2005-09-07 GoodOil PRINT · PNG Fields deliver production growth over next 2 years PNG Pipeline...
Transcript of 2005-09-07 GoodOil PRINT · PNG Fields deliver production growth over next 2 years PNG Pipeline...
Good Oil Conference, 7th September 2005
O I L S E A R C H L I M I T E D
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A New Beginning
Oil and Gas Industry in PNG has undergone a renaissance in last 3 years– Driven by local control of industry– Significant new investment– Helped by high oil prices
Investment bringing returns– Oil industry growing– Gas commercialisation making major strides– New developments– New exploration
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Oil SearchThe Last 18 Months
Completed acquisition of ChevronTexaco’sPNG assetsSuccessful transition to significant operatorNew approach to delivering maximum value:– Focus on mature fields and new developments– Investment for growth in exploration and
development– Measured diversification
The dog now has control of the tail
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Oil SearchThe Last 18 Months
Continued world class safety performance across operations
Top quartile Total Shareholder Returns
Driven by capturing value in PNGoil and gas assets
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Focus Areas for Value Creation
Maximise value of discovered resources– Production optimisation– Improved profitability
– Field and operating efficiencies– Contract efficiencies
Gas Commercialisation– 1st and 2nd tier developments– Integration with oil business
Exploration– Measured diversification
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Revenue Growth
43% CAGR over last four yearsOil revenues up 37% on prior 1st halfRealised oil price: US$53 (1H04: US$36.18)
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MineralsOil
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Net Profit After Tax
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Net profit up 53% on restated prior first half
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Treasury Review
Gearing %
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US$208million in cash at end June, debt at US$147millionLiquidity of over US$300 million, including undrawn committed bank linesUS 3 cent final dividend (US$33.5m) paid on 24 March 2005. An additional US 2 cent interim dividend (US$22.3m) has been declared on 23 AugustNo oil hedging currently in place
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Share Price Performance
Oil Search Woodside Santos HardmanASX 200 Energy ASX 200
Origin
Jul-0
2Se
p-02
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2Ja
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STRATEGIC REVIEW COMPLETED
CPSCONVERSION
OSH ELECTED OPERATOR OF
PNG OIL FIELDSASSUMPTION OF OPERATORSHIP& ACQUISITIONOF CT ASSETS GAS
PROJECT FEED
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O I L S E A R C H L I M I T E D
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PNG Oil Field Optimisation
Mature fields have been rejuvenated :
Added 10,000 bopd to Kutubu, 5,000 to 8,000 bopd to Moran and over 3,000 bopd to Gobe fields production levels through new initiatives and more focused field management practicesReduced direct field operating costs by 8%New reserves found at Kutubu, Moran and SE GobeReduced drilling costs by 15% Discovered and commenced development of NW Moran Commenced development of SE ManandaDevelopment of Nabrajah Field
– Base project 15,000 bopd– Reviewing major expansion
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Kutubu ImprovementReservoir History Plot - Kutubu including Agogo
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Rate
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Oil Search has added
10,000 bopd to Kutubu Production
Decline trend established over the 4
years prior to Oil Search becoming involved in
field management
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SEG Wedge Development
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SEG 11
SEG 11 drilled in May 2005, proved a 61m oil column in the SE Gobe wedge areaSEG 11 onstream and producing at ~1600 bopd with low GOR and no waterRevised mapping indicates 50-60 mmbbl oil-in-placeDevelopment plan is being finalised, will add >10 mmbbl reserves Devt Plan assumes SEG 11 and an additional 2-3 prodn wells supported by gas injection drilled from a central wellpadDrilling to commence late 2005
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NW Moran EPT Development
Completed installation of NW Moran flowline, production facilities at NWM and APF, commissioning underwayProject cost = $US 25 million, significantly delayed, impacted by Landowner issues and weather
EPT to commence in Sept. at 3,000 bopdGas injector to support NWM 1, mid 2006
Boundary of 3D image
Moran
NW Moran
NWM injectorNWM 1X ST5
M6XST2
M4X
M10ST1
B Block wells
M2XST2
M5XST2
Summary
Outlook
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SE Mananda Development
SE ManandaMoran
Agogo Processing Facility
Field was discovered in 1991, deemed uncommercial by previous operatorOil Search developed innovative plan to bring SEM into production and negotiated appropriate fiscal terms with PNG GovernmentDevelopment commenced in late 2004
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SE Mananda DevelopmentHegigio Gorge – Bridge Site
Artist’s Impression
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SE ManandaConstruction Progress
South Abutment A-frame
Tower Roll Up
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SE ManandaConstruction Progress
SEM Bridge Cable
Launching
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SE ManandaBridge Comparison
MillauRoad bridge
France
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Production Outlook
PNG Fields deliver production growth over next 2 yearsPNG Pipeline Project provides sustained production for many years
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Oil Production Gas Project Liquids Gas Project Gas
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Block 43 Nabrajah FieldFirst Non - PNG Oil Production
First oil from Qishan reservoir July ’05Discovered oil in Basement, tested up to 10,000BOPD
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NabrajahBasement Depth Mapping
(mSRD) with Nab-5 HC Shows
Oil in Structural
Closure
Oil Down To
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Block 43 Nabrajah Field
Block 43
Nabrajah
Block 14Block 43 Development AreaProspects and Leads Map
Nab-1 Al Haglah-1
Structural projection tentative
~2000 m SRDGas/oil contact
N-5 2225 m SRDDST 1B oil 5,800 bopd
N-5 TD 2568M SRD~Base of greater oil column
N-2 gas test15 Mscfg/d
Nab-5Nab-2
210m Gas column
250m oil column
500-600m oil column
Nab-1 Al Haglah-1
Structural projection tentative
~2000 m SRDGas/oil contact
N-5 2225 m SRDDST 1B oil 5,800 bopd
N-5 TD 2568M SRD~Base of greater oil column
N-2 gas test15 Mscfg/d
Nab-5Nab-2
210m Gas column
250m oil column
500-600m oil column
Limits of constraint
Area of Planned 3D
Seismic Survey
Nab-9 Nab-8
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Block 43 NabrajahFacilities Under Construction
Tie-in to Block 14 Separator at CPF
Storage tanksManifold at CPF
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Masilah Basin Play Fairway
Marib-ShabwahBasin Play Fairway
New Yemen Exploration Blocks
Blocks 3, 7 and 74 consolidate OSH’s position in Yemen’s two oil productive basinsNew blocks provide additional exposure to successful oil productive Basement play fairwayBlock 3 - 300km of 2D seismic data 1Q 2006 & one exploration well in late 2006Block 7 - 250km of 2D seismic data 3Q 2006. 4 well drilling program commences in 1Q 2007 Block 74 - 250km of 2D seismic data 4Q 2006. 3 well drilling program commences in 3Q 2007
Block S2: OMV Habban -1New Basement Discovery
>250,000bopd Pipeline
>120,000bopd Pipeline
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Arakubi Prospect
2004 seismic has de-risked ArakubiArakubi sits above and NE of UsanoMay share common fluid contactsStructurally simpler2km from infrastructure
Mean reserves ~18 mmstbSite underwayInformation from well will aid in 2006 Usano re-development
Arakubi
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Juha Appraisal
Currently 0.5 tcf Proven gas-in-place (GIIP)Two wells being considered
– one appraisal of Juha discovery
– one exploration of mega-Juha prospect
Target post-wells GIIP >2.5 tcf Proven2 tcf meets threshold for recycle scheme with later sales gas for methanol, DMESite surveys underway
PRL2
Mega-Juha - Exploration
Juha Main – Appraisal
Juha 2 Baia 1
Proven, crestal accumulation
Untested prospect
x-section
10km
Juha – Current 1P
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For the Next Generations
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A Long Time Coming
PNG Project has taken a step change towards commerciality over
the past 12 monthsAlignment of key stakeholders for risk mitigation and growthFEED entry a pivotal pointFront End Engineering and Design almost 60% completeNow secured over 200PJ/a of conditional gas sales agreementsMajor customers in NT, Gladstone, Southern Queensland, NSW and SAAPC (AGL/Petronas) entered FEED for Australian pipeline
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A Generational Change
Gas Supply fundamentals for East Coast Australia are changing
The Cooper Transition
– Maturity brings higher expense
– A struggle to remain competitively priced
A healthy and growing CSM supply
– Significant growth in past 5 years
A major supply source from PNG, with new pipeline network
A struggle for the next 30 year supply picture
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Project Scope
Joint venture betweenExxonMobilOil SearchMRDC/StateMerlin (JPP)
Gas Sales with condensate exportConversion of Kutubu oil fields to gas productionDevelopment of Hides Gas FieldFacilitates integrationGas pipeline from Highlands to PNG border
39.43%54.15%
3.02%3.39%
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PNG Gas Project Configuration
600 mmscfd Sales GasFull Condensate Recovery
AGOGO/MORAN
Production
HIDESPRODUCTION
Additional condensate oil up to 18,000
bbls/day through existing export pipeline
Subject to FEED review
KUTUBU CPFOil production & 165 mmscfd gas
AGOGOCPF
LP
G
New sales gas pipelineCapacity 250 PJ/a600 mmscfd sales
KUTUBUReinject
150mmscfddry gas GOBE
Production
GOBECPF
HIDES PRODUCTION
FACILITY700mmscfd
Condensatepipeline
Gaspipeline
New CENTRALGAS CONDITIONING
PLANT (CGCP)
Pipelineto POM
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Project Scope
Final pipeline configuration and route being determined by customer demandAbundant competitively priced gas to NT, Queensland and southern marketsInterconnected pipeline system promoting competition and enhanced security of supply
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Project Activities
Focus on Successful Project DeliveryFEED– Final design and facilities configuration– Pipeline design– Cost optimisation– Operating parameters
Government and Fiscal– Licencing submissions and regulatory
approvals– Landowner benefits distribution and
business development
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Project Activities
Focus on Successful Project DeliveryMarketing– Focus on confirming gas sales agreements– Present indicative agreements for 190 to
>200 PJ/a, with further markets targeted– Possible integration of in-country activities
Financing– Coordinated approach from all stakeholders– Positive bank and insurer response
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Project Timetable
FEED activities due for completion late ’05– Early works decision by year end
Project Sanction 2Q ’06– Commitment to long lead items etc.
Financial Close 2H ’06– Major construction commences year end
First Gas 2009
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Targeted Alignment– The Key to Project Success
Deliberate strategy to achieve stakeholder alignment– Project FEED Decision – Joint Venture
Alignment– Market / Customer and Downstream
Alignment– The importance of AGL
– Largest east coast energy retailer– Major gas customer– Pipeline and infrastructure– Downstream development potential
– Santos ?
Powerful Combination for Next Generation of Supply
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Targeted Alignment – The Key to Project Success
Landowners in PNG– Excellent production reliability in oil projects, based
on oil equity ownership and business development partnerships
– Mature process for ownership
Lessons for Australia?
Government in Papua New Guinea– Strongly motivated to deliver– Committed to in-country development after core
Pipeline Project delivered
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Clear need for gas in Eastern Australia
Wood Mackenzie analysis suggests even with PNG, Coal Bed Methane & Yet-to-Find (YTF) gas there is a clear need for new sources of gas supply to meet demand
Eastern Australia - Supply & Demand Base Case
The Opportunity
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Oil Search a leader in in-country gas development– World Scale Petrochemical Plant in Port
Moresby– Final feasibility stage– Indicative Terms Sales Agreement ~80PJ/a– Timing parallel to PNG Pipeline Project
– Compressed Natural Gas– Export and domestic use
– Power Projects– AGL Alliance
Gas Commercialisation
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Investment in PNG –Delivering Returns
Since taking operating control in 2003 :– Oil Search has invested over US$400m in oil
and gas business in PNG
Delivered :– Increased production– Record revenues– Record profits– Excellent returns to shareholders
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Investment in PNG –Delivering Returns
Investment bringing unprecedented growth opportunities
Measured diversification provides good risk reward balance– Early success at Nabrajah– Major new oil play being pursued– Further acquisitions likely in building
portfolio