1

Oil Search Update

Macquarie Australia Conference

5 May 2010

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

2

2009 Highlights

PNG LNG Project sanctioned on 8 December: Less than two years from FEED to Sanction

Transformational impact on Oil Search and PNG

ExxonMobil quality operator

Foundation for major LNG industry in PNG

Seven fold increase in proven and probable reserves, from 67 mmboe to 567 mmboe, with significant further potential upside

Successful capital raising resulting in very strong balance sheet with sufficient liquidity to fund both PNG LNG equity contribution plus T3/T4 gas exploration/ appraisal programme

3

Strategic priorities in 2010and beyond

Assist Operator, ExxonMobil, to deliver PNG LNG Project on time and on budget

Priority focus on further LNG development, to capture maximum synergy value:

Gas exploration and appraisal activities in PNG

Strategic PNG gas acquisitions

Partner alignment

Optimise oil field management

Measured oil exploration activities

ACHIEVEMENT OF ABOVE WILL ENSURE CONTINUED TOP QUARTILE TSR PERFORMANCE

4

PNG LNG ProjectUpdate

5

PNG LNG Project Overview

6.6 MTPA, 2 train development, operated by ExxonMobil

Co-venturers:ExxonMobil – 33.2%, Operator

Oil Search – 29.0%

IPBC & Petromin (PNG Government) - 16.8%

Santos -13.5%

Nippon Oil Exploration - 4.7%

MRDC (PNG landowners) - 2.8%

6

PNG LNG Project Overview

Fully contracted to quality Asian customers:Sinopec (China) ~2.0 MTPA

TEPCO (Japan) ~ 1.8 MTPA

Osaka Gas (Japan) ~1.5 MTPA

CPC (Taiwan) ~ 1.2 MTPA

20 year contracts

7

PNG LNG Project Overview

Engineering, Procurement and Construction (EPC) contracts awarded

Contracts mix of fixed and variable price

Construction underway, first LNG sales targeted for 2014 Investment for initial phase estimated at US$15 billion (ex. shipping & finance costs)Capital cost to be funded 70:30 debt: equityUS$14bn project finance facility in place for debt component

8

2010 PNG LNG Project Activities

Continued early works: Roads, bridges, camps, site preparation and training facilities

Order remaining long lead items and place purchase ordersOpen supply routesMobilisation of people and equipment by key contractorsCommence Associated Gas (AG)construction

9

Proposed PNG LNG Timetable

2010 2011 2012 2013 2014

FinancialClose

• Continued early works• Detailed design

• Order long leads and place purchase orders• Open supply routes

• Contractor mobilisation• Commence

AG construction

• Pipe lay (Kutubu to Hides)

• Ongoing drilling• Complete Hides plant• Commission LNG plant

with Kutubu gas

• Ongoing procurement and mobilisation

• Airfield construction• Drilling mobilisation

• Start offshore pipeline construction

•Onshore line clearing• Start LNG equipment

installation

First Gas from Train 1,

then Train 2

• Complete AG • Commence

onshore pipe lay (Kutubu to Omati)

• Complete offshore pipe lay

• Start Hides plant installation

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GasGrowth

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PNG Gas Growth

Key strategic priority for Oil Search is to grow gas business in PNGLNG remains optimum commercialisation route for additional gas Significant pre-investment - 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

Government is very supportive of, and expects, future gas growth

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Two-Pronged Gas Growth Strategy

PNG LNG dedicated fields:

Proven (1P) 301 mmboe (OSH share) – all sold

Proven & probable (2P) 505 mmboe (OSH share)

Focus on moving 2P (& 3P) into 1P contractible category through field development optimisation and further appraisal

Other fields and exploration:

Existing proven & probable resources (2C) of 281 mmboe (OSH share), still to be commercialised

Programme to appraise discoveries and explore for new gas

Objective is to prove up sufficient proven contractible reserves to underwrite Trains 3 and 4

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Requirements for LNG train growth in PNG

OSH Operated LicenceOSH Interest LicencePetroleum Development LicencePetroleum Retention LicenceLicence ApplicationOil FieldGas FieldOil & Gas FieldOil PipelineProposed Gas Pipeline

Kumul Terminal

PRL01

PPL234

PRL08PPL240

PRL03

PRL11

PRL12

PPL239

PDL1

PPL233

PPL190

PPL219

PRL10

PRL02

PDL2

PDL5PDL6

PDL4

PDL3

PRL09

142°E

9°S

7°S

145°E50km

APDL14

PPL260

AngoreJuhaHides

Moran

Agogo Kutubu

Gobe Main

PNG LNG ProjectGas Resources

Mananda Attic

Flinders

Barikewa Deep

Huria

Hedinia FW

Lead 7

Korka

Gobe Deep

Hides FW

Pasca B

ExplorationGas Resources

Pandora

Barikewa

Uramu

P’nyang

Kimu

Juha North

SE Gobe

Non PNG LNG Gas Resources

3rd Train Threshold

0

5

10

15

20

25tcf

PNG LNG3C

Upside

PNG LNG

Base Volume

2C

3C

Other Highlands JV Partner Resources

4th Train Threshold

2C

3C

Forelands &

Offshore Resources

Exploration

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Circle areas proportional to reserves potential. Outer circle unrisked potential, inner circle risked potential

Red = GasOrange = CondensateGreen = Oil

Proposed 2010/11 PNG Gas Exploration

PRL01

PPL234

PRL08PPL240

PRL03

PRL11

PDL7

PPL239

PDL1

PPL190

PPL219

PRL10

PRL02

PDL2

PDL4

PDL3

PRL09

PPL244

9°S

6°S

145°E50km

Kumul Terminal

PDL6PDL5

APRL14

PPL260

APPL249

APPL250

PPL

233

PDL9PDL8

142°E

Flinders

Barikewa Deep

KorkaHuria (PDL 8)

Mananda FW

Mananda Attic

CBM test

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Oil Search Reserves & Resources

Six-fold increase in proven (1P) reserves, from 50 mmboe at end 2008 to 344 mmboe

Seven-fold increase in proven & probable (2P) reserves, from 67 mmboe to 567 mmboe

PNG LNG Project reserve booking of 505 mmboe

2P reserve life extended from 8 years to 70 years (based on 2009 production)

2C resources, comprising gas and associated liquids, of 281 mmboe at end 2009, compared to 886 mmboe at end 2008

Total 2P and 2C reserves and resources of 848 mmboe

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Significant additional LNG reserves booking potential

PNG LNG gross 2P reserves are 9+ tcf gas, 200+ mmbbl liquids Similar level of proven and probable resources already exist outside PNG LNG:

Total 2C resources in OSH and other PNG fields, ex PNG LNG, estimated at 1,686 mmboe (9 tcf)

PNG 2009Reserves & Resources (100% Licence Estimates)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Mil

lio

ns

of

Barr

els

Oil

Eq

uiv

.

Oil Only Oil + PNG LNGOSH Fields'Reserves &Resources

All OtherResources

2P/2C

Oil Search 2009PNG Fields Net Reserves & Resources

0

100

200

300

400

500

600

700

800

900

Mil

lio

ns

of

Barr

els

Oil

Eq

uiv

. (N

ET

)

Oil Fields Oil + PNG LNG Oil + PNG LNG +Resources

1P/1C 2P/2C

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Oil Production

and Exploration

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PNG Oil Production (gross)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Oil

Pro

du

ctio

n (

Bo

pd

)

P10

P50

P90

Pre-OSHDecline

Added over55 mmstbcompared

to Chevron

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Oil development drilling continues to add value

Since 2003, gross PNG proven (1P) oil reserves have increased by 51 mmbbl and proven and probable (2P) reserves by 37 mmbblDevelopment drilling has added 2P reserves at average cost of US$11.72/bbl Further opportunities exist to add oil reserves within field areas

PNG Oil Fields – Gross Ultimate Recoverable Reserves (pre-LNG)

1P

2P

440

460

480

500

520

540

560

Mil

lio

ns

of

Barr

els

2003 2004 2005 2006 2007 2008 2009

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Operational Outlook

Gas value driving revised operating framework:

Field reliability management

Gas conservation with minor oil production impact

Value-adding PNG production activities to continue in 2010 & 2011, winding back as first gas approaches

Ongoing focus on costs and capital efficiency

Aligning and maximising use of infrastructure to support LNG Project

Production outlook for 2010 unchanged at 7.2 – 7.4 mmboe, with incremental activity expected to flatten decline curve in 2011 - 2013

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PNG 2010 Exploration Summary

PRL01

PPL234

PRL08PPL240

PRL03

PRL11

PDL7

PPL239

PDL1

PPL190

PPL219

PRL10

PRL02

PDL2

PDL4

PDL3

PRL09

PPL244

142°E

9°S

6°S

145°E50km

Kumul Terminal

PDL6PDL5

APRL14

PPL260

APPL249

APPL250

PPL

233

PDL9PDL8

Commitment

Discretionary

Future Commitment

Well Types

Prospect/Lead (POS%)Mean Oil Gross (mmstb)Mean Gas Gross (tcf)

Seismic

CommitmentDiscretionary

Permit 2D(distance)/3D(area)

Flinders (12.5%)1.0 tcf+

Korka (15%)1.3 tcf +

Mananda Attic (45%)30 mmstb

Mananda FW (10%)1.2 tcf +

PPL 234 3,000+km2

PDL 8/PRL 11 80km

PPL 233 55km

PDL 2 70km

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MENA 2010 Exploration Summary

Commitment

Discretionary

Future Commitment

Well Types

Prospect/Lead (POS%)Mean Oil Gross (mmstb)Mean Gas Gross (bscf)

Seismic

CommitmentDiscretionary

Permit 2D(distance)/3D(area)

Sana’a Office

Dubai Office

Tajerouine

Le Kef

K42

Shakal

Block 7

Block 3

Taj. + Le Kef 600km

K42 200km

Shakal 50km

Jebel Milh (17%)28 mmstb

Block 3 & 7 400km

Al Meashar (20%)20 mmstb

Block 3/7 well,late 2010

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Outlook

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Production Outlook

PNG LNG adds ~18 mmboe pa to OSH at plateau in 2015 onwards. 30 year Project lifeT3 could add an additional ~9 mmboe pa, with T4 of similar magnitude

Net

Pro

du

ctio

n (

bo

ep

d)

0

10,000

20,000

30,000

40,000

50,000

60,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

LNG GasLNG Gas

PNG DevelopmentPNG Development

70,000

80,000

Potential T3 LNG GasPotential T3 LNG Gas

LNG CondensateLNG Condensate

90,000

Potential T3 LNG CondensatePotential T3 LNG Condensate

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Summary

PNG LNG Project construction underwayCompany and country transformational

Active programmes to deliver more value in 2010/2011

Appraisal and exploration to prove up gas for T3/T4 has commenced

Core oil production remains solid. Focus on life extension, reliability and gas conservation

Measured oil and gas exploration in PNG and MENA

Activities underwritten by strong balance sheet and liquidity to meet LNG obligations, T3/T4

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