Oil Search’s activities in

Yemen

20 September 2005

Presented by Peter Botten, Managing Director, and Jon Pattillo, Yemen Asset Manager

International diversification

Oil Search commenced programme of measured international diversification in 2000, to augment exploration activity in PNGMiddle East / North Africa was selected as focus area. Required criteria for investment included:

– In areas with proven petroleum systems– Close proximity to infrastructure– Acceptable fiscal terms– Near term drilling opportunities– Ability to apply our unique skills (developing country

expertise, ability to work co-operatively with host governments & local communities, culturally sensitive, experience in challenging environments)

Why Yemen?

World class petroleum system – success rates >30%Relatively under explored petroleum basins, recent discoveries and new developmentsAccess to good acreage (but getting more competitive)Low capex and opex (typically <SU$2-3/bbl and US$3/bbl) with short payback periodsAcceptable fiscal environment; conventional PSAAccess to producing infrastructure in key basins (US$0.70/bbl TPA Masilah)Active and established E & P industry; LNG project recently sanctionedModerate political risk; moderate/high security risk (but manageable)

Building of Yemen Portfolio

2000 – acquired 80.75% interest in Block 15, offshore Yemen. Farmed down to Kufpec. Current interest is 52.5%, operator

2003 – awarded interest in Block 35, located in Masilah Basin, with SiPetrol (Chile) and SabaYemen. Current interest is 42.5%, operator

2003 – farmed in to Block 43, adjacent to Block 35 and operated by DNO. Current interest is 28.3%

2005 – awarded 34% interest in Block 7 (ShabwahBasin) and 34% in Block 74 (south of B-43) in 2005 International Bid Round. Operate both licences.

2005 – awarded 60% interest in Block 3, adjacent to Block 7, through direct negotiations with Government. Operator.

Yemen Licence Interests

DNO (56.7%, operator), Yemen Co (15% carried)

28.3%Block 43

Sipetrol (37.5%), Yemen Co. (5% carried), Voyager

(15%)

42.5%, operatorBlock 35

Kufpec (42.5%),Yemen C0 (5%)

52.5%, operatorBlock 15

Kufpec (21.25%), Voyager (21.25%), Adelphi (8.5%), Yemen Co (15% carried)

34%, operatorBlock 7

Petoil (35%), Yemen Co (5% carried)

60%, operatorBlock 3

PartnersOSH interest Licence Area

Sana’a, Yemen

Republic with democratically elected PresidentPopulation ~20 millionRelatively mature oil industry with good infrastructure Oil exports primary source of national income:

– 280,000 – 300,000 bopdWorld-scale LNG Project recently sanctioned:

– 6.5 million metric tons/yr from 2008– revenue US$850 million/yr for 20 years

Sana’a

Yemen – current assets

Masilah Basin Play Fairway

Marib-ShabwahBasin Play Fairway

>250,000bopd Pipeline

>120,000bopd Pipeline

Interests in the two major producing basins in Yemen:– Masilah Basin– Marib/Shabwah basin

Have participated in 4 wildcat wells since 2004Early success at Nabrajah-1, in Block 43

Nabrajah Block 43

Oil Search played a key role in the Nabrajah oil field discoverySmall Qishn sandstone accumulation overlying deeper gas and oil field in fractured granitic BasementBasement/Kohlan tested ~10,000 bopd

Nabrajah Block 43 - Qishn

Production from Qishn commenced in July 2005 from Qishn sandstone ~16 months after discovery

Development comprises completion of 4 wells for production, water injection well, construction of Central Production Facility and 12 kilometre pipeline to Masilah Block 14

Phase 1 Costs: ~US$35-45 million

2P Reserves : <10 mmbbls

Currently producing ~4,700 bopd from three wells building to 10-15,000 bbls capacity by end September ’05 (DNO Qishn Development Plan)

No further Qishn drilling planned in 2005

Nabrajah Basement Appraisal

Forward Program 2005-2006:– 4 appraisal wells initially planned (Nab-8 to

Nab-11)– Nabrajah-8 is planned to drill ~1,000 metres

into Basement. Total depth 3,422 metres. Spudded 6 September, 40 day well

– Well costs US$5.7 – 6.5 million– 400 km2 3D seismic programme planned

over Nabrajah trend commencing late 2005

Nabrajah-5 oilNabrajah-2 gas

Nabrajah-9

Nabrajah-8Nabrajah-5 oilNabrajah-2 gas

Nabrajah-9

Nabrajah-8

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

Nab-9 Nab-8

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

Nab-9 Nab-8

Block 43

Nabrajah

Block 14

Area of Planned 3D

Seismic Survey

NabrajahBasement Appraisal

Basement reserves based on Nab-5 well only:

– 40-70 mmbbl range ‘best estimate’

Key uncertainties (risk) in reserve estimation are:

– Ultimate height of producible oil column

– Lateral/vertical connectivity and density of fracture system

Next two appraisal wells will address this risk and help constrain potential Basement oil volumes

Additional gas compression and further CPF upgrade to handle Basement oil planned late ’05-‘06.DNO initial Development Plan based on 50,000 bopd capacity by 4Q 2006, subject to results of appraisal programme

NabrajahDevelopment Milestones

– July 2005 - Phase 1: Pre-CPF production started (3,500 bopd, Qishn) (2 Qishn prod + 1 Qishn WI)

– Oct 2005 – Phase 2a: CPF start date (~10,000 bopd, 30,000 bfpd, Qishn)

– Dec 2005 – Phase 2b: Gas injection available (10-15,000 bopd, Qishn + Basement)

– March 2006 – Phase 2c: Block 43 crude oil receiver facilities (25-40,000 bopd capacity)

– Dec 2006 – Phase 3: Permanent CPF facilities (40-50,000+ bopd capacity)

(Results of appraisal programme will influence final development plan for Basement)

Nabrajah-typeBasement Reservoir

Granite forms ‘core’ of horst and tilted fault blocksIn the Masilah basin the granite appears to be naturally (joints) and tectonically fractured (faults)

– Effective Porosity 0.01%Aerial exposure in the Jurassic is likely to have enhanced these fracture systemsOil generation from Madbisource rock in the adjacent grabens have migrated directly into the open fracture systems

Typical fractured granite Basement ( from Yemen)

Analogue Basement FieldSunah Field Block 14

Sunah Field Basement reserves estimated at 60-200 mmbbl after 10 years of production:

– S-4 well has produced over 30 mmbbls– No Basement OWC seen in field– Proven oil column 600m TVD– Recent Basement wells tested between 7,000 – 10,000 bopd– Depth of fracturing may determine ultimate oil column height– Potential for ~1,000m oil column

SUNAH

KHARIR

Analogue Basement FieldKharir Field Block 10

Block 10 producing >30,000 bopd:– ~80% comes from the Basement (?4 wells)

Recent KH A210 well flowed 7,000 bopd; 500m oil columnDepth of deepest open fractures has not yet been found in Kharir FieldProven 900m oil columnNo aquifer encountered Individual wells seeing OOIP >50 mmbblReserves in Kharir field area estimated to be >200 MMBOIP and remain unconstrainedSimilarities on seismic between Nabrajah and Kharir fields

Simplified Kharir Field section

SUNAH

KHARIR

TVD (m/MSL)

KHA301 KHA208 KHA102 KHA101KHA208

-1600

-2000

-1800

-2200

-2400

-1400

-2600

-1200

-1000

-1838.8

-1916.4

-1832.0

-2058.2

-1473.8

-1355.5-1369.5

-1382.5

-1601.2-1550

-1721.2

-2091.1

77mMD230mMD

131mMD 22mMD

120mMD520mMD

3°@TD

8°@TD

28°@TD 54°@TD

3.6°@TD

NE SW

1°@TD

Top Basement

++

+

++

+

+

+

++

+

+

+

+

+

Horizontal scale not respectedAll depths in m/MSL

KHA101deep

KHA105

-2151

Top Basement

OWC ??

560mMD

TVD (m/MSL)

KHA301 KHA208 KHA102 KHA101KHA208

-1600

-2000

-1800

-2200

-2400

-1400

-2600

-1200

-1000

-1838.8

-1916.4

-1832.0

-2058.2

-1473.8

-1355.5-1369.5

-1382.5

-1601.2-1550

-1721.2

-2091.1

77mMD230mMD

131mMD 22mMD

120mMD520mMD

3°@TD

8°@TD

28°@TD 54°@TD

3.6°@TD

NE SW

1°@TD

Top Basement

++

+

++

+

+

+

++

+

+

+

+

+

Horizontal scale not respectedAll depths in m/MSL

KHA101deep

KHA105

-2151

Top Basement

OWC ??

560mMD

YemenGeneralised Fiscal Terms

PSC based systemRoyalty on productionCost oil ~50%Profit oil ~30% Cost recovery 50-75%Yemen remains attractive compared to peer group MENA countriesCompetitive Bid Rounds tightening commercial terms

Block 43 Fiscal Terms

Royalty:- < 12,500 bopd – 3%- 12,500 – 25,000 bopd – 4%- 25,000 – 50,000 bopd – 6%- 50,000 – 100,000 bopd – 8%- >100,000 bopd – 10%Cost oil = 50% of oil after royaltyContractor can recover 100% of operating costs and 50% of exploration and capital costs each year, remaining balance rolling forwardProduction Sharing oil (after deducting royalty and cost oil):- <25,000 bopd, 70%/30% split, Government /

Contractor- Increases in 2.5% increments per 25,000 bopd to a

maximum of 80%/20% at >100,000 bopdYemen Company receives 15% of Contractor profit oil with no participation in costs

PROFIT OIL50%

MOM70%

DNO,OSH& TYC30%

COST OIL50%

DNO66.67%

OSH33.33%

TYC15%

DNO, OSH85%

DNO66.67%

OSH33.33%

BALANCE97%

ROYALTY3%

PRODUCTION100%

MOM

Entitlement by Lifters (According to the above Percentage):Ministry of Mines (MOM) = 36.9500%The Yemen Company (TYC) = 2.1825%DNO & OSH = 60.8675%

Block 43 PSA(12,500 bopd Case)

Calculation of Entitlement Percentage

Block 43 Entitlements

When reporting production, Oil Search intends to book net entitlements

Based on 28.3% working interest, net entitlement is expected to be approximately 16% in early years falling to approx 12% (note that this is very sensitive to assumptions used, particularly oil price)

Based on OSH modelling, NPV per barrel of 50 – 100 mmbbl field is approx:

– US$5.40/bbl at US$40/bbl– US$3.70/bbl at US$ 30/bbl

Block 15

Energy Searcher contracted for 2 wells + optionsDrilling now scheduled for March 2006

– Delay due to tight deepwater rig market & timing of availability

– 35 day well plans (no testing proposed for initial wells)

Mean case Prospect sizes 150mmbbl+

Riyan-1Objective:Oligocene clastics

Riyan-1 Prospect

150MMbblsSuad-1 Prospect

>152MMbbls

Shuhayr-1 Prospect

165MMbbls

Sayhut-1 Prospect

>145MMbbls

Sarar-1X Recovered 1700 litres

45° API oil from Cretaceous sands

Ras Ghashwah-1X Recovered 38° API oil from fractured Eocene limestone

Hami-1XHeavy oil &

bitumen

Sharmah-1XProduced 3045bopd

43° API oil from fractured Eocene

limestone

Masilah-1XOil and Gas shows

N S

Block 35

Drilled Al Ahkaf-1 well 2004/5– Tested Saar carbonates– Water wet

Reviewing implications of well result on remaining potential of blockA number of higher risk leads have been identified

Al Ahkaf Source kitchen

Qishn horizon

Qishn horizon

Al Ahkaf-1 location

Al Ahkaf-1

New YemenExploration Blocks

The continuing trend of oil discoveries in Yemen and the opening up of the Basement play has encouraged OSH to expand its acreage position in the countryBlocks 3 and 7 provide OSH with exposure to the Basement and proven conventional plays in the prolific Marib/Shabwah basinBlock 74 further consolidates OSH position in the Masilah Basin to the south of the Nabrajah oil fieldThe combined work programmes over the three year (firm) period is 8 wells and 550km 2D seismic

Masilah Basin Play Fairway

Marib-ShabwahBasin Play Fairway

Block S2: OMV Habban -1New Basement Discovery

>250,000bopd Pipeline

>120,000bopd Pipeline

Blocks 3 and 7

Blocks 7 (34%) and 3 (60%) will be operated by OSH OSH’s strategy in the Shabwah basin is to capture acreage containing untested Basement structures as well as plays already proven within the basinOMV’s recent Habban-1 basement discovery in Block S2 and YICOM’s West Ayadfields are on-trend to untested basement structures identified in Block 7 and 3Potential mean reserves range 20 - >100 mmbblsSubject to rig availability, OSH will seek to drill a well in Block 3 in 4Q’06

Block 3

Block 7

Block S2

Block 4

Block 8

Block 2

OSH 34%

OSH 60%

CR

ETA

CEO

US

JUR

AS

SIC

PR

E-C

AM

BR

IAN

Al Harsh

Block 18Fields

West AyadAl Nilam

An Nagyah

Amal

Al KahwahEast Ayad

Habban(750m oilColumn)

QISHN SST

ALIF SST

SABATAYAN SALT

LAM SST

KHOLAN SST

FRACTUREDBASEMENT

CLASTICWEDGE

MADBIREEF

MADBI/MEEM

SABATAYANDOLOMITE

AZAL SST

OMV HabbanNew Basement

Discovery>750m oil column

East Ayad Field

West Ayad FieldBasement Play not appraised

Production from Sabatayan

Block 74

Block 74

Block 35

OSH 34%

OSH 46%

Block 43

Nabrajah

OSH 28.3%

Block 14 Fields>1.2 billion bbls

reserves

CR

ETA

CEO

US

JUR

AS

SIC

PR

E-C

AM

BR

IAN

Block 14, 10,51, 9 & 43

(Nabrajah)

Block 14 & 9 SAAR SHOAL

NAKA

SHOAL

KHOLAN

FRACTUREDBASEMENT

MADBICARBONATE

WEDGE

MADBIREEF

MADBI

SAAR CLASTICS

QISHN SST

Block 14

Block 14 & 9

NabrajahSunahKharir

N. Camaal

Blocks 74 (34%) will be operated by OSH Block 74 is considered similar to the geological setting of Block 43The area is lightly explored with potential for basement plays and conventional Qishn/Saar/Kholan playsPotential mean reserves range 20 - +50 mmbblsThe block is close to infrastructure

Other MENA Assets

Successfully acquired Block 18 in Libya in EPSA IV Bid roundEast Ras Qattara Block EgyptActively pursuing new business opportunities in the region:

– Production focus– development/exploration enhancement

opportunities

Regional head office in Dubai, office in Sana’a, representative office in Cairo, Tripoli14 committed wells over next 3 yrs (4+ wells/yr)Good balance of onshore & offshore drilling with diversified risk

Libya Area 18

Libya EPSA IV award: Area 18 (30%)

– Petrobras operator (70%)

– Commitment 2,000km 2D & 500 sq km 3D & 1 well

– Seismic acquisition planned for 1Q’06

– Well in 2007– 3 major leads– Lead size 150-450

mmbbl potentialOSH participating as a accepted operator and participant in current EPSA IV Round 2

Egypt

Egypt East RasQattara Concession

– OSH 49% non operator– Targeting Bahariya Fm

structural traps (mean 7-18 mmbbls)

– Upside recognised in Obaiyed Fm stratigraphic traps (Obaiyed field 1.2tcf/71 mmbbls condensate)

– Currently acquiring 1,600 sq km 3D seismic

– 2-3 wells planned for 2H’06

Alamein (1966)Res : 80mmbo

Yidma (1971)Res : 27mmbo

Bur El Arab (1996)Res : 2.0mmbo

Horus(1995)Res : 6.0mmbo

Qarum G1 (1997)Res : 70mmbo

Al Ahram (1994)Res : 6.0mmbo

Mubarak East (1975)Res : 1.0mmbo

Qarum (1994)Res : 70mmbo

Reserves :1.2 tcf gas &

71 mmbo cond.

Obaiyed Field – Analogue for Stratigraphic Trap

MENA Asset Review

September 2005

Yemen

LibyaEgypt Dubai Office