUNITYVOLUME
PNG
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Gas Commercialisation
Phase 2 : Gas for PNG Industry Development and Further Exports
New initiative recognising world market realities
Significant interest for petrochemicals, GtL, fertiliser and new LNG developments
Requires resource conversion to contractable gas
Focus on accelerated appraisal programme for resource conversion 4-8 tcf contractable in 3 years
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Phase 2 Gas Strategy
Targeting 2010-12 In-Country Industry Development
Requires more contractable reservesStrong interest from industry developers
PetrochemicalGtLFertiliserLNGCNG local and export use
Expanded exploration, appraisal and development programme involving gas fields not committed to PNG Gas Project
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Phase 2 Gas Strategy
Aiming for 150 PJ pa initial market load in Port Moresby, growing to over 300 PJ pa
Flexible gas supply options but to include potential development of
Juha
Barikewa
Kimu
Uramu
Subject to further appraisal success
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Phase 2 Gas Strategy
Programme designed to target 4 to 8 tcfof contractable gas over 3 years
Expanded exploration and appraisal drilling programme
FEED on pipeline from Kopi to Port Moresby
Potentially 3 new field developments
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CurrentOil
Production and
PNG Gas Project
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CurrentOil
Production and
PNG Gas Project
IncludingPhase 2
Gas
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New Appraisal and Development Programme
Dedicated exploration / drilling resources
Juha drilling programme ’06-’07Barikewa seismic acquisition then appraisal drillingKimu / Korobesea seismic then drilling
Engineering and FEED activitiesPipeline to POM – Konebada Petroleum ParkIndividual field development engineering and economics
Progressive development of potential customers
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Juha
Engineering feasibility study on Juha gas and liquids cycling plant completed Juha cycling looks attractive, particularly in high oil price environment Planning to drill two Juha wells, with activity to commence in good weather in 4Q06Sites identified, construction imminentCurrent proven gas-in-place of 0.6 tcf, aim to increase to 2tcf and confirm potential upside
Important source of gas for non-PNG Gas projectsDuring 2006 will progress Pre-FEED and FEED work on cycling
Juha 3 Juha 2 Juha 1
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CREATE VALUE
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2006 PNG Exploration
PNG – up to 5 exploration wells planned for 2006Mix of low risk/near field opportunities and higher risk/large potential wellsArakubi expected to spud late 2QPlanning well advanced for late 2006 Juha drillingOnshore seismic planned for Moguluarea (2Q), and in the Foldbelt (4Q)Offshore seismic in the Papuan Gulf (2,000 km) 1-2Q
Juha
DamamiRiver seismic
(Mogulu)
NW Paua
Mananda Attic
Murray Deep
Arakubi
Lahara seismic acquisition
Foldbelt seismic
Drilling
Seismic
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Yemen 2006Appraisal/Exploration
Proposed Al Harsh-2
Proposed Shaibah-1
Proposed Riyan-1
Proposed Suad-1
NABRAJAH
Complete appraisal programme on Nabrajah: Nab-10 underway, Nab-11 to followComplete acquisition/processing of Block 43 seismicUp to six exploration wells planned 06/early 07
2 Block 15 well: ~150 mmbbl prospect size1-2 Block 3 wells: 20-70 mmbbl prospect size1 Block 43 well: Naifa/Saar/Basement1 Block 35 well
Rig availability will dictate timing
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Egypt & Libya
Egypt - East Ras Qattara3D has substantially increased block potential2 wells commencing 3Q06
Egypt - Area ‘A’15 well/3 years committed development /exploration programmeExploration commences early 2007Focus on prolific Nubian play
Libya - Area 18 : Seismic acquisition during 2006, drilling 2007
Further growth optionsbeing pursued in bothEgypt and Libya during2006
Two Wells
Area A
Wadi DaraExploration
Kareem, Yusr, Kheir& Shukheir
Development
Kareem, Yusr, Kheir& Shukheir
Development
Kareem, Yusr, Kheir& Shukheir
Development
Kareem, Yusr, Kheir& Shukheir
Development
Umm El YusrExploration
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Summary
Production outlook remains unchanged: 2006 production forecast at 11.0 – 11.5 mmboe, +10% in 2007 Gas – priority is to deliver PNG Gas Project and progress next phase of gas developmentsExploration
PNG – range of low risk/near field opportunities and higher risk/large potential exploration wells planned for 2006Yemen - completion of Nabrajah appraisal programme plus up to 3 wildcats in 2H06 First drilling in Egypt
Unhedged exposure to high oil pricesFinancially very strong, with cash of nearly US$500 million
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O I L S E A R C H L I M I T E D