For Web FLEX LNG and InterOil Presentation at Seoul FLNG Conference 25 October 2011

8/3/2019 For Web FLEX LNG and InterOil Presentation at Seoul FLNG Conference 25 October 2011

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Seoul FLNG Conference, 25 October 2011

Philip Eystein Fjeld

Chief Executive Officer

FLEX LNG

Collin F Visaggio

Chief Financial Officer

InterOil Corporation


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InterOils Vision

Papua New GuineaPoised to Join the Ranks of Asian LNG Suppliers

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InterOil A Trusted PNG Partner That Delivers

InterOil is a domestic company (PNG Only)looking for long-term sustainable economicdevelopment for the nation, InterOil, and thecitizens of PNG.

InterOil considers itself a partner with thecountry, its people, and government.

InterOil acts in good faith, using best efforts forall stakeholders.

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nter as a proven an a r trac recor .


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InterOil Vertically Located and Positioned for Growth

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Exploration Portfolio3.9 million acres

Midstream Portfolio - Refinery36, 500 bpd capacity

Downstream DomesticDistribution

MidstreamLNG Project

Condensate Stripping ProjectGenerates Early Cash Flow

and Revenue to AllStakeholders


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The World Woke Up: A World Record Rate of Over 700 MMCF/D

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The Resource: 2010 Third Party Resource Estimate of Elk and AntelopeUnderpins a large LNG development with a 5% increase over 2009

As at December 31, 2010 Case

Low(C1)

Best(C2)

High(C3)

Initial Recoverable Sales Gas(Tcf) 6.47 8.59 10.44

Initial Recoverable Condensate (MMBbls) 105.3 128.9 151.4

Initial Recoverable MMBOE 1,183.6 1,560.4 1,891.1

Gross Contingent Resource Estimate for Gas and Condensate as of December 31, 2010

An evaluation of the potentialresources of gas and condensate forthe Elk/Antelope field has been

completed by GLJ PetroleumConsultants Ltd., an independentqualified reserves evaluator, as ofDecember 31, 2010

The estimates presented are inaccordance with the definitions anduidelines in the COGE Handbook

and Canadian NI 51-101

Gas in place increased almost 1TCFfrom 2009 to 2010

C1 enough to produce 8mtpa LNG, and C2 enough to produce 11 mtpa, for 15 years


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InterOil Has a Proven Track Record in Papua New Guinea

InterOil was formed in 1997 - Vision to create an integrated energy company

Exploration licenses signed under incentive program - 2003 Elk-1 discovery of Elk fault block 2006

Antelope-1 discovery of Antelope reef 2008 Third-party certified contingent resources estimate 2009 over 3.8 Tcfe ~ 630 mmBOE* Third-party certified contingent resources estimate 2010 over 9.1 Tcfe ~ 1.52 BBOE* Third-party certified contingent resources estimate 2011 over 9.4 Tcfe ~ 1.56 BBOE* Potential for 2.5 Billion BOE

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Refinery commissioned in 2004, Mechanical completion - 2006

Completed refinery project agreement Secured land rights - harbor rights OPIC Financing

Distribution asset acquisitions to vertically integrate with refinery - 2003/2005 Purchased distribution assets from BP and Shell in PNG

InterOil Gulf LNG Project Current Activity Start-up configuration of:

Condensate stripping plants 3 mtpa land-based, modular LNG plant 2 mtpa fixed floating LNG plant Gas and liquids pipeline to LNG plant and Jetty on the coast Ramp up LNG to 8 mtpa

*


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Papua New Guinea is Now Poised to Emergeas a Global LNG Supplier

Two LNG Project Agreements approved bythe PNG Government

InterOil led Gulf LNG Project

5 mtpa start-up capacity

Expansion to 10.8 mtpa

Exxon led PNG LNG Project

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.

Expansion to ~ 10 mtpa

Largest carbonate reef trend in Asia

World-class exploration potential

Active Highlands area

Strong off-shore Gulf area

A number of new Potential LNG players


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World Class Hydrocarbon Province InterOils 3.9 Million Acres

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Attractive Economics Relative to Asia-Pacific LNG Projects

Natural Gas Supply - InterOil

High productivity reservoir >300 Mmcf/d Antelope flow

tests

Tests indicate 5-6% CO2

InterOil field tested over 20 Bbls/MMcf of condensate

Minimal pre-LNG processing requirements

Favorable Geography

Protected geographic region

Onshore, near coast (115 Km)

Close to largest global LNG market

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Proposed Infrastructure CSP EPC bids in, Mitsui to optimise financing

Mid-size LNG plant funded by EWC

Fixed-floating FLNG plant funded by Samsung and FLEX LNG

InterOil LNG plant and infrastructure costs well below competitiveproposals

Fiscal Policy 30% flat tax rate

Major project incentives and exemptions available from the State

Government resource project protection

Experienced LNG Management Team

Marathon EGLNG Team Members now at InterOil and affiliates

EG LNG project completed ahead of schedule and under budget


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InterOil Gulf LNG Development Map

Upstream Gas ProjectPetroleum Development Licence

Elk and Antelope Fields Elk Antelope fields, - 8.59 tcf Recoverable Sales Gas, and 129 mmbbls

Condensate (2C resource) 7 to 12 wells producing up to 200 -400mmscfpd each (initial capacity) 1 water reinjection well and 1 surveillance well Compression facilities

Condensate Stripping Facilities 12-14 Infield gas gathering pipelines

Fields to CSP wet gas trunk line Condensate stripping plants - up to 1.8 BCF capacity Produced water re-injection pipeline from CSP to fields injection well

Pipeline Licence CondensateCondensate Pipeline ~120km buried 12 3/4 condensate pipeline from CSP to condensate

storage tanks at Gulf 100,000bbl condensate storage tank at the Gulf with plans to add

additional tanks when needed

Development Map

PDL Elk AntelopePDL Elk Antelope

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Midstream LNG ProjectPipeline License Gas

Dry Gas Pipeline ~120km buried 32 dry gas pipeline from CSP to liquefaction plants at

Gulf and a 12-20 pipeline to floating LNG at jetty export terminalfacilities

Petroleum Processing Facilities Licences

Liquefaction Facilities Liquefaction plants land based and fixed floating of 11 mtpa capacity LNG storage tanks 180,000 m3

Pipeline connecting the LNG storage tanks to the export terminalloading facilities

LNG loading facilities Return pipeline from loading facilities to liquefaction plants and LNG

storage tanks (6000m x 0.5m)Export Terminal and Common Facilities ~6km breakwater, causeway, moorings and jetty Offices, warehouses and accommodation

on ensa e recovery p pe ne rom que ac on p an s o con ensa estorage tanks

Pipeline connecting condensate storage tanks to ship loading facilities Condensate ship loading facilities

PPFL LandPPFL Land

PPFL Fixed FloatingPPFL Fixed Floating


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Lessons from EGLNG and Others: US$1.2 Billion in Pre-FIDinvestments to maintain schedule 2014 LNG Start-Up

Ordering up to $100 million of:

Condensate Line Pipe

Processed gas Line Pipe

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Critical long lead infrastructure

Purchased over $20 million inConstruction Equipment:

Dump Trucks

Bulldozers

Excavators


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InterOils Gulf LNG Project Update and Future Milestones

InterOil is moving ahead to reach FID

LNG facilities increased from 2mtpa to 5mtpa withSamsung & FLEX LNG fixed floating proposal,targeting 8mtpa

CSP facilities re-engineered for increased

production volumes are nearing completion & readyfor bid

Pipelines for natural gas and condensate have beendesigned to handle the capacities required for ourtarget LNG volumes

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LNG with Energy World is almost complete

Continuing LNG pre-investment to lower bidderrisks and secure lower project costs

LNG off-take HOA was signed with Noble Group for1 mtpa for 10 years, in addition to the 300,000tonnes per annum dedicated to the PhilippinesPower Project


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InterOils #1 Priority is Achieving CSP and LNG Project FIDs

Making good progress on early development requirements

Increasing local employment, InterOil is already one of the largest employers in PNG


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The LNG Plants: EWC LNG & FLEX LNG /Samsung Project Partnerships

On February 2, 2011, InterOil and PACLNG and Energy WorldCorporation completed final documentation for a 3 mtpa plant.

The initial 3 mtpa modular LNG plant is expected to process anestimated 2.25 Tcf of natural gas over 15 years.

On April 11, 2011, InterOil and Pacific LNG Operationsexecuted agreements with FLEX LNG LTD and SamsungHeavy Industries for a floating liquefaction project in PapuaNew Guinea with targeted start of LNG production in 2014.

The FLNG vessel will be moored alongside the jetty and have a

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. -

LNG per annum.Samsung provides the construction financing and allperformance guarantees for the FLNG vessel

,agreed deductions and premiums, 14.5%of the proceeds from the sale of LNG bythe upstream partners from the FLNGvessel for an initial 15-year period.


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InterOil Engages Advisors on Sale of Interest in Resource and Exploration

InterOil has retained Morgan Stanley, Macquarie and UBS as jointfinancial advisors to assist InterOil with its evaluation ofproposals from potential strategic partners in the liquefied naturalgas project

Obtain an internationally recognized LNG operating partner

Accelerate the LNG capacity to 7.6 mtpa or more

Partial sale of an interest in the Elk and Antelope fields

Possible LNG off-take

Possible participation in InterOils exploration tenements in Papua

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The timing is right for engaging in partnering process

Strengthening Asian LNG market, >$17/mcf spot prices

Company has received proposals from internationally recognizedLNG operators

Increased interest in exploration and investment in PNG

Third annual Elk and Antelope resourse estimate supports LNGproject

Substantial progress in LNG project engineering and design

Opportunity to book proven reserves on declaration of FID

Spudding of Triceratops 2 well this quarter.


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In Summary

Papua New Guinea was an under-discovered frontier, with world class assetsstrategically located on the doorstep of LNG Asia: Ignored and bushed aside bymost majors

The world awoke to PNGs LNG Value as Spot Prices near US$19/mmbtu

Quality gas for the Asian LNG Buyers, with diversification from Qatar and Australia

Vast exploration and resources to ensure reserves for all stakeholders

Modular LNG can build 20 to 30 mtpa of LNG capacity in PNG

nd

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,

InterOil has a significant F&D advantage, and early cashflow with Modular and FLNGdevelopment

15 years in PNG with the best track record in PNG Exploration

The only PNG refinery operator providing operator advantages for LNG

Bottom line: PNG passed the turning point for LNG; and is now on the path to beinga Major Supplier of clean energy as a portfolio including FLNG with Korea


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InterOil: Working with all stakeholders and the future of Papua New

Guinea

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An Energy Company With Innovated LNGDevelopment and Loyalty to PNG


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Gulf LNG ProjectThe Worlds First FLNG Project

London, 30th July 20109th May 2011


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FLEX LNG Ltd Brief introduction

FLEX LNG is a pure-play developer of floating liquefaction projects

Lump-sum, turnkey EPCIC for entire unit (hull and topsides)

Long-standing partnership with Samsung Heavy Industries

Pure FLNG Provider

Firm orders

Strong SHI support

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Strong shareholder base (K-Line and InterOil among the largest

shareholders)

Offering an advanced and mature FLNG design

LNG Producer offers great adaptability for different applications

Gulf LNG project being developed together with InterOil Corp. andpartners for an at-shore FLNG project in Papua New Guinea

Strong shareholder base

Mature FLNG concept

Large adaptability

Delivery in 2014


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Gulf LNG Project FLNG Scope and Interfaces

Samsung Heavy Industries

FLNG FEED for Gulf LNG Project

FLNG vs Onshore Development Costs

Summary

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Gulf LNG Project- FLEX LNG interfaces and battery limits

FLEX LNG Scope

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Includes the LNG FPSO + LNGoffloading-arms.

Excludes breakwater, FSU, LNGC

Battery limits:-Feed gas loading arms-LNG jettyhead manifold-Mooring lines & fender dolphins


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Main Particulars LNG FPSO Gulf LNG Project

Main particulars (preliminary)Length overall (approx) 276 m

Breadth, moulded (approx) 50.0 m

Depth to upper deck, moulded (approx) 32 m

Full load draught (approx) 13 m

LNG Storage Capacity (approx) 170 000 m3

Condensate Storage Capacity (approx) 5 000 m3

LNG Production Capacity (approx) 2 mtpa

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Offshore Marine Infrastructure

The offshore marine infrastructure willbe located 6-7 km from the shoreline inapproximately 15 m water depth

The offshore marine infrastructure willconsist of the following:

A breakwater

A single LNG FPSO jetty berth consistingof a single jetty head, and anarrangement of mooring dolphins, fenderdolphins and a HP feed gas transfer

system A dual berth for the LNG offtake vessel

and a Floating Storage Unit comprising ofa dual jetty head and an arrangement ofmooring dolphins, fender dolphins andLNG loading arms

Tug berth

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LNG FPSO Mooring to Jetty- Top view and side view

The LNG FPSO mooring system will bedesigned according to offshore rules -DNV-OS-E301 Position Mooring

The mooring system is to be designedfor the site specific 100 year returnwind, wave, current conditions(resulting wave and current conditionsbehind the breakwater)

Top View

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The offshore design philosophyrequires redundancy in the mooringlines and fenders at the 100 yearreturn metocean conditions

The mooring arrangement will consist

of between 18 to 20 mooring linesdeployed from the LNG FPSO tomooring dolphins

Side View


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Ship to Jetty LNG and Gas Transfer

Four 16 marine loading arms will beinstalled on the LNG FPSO midships

Two loading arms will be dedicated forLNG, one loading arm will be a hybrid arm

(capable of either LNG or vapour returntransfer) and one will be dedicated forvapour return

The total LNG transfer flowrate will be10,000 m3/hr

Gas transfer from the jetty head to the LNGPwill be performed by CNG gas loading arms

This method of CNG transfer is proven froma number of operating jetty moored

FSRU/Gas Port projects ie Pecem, GuanabaraBay (Brazil), Bahai Blanca (Argentina),Teeside (UK), Mina Al-Ahmadi (Kuwait)

A single CNG loading can provide a gasflowrate equivalent to the maximum LNG

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Production rate (310 mscfd) at 65 barg.


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Summary

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Benefits of Constructing in a Controlled Environment- SHI is arguably the best qualified yard to construct an LNG FPSO

The FLNG unit is constructed in a highly efficient shipyard, utilizing existingproduction facilities and infrastructire. This results in better control overfactors such as:

Samsung Marine Samsung Offshore

Construction Schedule -known workshop capacity / production rates

Quality Control -constructed in a clean, sheltered environment

HSE Performance -mainly using the yards regular workforce

CAPEX -benefits from existing, highly efficient infrastructure

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FLEX LNG Producer

scope

Hull and Marine

systems

Topsides and

Integration

Production Capacity 5,400,000 GT/yr 160,000 mt/yr

Products

Crude Oil Tankers,Container Vessels,Cruiser & Ferries,

Gas Carriers(LNG,LPG),FPSO, Drill ships, etc.

Offshore Platforms,Drill ship, FPSO, FLNGTopsides,TLP, Semi Rig,

Material HandlingEquipment,Desalination Plant

Production (2009) 61 Vessels 12 Offshore Units

Samsung Heavy Industries, Geoje - Korea


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EPCIC Contract With Samsung Heavy Industries- SHI takes the single-point responsibility for the entire LNG FPSO

Contract Structure

Single, lump-sum, turnkey EPCIC

Hull and Topsides aligned under Umbrella contract

Final lump-sum conversion after field-specific FEEDPerformance Guarantees and LDs

Production capacity

Fuel efficiency

Plant reliability

Defect rectification liability

Contract Particulars

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Technology risk mitigation

Minimise risk for cost overruns

Minimise risk for delays

Minimise integration risks

Favourable performance guarantees & LDs

Engineering flexibility to adapt the design

Optimised to Satisfy Lenders & LNG Offtaker

Interests/Requirements Contract structure (i.e. single, lump-sum, turnkey)

Risk allocation (Cost, Schedule, Performance, Integration)

Alignment of interests Owner & Contractor

Project Benefits: Favourable Risk Profile and Risk Allocation


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Summary

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Gulf LNG FEED Contract

FEED period and resources

May 2011 Nov 2011

Currently more than 150 engineers mobilised to complete FEED for Gulf LNG project

Main objectives Adapt the generic hull and topside design to match the field-specific requirements of the Gulf

LNG project

Provide a sound basis for lump sum based execution contracts (EPCIC contract and SBC)

Prepare to start EPCIC works immediately following Final Investment Decision in December

Hull FEED scope is executed by SHI shipbuilding division, Geoje, S. Korea

Subcontractor IHI undertaking SPB tank design in Japan

Topside FEED scope is subcontracted to WorleyParsons (WP) and is carried out atWPs office in London

WP has teamed up with Kanfa Aragon, Costain Group, and NLI Engineering, which were allinvolved in the development of the generic design

SHI is present at the WP office with a resident engineering team to control the FEED works

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FLEX LNG


Project Execution- Contractor structure

Lump sum turn key contract

Overall project mgm. and interface mgm.

FLEX LNG technical and commercial team manages SHI- Provide design basis and project specifications- Interface management towards InterOil (jetty, feed gas,etc.)

Offshore Division

Topside EPCTopside & Hull IntegrationTopside Commissioning

Shipbuilding Division

Hull EPCHull CommissioningGas & Sea Trials

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Engineering & ProcurementSubcontrractor

SHI resident engineering team to manage subcontractor

Subcontractor to be nominatedOption: WorleyParsons

SHIs specialised organisations & yard,Geoje, S. Korea


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FLNG FEED for Gulf LNG ProjectFLNG vs Onshore Development Costs

Summary

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The Benefits of the FLNG are NumerousLow cost, early LNG, construction risk mitigation, and flexibility

Work closely with the yard to ensure constructability of design

-

Maximize LNG production capacity within a standard LNG hull-size

MinimizeCAPEX

Modularisation

Maximise use of proven technology and existing equipment ranges.Simplify the design and complexity

Select inherently safe and robust technologies. Design for safety

Minimize

projectexecutionschedule

Minimizetechnology

andoperational

risks

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LNG Projects Are More Costly Than Ever to Develop- FLNG reduces CAPEX and has significant schedule advantages

CAPEX/ton of installed liquefactioncapacity has during the last decademade a permanent shift from anaverage figure below 500 USD/ton toa typical range of range of 1500

3000 USD/ton

The IHS CERA Upstream Capital CostsIndex (UCCI) shows more than adoublin of costs in the oil and as

Onshore LNG Development Costs Continue toIncrease

210

230

210

202

201 207

120

140

160

180

200

220

240

UCCIInd

ex

industry. However, due to the

uniqueness often attributed todeveloping LNG projects, current LNGdevelopment costs exceed theaverage for the oil and gas industry

Traditional onshore liquefaction

projects continue to overshoot onschedule and cost

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Source: IHS Cambridge Energy Research Associates (IHS CERA)

0

200

400

600

800

1000

1200

1400

1600

1800

2000

0 2 4 6 8 10 12 14 16

USD/tonliqu

efaction

capacity

Annual LNG liquefaction capacity (mtpa)

Source: FLEX LNG, Tri-Zen, Industry Reports

FLEX LNG(2014)

ALNG(Trinidad 2003)

Gorgon LNG(late 2014)

Pluto LNG(2011)

Angola(late 2012)

PNG LNG(2014)

QCLNG(2014)

GLNG(2014)

Nov

2005

May

2006

Nov

2006

May

2007

Nov

2007

May

2008

Nov

2008

May

2009

Nov

2009

May

2010

Nov

2010


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FLNG FEED for Gulf LNG ProjectFLNG vs Onshore Development Costs

Summary

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FLNG is Revolutionising the LNG Industry.... and combined with the Gulf LNG Project offers an unique value proposition for PNG

LNG FPSOs offer compelling arguments.....

Lead time less than 50% of a traditional liquefaction project

Unit CAPEX of less than 50% of cost of traditional onshore liquefaction capacity

Strategic and commercial independence

Increased revenue/taxation for host governments compared to traditionalonshore developments

Considerably reduced environmental impact compared to a traditional onshoredevelopment

.....and as the first FLNG units are deployed the industry will see thefollowing changes:

LNG supply projects can be developed in 2-3 years

LNG supply projects will appear in locations unimaginable today (i.e. liquefyingpipeline gas supplied from existing grid)

Onshore liquefaction projects will have to innovate and become more cost

effective to remain competitive Traditional end-users of LNG will integrate upstream and take control over their

own LNG supply destiny

Companies with no previous affiliation to the LNG industry will becomesubstantial LNG suppliers

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Questions?

Collin F Visaggio

Chief Financial Officer

InterOil Corporation

Philip Eystein Fjeld

Chief Executive Officer

FLEX LNG

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For Web FLEX LNG and InterOil Presentation at Seoul FLNG Conference 25 October 2011

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Transcript of For Web FLEX LNG and InterOil Presentation at Seoul FLNG Conference 25 October 2011