For personal use only Encl. - Australian Securities Exchange · 5 Strong 5 Year Share Price...
Transcript of For personal use only Encl. - Australian Securities Exchange · 5 Strong 5 Year Share Price...
O I L S E A R C H L I M I T E D(Incorporated in Papua New Guinea)
ARBN – 055 079 868
A U S T R A L I A N R E G I S T E R E D O F F I C E
Level 27 Angel Place, 123 Pitt Street, Sydney NSW 2000, Australia GPO Box 2442, Sydney NSW 2001, Australia
Telephone: (61 2) 8207 8400 Facsimile: (61 2) 8207 8500 www.oilsearch.com
6 October 2009 Company Announcements Officer AUSTRALIAN SECURITIES EXCHANGE (SYDNEY) LIMITED Level 4, Exchange Centre 20 Bridge Street Sydney NSW 2000 AUSTRALIA Dear Sir/Madam, Oil Search Limited – JP Morgan 2009 Australasian Conference. 6th October 2009 For release to the market, attached please find - JP Morgan 2009 Australasian Conference. 6th October 2009 Yours sincerely OIL SEARCH LIMITED
STEPHEN GARDINER Group Secretary Encl.
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JP Morgan 2009
Australasian Conference
October 2009
O I L S E A R C H L I M I T E D
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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.
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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
As operator, responsible for generating 22% of PNG’s export revenue and 13% of its GDP in 2008 and is PNG’s largest investor and taxpayer
PNG Government is largest shareholder with 17.6%. In early 2009, Govt issued exchangeable bond over shares to IPIC of Abu Dhabi. Money raised by this Bond secured equity funding for PNG Government’s share in PNG LNG Project
~30% interest in PNG LNG Project, world scale LNG project operated by ExxonMobil. FID expected late 2009
Significant further gas resources still to be commercialised plus range of material exploration interests in PNG and Middle East/North Africa
Market capitalisation ~US$6 billion. Listed on ASX (Share Code OSH) and POMSOX, plus ADR programme (Share Code OISHY)
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Oil Search Locations
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Strong 5 Year Share Price Performance
OSH has delivered consistent top quartile performance.TSR for five years to end 2008 of 396%, 7th out of ASX 100
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08
Share price (rebased to OSH)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Jan 09
Santos
ASX 100
WTI oil
Jul 09
Woodside
Oil Search
28-Sep-09
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Financial Performance
US$m
0
100
200
300
400
500
600
700
800
2003 2004 2005 2006 2007 2008
85.7
107.3
200.2 207.5
140.8
240.0
900
350.8
416.3
664 644.5718.6
814.3
239.1
330
554.3 544.8598.2
698.0
191.3
276.7
357.7
399
326.8
507.4
EBITDAX
Revenue OperatingCash Flow
CoreNet Profit
Share price underpinned by positive financial performance
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2009 First Half Performance Summary
Sound operating performance in 1H09, despite challenging conditions
NPAT of US$35.6m vs US$133.3m in pcp. Result driven by 55% lower oil price of US$51.84 per barrel, marginally lower production and liftings imbalance
Cash operating margin remained healthy at 78%, despite lower oil price
Balance Sheet strong with current cash balance of >US$430m
Debt free, with US$391.5m draw down facility available
Board approved payment of two US cents per ordinary share, unfranked, interim dividend. Payable on 9 October 2009
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World Class Safety Performance
Total Recordable Incidents (TRIs) of 1.1 in 1H09
TR
I /
1,0
00
,00
0 H
ou
rs
0
2
4
6
8
10
12
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1998 1999 2000 2001 2002 2003 2004 2005 2007
Oil Search
2006
Australian Companies (APPEA)
2008
8.5
10.69.8 10.7
5.8
1.7
4.7
2.4 2.31 2.052.04
InternationalCompanies
(OGP)
12.7
9.1 9.37.8
7.0 7.3
5.2
9.4
8.2
6.3 6.8
3.9 3.1 2.9 2.7 2.1
4.0
3.6
4.9
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Strategic Direction
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The Next Growth Phase
PNG LNG T1 and T2 is transformational for both Oil Search and PNG
~ 580mmboe of 2P reserves will be commercialised (pre-Govt back-in)
Nearly triples OSH’s production base
Introduces ~30 yr plus legacy cashflow
More than doubles PNG’s GDP, triples export revenues
Substantial further growth potentialFurther 300mmboe discovered resource to commercialise
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The Next Growth Phase
Oil Search 2002/03 Strategic Review provided framework for delivery of consistent top quartile returnsNow undertaking major strategic update in light of expected PNG LNG Sanction 2009 Strategic Review is focused on:-
Optimisation of existing assets− Producing fields− Infrastructure− Drilling rigs
Delivery of PNG LNG T1 and T2Future growth− LNG Growth
− Achieving cost synergies with T1 and T2− Resource accumulation strategy
− Active appraisal and exploration programmes focused on material opportunities, portfolio optimisation
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IPIC Transaction
Expect to finalise terms shortly for sale of effective interest in PDL 2, including ~ 3.5% interest in PNG LNG Project, to IPIC
Funds raised will strengthen Balance Sheet, providing capital for growth initiatives including:
Exploration and appraisal activities to confirm contractible reserves LNG expansionOther gas commercialisation opportunities
Also provides buffer for funding of PNG LNG Project
IPIC welcomed by other JV partners, financiersDivestment is:
Value-accretive for shareholders, relative to share priceProvides a third-party see-through valuation Represents optimal way to raise funds for expansion
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Gas Commercialisation
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PNG LNG Project -Summary
All targeted milestones achieved, including:Umbrella Benefits Sharing Agreement signedMarkets – alignment on commercial terms with customers, covering full 6.3 MTPA capacityEarly Works approvals and commencement of activitiesAgreement on key terms for financing facilityEIS approved in principle
Final Investment Decision in late 2009, first LNG sales late 2013/early 2014
Final capital cost estimate expected 4Q09
Continued strong support from the PNG Government
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PNG LNG Project
Hides & Angore
Juha
Kopi
Kutubu & Agogo
Gobe
Port Moresby75km
310 km 32”gas onshore
pipeline
Juha Production facility 250 mmscfd
960 mmscfd Hides Gas Conditioning Plant
65 km 14” gas line & 8”
liquids line
110km 8”condensate line
~400km 34”subsea gas line
LNG Facility
Existing 270km 20” crude pipeline
Kumul
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Project Update –FEED/Early Works
FEEDTechnical and commercial analysis of bids for major supply contracts underway, contractor selection (with award conditional on FID) in 4Q09
Final capital cost available in 4Q09
Early WorksRange of early works activities now underway, including construction of training facilities in Port Moresby and Highlands, work to open up northern and southern supply routes
Activities will have positive impact on overall timetable, enables full scale construction to commence early 2010
Testing in-country capability
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Project Update - Financing
Comprehensive term sheet negotiated by PNG LNG Project finance team with a number of Export Credit Agencies (ECAs)
All key terms agreed, including 70% debt: 30% equity gearing ratio
Detailed discussions with commercial banks underway, based on ECA term sheet. Cornerstone of financing expected to be ECAs, with balance coming from banks, partner co-lending and potentially bond markets
Offers of finance from ECAs & banks expected 4Q09
OSH’s equity share covered by cash,corporate debt facility and cash flows
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Project Update In-country issues
Landowner agreementsUmbrella Benefits Sharing Agreement signed in May in KokopoIndividual licence-based forums have commenced to determine detailed benefits sharing arrangements within the licence landowners
EIS approved in principleLicence applications submitted for all upstream, pipeline and plant licencesF
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PNG LNG Milestones
2010 2012 20142011 2013
CommencedEarly Works
2Q 09 3Q 09 4Q 09
UBSA
1Q 09
Signed HOAs ReceiveEPC bids
FinaliseCapex
Receive offersof project finance
Commenceconstruction
First LNG sales
Final InvestmentDecision
SignSPAs
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Gas Resources 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
WasumaGobe 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
25 tcf
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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LNG Expansion
PNG LNG infrastructure will provide substantial cost synergies for further LNG expansion
Studies underway on third train, focusing on:-Timing
Cost synergies
Resource requirements
Economics
Key requirement is proving up sufficient contractible gas to underpin the investment
Integrated exploration and appraisal programme including seismic and drilling
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Operations Review
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Hides
PNG Producing Oil & Gas Fields
PRL01
PPL234
PPL260
PRL08PPL240
PRL03
PRL11
PRL12PPL239
PDL1
PPL190
PPL219
PRL10
PRL02
PDL2
PDL5PDL6
PDL4
PDL3
PRL09
PPL244
OSH Operated LicenceOSH Interest LicencePetroleum Development LicencePetroleum Retention LicenceLicence ApplicationOil FieldGas FieldOil & Gas FieldOil Pipeline
142°E
9°S
6°S
145°E
Kumul Terminal
Moran
AgogoKutubu
Gobe Main
SE Gobe
SE Mananda PPL233
50km
APPL342
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Providing Cash for Growth
Since Oil Search took over operatorship of PNG oil fields in 2003, fields have produced ~50 mmbbl in excess of previous operator’s expectations and field life extendedExisting oilfields are mature (decline rate of 15-20%) but with appropriate investment, expect to mitigate decline curve to approx 10% Strategic review of field operations nearing completion. Key objectives are:
Delivering safe and cost effective operationsMaximise cash flows to support PNG LNG financingMeet project delivery obligations for gas to PNG LNGIntegrate and optimise oil & gas businesses
Revised operating philosophy in oil field operations Gas supply to LNGValue and conservation of gasImproved reliability and sustained operability of facilities
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Active Cost Management
PNG production is highly profitable – net oil field costs US$10.74/bbl in 1H09, US$9.97/boe including gas field costs
Global industry cost pressures easing
Continuing active cost reduction programmes
Adverse currency movements will put upward pressure on opex in 2H09
Field Costs Other Opex Corp Costs/FX
US$/boe Total cash costs per boe
10.68
2.18
1.09
9.97
1.52
0.46
1.88
1.75
9.13
1.45
1.26
7.64
0
2
4
6
8
10
12
14
16
2006 2007 2008 1H09
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PNG Gross Oil Production
Oil R
ate
(b
op
d)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2004 – 2008Devt capex = $7.91/bbl,
Opex =$9.82/bbl
Pre-OSHDecline
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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OSH Net Production
Net Production (mmboe)
0
2
4
6
8
10
12
14
2004 2005 2006 2007 2008 2009F
Kutubu
Moran
Gobe Main
SE Gobe
SEM
Hides GTE
MENA
Production outlook for 2009 of 8.0 – 8.3 mmboe
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Field Development Drilling Activity
Usano:2009 : 2 wells
SE Gobe:2010 : 1-2 wells
Kutubu:2009 : 2 wells2010: ±1 well
Agogo:2009 : 1 well2010: ±1 well
Moran:2009 : 1 well2010: 2 wells
PRL08
PPL240
PRL11
PRL12
PPL239 PDL1
PPL233
PPL190
PPL219
PRL02
PDL2
PDL5PDL6
PRL09
APRL14
PPL260
PPL219
PDL4
PPL219
PDL3
PDL4
PRL12
50km
AngoreJuha
Hides
SE Mananda
Gobe Main
Barikewa
Kimu
Cobra
Iehi
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2009 Exploration Update
Active 2H09 programme, focusing on maturing gas prospects in PNG and MENA commitments2H09 activities include:
PNG
MENA
PNG:− Wasuma well in PPL219
commencing 4Q09− 2D Seismic− Portfolio optimisation− PNG CSG licences activity
planning and start-up− Well site preparation in PPL 260
MENA:− Shakal well in Kurdistan − Caliph well in Libya− Tubb’a in Block 3, Yemen− Al Meashar in Block 7, Yemen− K42 Kurdistan award / seismic
option start-up
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PNG Exploration
PRL01
PPL234
PRL08PPL240
PRL03
PRL11
PRL12PPL239
PDL1
PPL233
PPL190
PPL219
PRL10
PRL02
PDL2
PDL4
PDL3
PRL09
PPL244
142°E
9°S
6°S
145°E50km
Fold Belt
Kumul Terminal
OSH Operated LicenceOSH Interest LicencePetroleum Development LicencePetroleum Retention LicenceLicence ApplicationOil FieldGas FieldOil & Gas FieldProspect (Oil/Gas)Oil PipelineProposed Gas Pipeline
PDL6PDL5
PPL260
APDL14
2010 -12 offshore
programme
2011 Flindersgas test
2011 PPL 234gas test
2011/12 Follow-up sub thrustleads adjacent to
Gobe, Hedinia and Hides.Technical/seismicwork in 2009/10
2010 PPL260Korka gas test
2009/10 Wasuma oil testwith sub-thrust test
Cobra sub-thrust success
2011 Barikewa Deepgas test
2010/11 Huriagas test
2011/12 distalfoldbelt oil play
CSG 7 Licences
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CSG Exploration Licences
6°S
142°E20km
141°E 143°E
ELA1725
ELA1726ELA1720
ELA1721
ELA1722
ELA1723
ELA1724
Commitment to spend ~US$5m over two years. Includes drilling several shallow wells and sampling/analysis of coals encountered
Existing well data is sparse, however, wells have encountered thick coals in the shallow Era Formation
Oil Search holds 100% in all seven licences
Awarded seven Mineral Exploration Licences in Strickland Basin (Western Province) of PNG (CSG exploration governed by Mining Act in PNG, licences administered by Mineral Resources Authority)Covers large area – 17,500 square kilometresOSH to investigate potential for Coal Seam Gas production from Pliocene coals present in basin
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Comparison to QLD CSG Region
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MENA Exploration
Sana’a Office
Dubai OfficeLibya
Tunisia
Yemen
Iraq
Block 3, Tubb’a(drilling ahead)
Tajerouine
Le Kef
Area 18, LibyaCaliph well (drilling ahead)
Shakal 1(testing)
Block 7, Al Meashar2H09
K42 Block
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Oil Discovery at Shakal 1, Kurdistan
Well reached TD (3,038 metres) in August having drilled all primary targets Strong hydrocarbon kicks in secondary target while drillingThis interval (Jaddala-Aalije) being testedFirst test interval of 40 ft flowed oil at up to 750 bopd on 13/64” choke Results of test of second 40 ft interval and third interval (dueshortly) will be analysed to determine appraisal programme
Oil Search has been closely involved in testing operationsAppraisal may involve further seismic or a well in 2010
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Libya – Caliph-1
Caliph is a frontier wild-cat testing proven and new plays offshore LibyaExxon, Hess, BP, NOEX all drilling in areaWell has encountered difficult drilling conditions due to high pressure and high gasHas had to be sidetracked twiceNow close to second of four target intervalsHigh hydrocarbon gas levels, with wet components are encouraging Logs being run to evaluate shows
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Block K42 KurdistanSeismic Option Agreement with Kurdistan Regional Government (KRG) over Block K42 in North-East IraqK42 block covers 511 square kilometres and lies in south-eastern section of Zagros Fold Belt adjacent to Pulkhana oil discovery and Kor Mor gas condensate field, under developmentAlso along structural trend from Jambur field, currently producing with reserves of approximately 1 billion barrels of oil
Initial option period of 18 months. OSH (75%) will acquire 200 km 2D seismic data, commencing early in 2010Government has awarded 3rd
party interest to ShamaranPetroleum Corp (Lundin)At end of option period, OSH has option to sign full Production Sharing Contract75% interest in option agreement will convert to net 40% interest in any future PSCK42 seismic acquisition to commence early in 2010
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PNG LNG transforms OSH’s production outlook
1. Deliver PNG LNG
Project
2. Project Build,
Positioningfor Growth
3. Project Completion, Delivering Growth
2009 2010-2013 2014+
0
10,000
20,000
30,000
40,000
50,000
60,000
Oil P
rod
uct
ion
(b
op
d)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
LNG Liquids
LNG Gas
PNG Development
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Summary
Oil Search on the cusp of major growth and corporate refocus
Is in an excellent position to deliver sustained growth:
Strong balance sheet
−>US$430m cash, with undrawn facility for US$391m, plus likely sale proceeds from oil and LNG interests
Delivery of PNG LNG T1 and T2 first priority
Strategic review has identified further growth potential, with activities action plan to deliver
Focus will move to appraisal and exploration post PNG LNG sanction
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O I L S E A R C H L I M I T E DF
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