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Macquarie Conference Sydney, May 2006

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

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Oil Search - Profile

Established in PNG in 1929

Operates all of PNG’s producing oil and gas fields

In 2005, generated approx 22% of PNG’s export revenue and 10% of its GDP. Largest investor and taxpayer

Has major interest in substantial undeveloped PNG gas resource

Growing presence in Middle East/North Africa, with production in Yemen, Egypt

Employs approx 800 staff and over 1,800 contractors

Third largest listed E & P company in Australia with market capitalisation of over US$3.5 billion

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Oil Search– Where We Operate

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Oil Search in PNG

6 producing oil fields (Kutubu, Moran, NW Moran, Gobe Main, SE Gobe & SE Mananda)1 producing gas field (Hides)Major gas development opportunitiesExtensive exploration acreage

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Oil Search in Yemen

1 producing oil field (Nabrajah, Block 43)Nabrajah Basement development6 concession areas (5 as Operator)

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Oil Search in Egypt

Also:Libya - Area 18

East Ras Qattara Area ‘A’ - comprises 2 development leases (5 small oil fields) and four exploration leases

Area A

Wadi DaraExploration

Kareem, Yusr, Kheir

& ShukheirDevelopment

Kareem, Yusr, Kheir

& ShukheirDevelopment

Kareem, Yusr, Kheir

& ShukheirDevelopment

Kareem, Yusr, Kheir

& ShukheirDevelopment

Umm El YusrExploration

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Core Expertise

Developing country specialist

Ability to work co-operatively with host governments and local communities

Culturally sensitive and diverse

Experienced in operating in challenging environments

Low cost, innovative, regionally significant operator

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Achievements - Production Growth

Focussed management of PNG oil fields has had positive results on productionPNG production is now at highest levels since 2001Production is being boosted by Nabrajah, Oil Search’s first non-PNG development

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

stb

/d

Kutubu Moran Gobe Main SE GobeHides Nabrajah SEM

2000 2001 2002 2003 2004 2005 2006Forecast

+23%+23%

+25%+25%+6%+6%

+10%+10%

+17%+17%Pre AGLPre AGL

--8% 8% PostPostAGL AGL salesale

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Achievements – Growth in Net Profit After Tax

102% CAGR in net profit over last four yearsDriven by higher production and strong oil price, and good cost control

US

cen

ts

US

$’m

12.112.1

47.047.0

85.785.7107.3107.3

200.2200.2

4.5

17.9

9.6

7.7

1.8

0

20

40

60

80

100

120

140

160

180

200

220

240

2001 2002 2003 2004 20050

2

4

6

8

10

12

14

16

18

20

Net Profit

EPS

2H2H

136.3136.3

1H1H

63.963.9

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Achievements - Top Quartile Total Shareholder Returns

0

20

40

60

80

100

120

2003 2004 2005

%

5th out ofASX 150

4th out ofASX 150

67%67%81%81%

107%107%

8th out ofASX 150

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How Do We Maintain Growth?

Deliver value: Continue to optimise performance of PNG oil fields, with tight control over costs

Extract value: commercialise our very significant PNG gas resources, through a variety of projects

Create value: Increase exploration activity, both in PNG and in the Middle East/North Africa

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DELIVER VALUE

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PNG Oil Production Outlook

SummaryProgrammes post-operatorship change have been successfulCurrent gross PNG production

At 2001 levelsDouble the level predicted by previous Operator for 2006

Opportunities exist, with continuous programme for the foreseeable future

3 drilling rigs in 2006 4 drilling rigs in 2007

PNG Gross Production History 2000-2005and Forecast 2006

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2000

2001

2002

2003

2004

2005

2006

STB/D

Forecast

Trend BeforeOil Search

Operatorship

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PNG Oil Production

Gross daily production at 20,000 bopd, highest level since 20028 workovers planned in ’06, four development wells in 2006-07

Production decline from Gobe fields reduced to 7%Further development of SE Gobe Wedge area ongoing and drilling of infill well in Gobe Main expected mid year

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Jan-

99Ja

n-00

Jan-

01Ja

n-02

Jan-

03Ja

n-04

Jan-

05Ja

n-06

Jan-

07

Oil Production (stb/d)

ForecastHistory

Trend BeforeOil Search

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan-

00Ja

n-01

Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Oil Production (stb/d)

Gobe Main

SE Gobe

ForecastHistory

SE Gobe

Gobe Main

KUTUBUGOBE

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PNG Oil Production

Currently holding plateau rates above 22,000 bopd Two additional production / injection wells in 2006, another two planned in 2007

MORAN

0

5,000

10,000

15,000

20,000

25,000

30,000

Jul-0

3Ja

n-04

Jul-0

4Ja

n-05

Jul-0

5Ja

n-06

Jul-0

6

Oil Production (stb/d)

ForecastHistory

NW Moran pipeline

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SE Mananda Development

First Oil on 26 March with production currently on ramp up to 7,000 bopd

Significantly more complex geology and reservoirs intersected, leading to reduced oil in place, lower reserves and lower production rates than anticipated

Project cost estimated at $US145m, above budget due to weather & scope changes

Excellent safety achievement throughout duration of project however overall a disappointing result and a major learning experience with respect to project development

SE Mananda

Moran

Agogo Processing Facility

NW Moran

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SE Mananda Bridge

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SE Mananda Bridge

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EXTRACT VALUE

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Gas Commercialisation

Significant change in global gas markets over past few years

Australia an anomaly in the developed world

World prices continue to climb

Considerable new interest in PNG’s static gas resources

Focus to turn optionality into real value in these new market circumstances

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Gas Commercialisation

Oil Search has over 1 billion boe of proven and probable uncontracted gas and associated liquids

Resource is of considerable potential value, approximately 40% of resource dedicated to PNG Gas Project

Strategic approach designed to capture phased value in new market regime

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Gas Resource Status (Gross PNG)

Current 3P gas resources approximately 25 TCF‘Yet to Find’ potential a further 25 TCF from multiple basins (estimate only)Maturing the resource ahead of market demand will require a prudent mix of appraisal and exploration

Recoverable Gas (bcf) ElevalaKetuPandoraUramuKimuBarikewaP'nyangAngoreJuhaHidesSE GobeGobe MainMoranAgogoSE ManandaKutubu

0

5,000

10,000

15,000

20,000

25,000

30,000

1P 2P 3P

Reco

vera

ble

Gas

(bcf

)

Yet

to F

ind

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Gas Commercialisation

Phase 1 : PNG Gas Project Delivery

Significant progress, with markets largely underwritten

Likely to be close to or at initial build plant capacity

Commercialises significant volume of reserves

Delivers major infrastructure spine

Late 2009 delivery

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PNG Gas Project

Sale of gas from PNG Highlands to Australia through over 4,000 km of pipelineConditional & firm contracts signed for total gas sales of 155-229 PJ paMajor buyers: AGL, Alcan, Comalco, QAL, CS EnergyDiscussions underway with Santos to acquire gas and to enter ProjectPipeline in Australia to be constructed by APC (JV between AGL and Petronas)OSH interest is 44.2%, falling to 37.2% if Govt and STO enter projectEstimated CAPEX for PNG component: US$2.5 billion based on initial capacity of approx 250 PJ pa, capable of expansion

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PNG Gas Project

Focus on Delivery

Substantial activities in PNG to finalise regulatory and landowner agreements

Oil Project commitments and agreements being finalised

Developing environment for Landowner Benefits distribution negotiations

Aggressive timetable with mid year target for project sanction

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Requirements for a Project Sanction decision

Conversion of remaining indicative terms agreements into gas sales agreements

Finalisation of local business development plan (NECL) and benefits distribution (GPCSA)

Conclusion of tariff negotiations with APC

Bankable finance plan

Environmental management plan

Economically viable project

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East Coast GasSupply / Demand

The market always ensures that commercially available reserves will be deployed to meet demand

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

0

200

400

600

800

1000

1200

PJ

SOURCE: Origin Energy Presentation Australia & PNG Gas Conference Dec 2005

GIPPSLAND

COOPER BASIN

OTWAY

CSG

OPPORTUNITYVOLUME

PNG

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Gas Commercialisation

Phase 2 : Gas for PNG Industry Development and Further Exports

New initiative recognising world market realities

Significant interest for petrochemicals, GtL, fertiliser and new LNG developments

Requires resource conversion to contractable gas

Focus on accelerated appraisal programme for resource conversion 4-8 tcf contractable in 3 years

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Phase 2 Gas Strategy

Targeting 2010-12 In-Country Industry Development

Requires more contractable reservesStrong interest from industry developers

PetrochemicalGtLFertiliserLNGCNG local and export use

Expanded exploration, appraisal and development programme involving gas fields not committed to PNG Gas Project

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Phase 2 Gas Strategy

Aiming for 150 PJ pa initial market load in Port Moresby, growing to over 300 PJ pa

Flexible gas supply options but to include potential development of

Juha

Barikewa

Kimu

Uramu

Subject to further appraisal success

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Phase 2 Gas Strategy

Programme designed to target 4 to 8 tcfof contractable gas over 3 years

Expanded exploration and appraisal drilling programme

FEED on pipeline from Kopi to Port Moresby

Potentially 3 new field developments

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CurrentOil

Production and

PNG Gas Project

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CurrentOil

Production and

PNG Gas Project

IncludingPhase 2

Gas

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New Appraisal and Development Programme

Dedicated exploration / drilling resources

Juha drilling programme ’06-’07Barikewa seismic acquisition then appraisal drillingKimu / Korobesea seismic then drilling

Engineering and FEED activitiesPipeline to POM – Konebada Petroleum ParkIndividual field development engineering and economics

Progressive development of potential customers

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Juha

Engineering feasibility study on Juha gas and liquids cycling plant completed Juha cycling looks attractive, particularly in high oil price environment Planning to drill two Juha wells, with activity to commence in good weather in 4Q06Sites identified, construction imminentCurrent proven gas-in-place of 0.6 tcf, aim to increase to 2tcf and confirm potential upside

Important source of gas for non-PNG Gas projectsDuring 2006 will progress Pre-FEED and FEED work on cycling

Juha 3 Juha 2 Juha 1

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CREATE VALUE

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2006 PNG Exploration

PNG – up to 5 exploration wells planned for 2006Mix of low risk/near field opportunities and higher risk/large potential wellsArakubi expected to spud late 2QPlanning well advanced for late 2006 Juha drillingOnshore seismic planned for Moguluarea (2Q), and in the Foldbelt (4Q)Offshore seismic in the Papuan Gulf (2,000 km) 1-2Q

Juha

DamamiRiver seismic

(Mogulu)

NW Paua

Mananda Attic

Murray Deep

Arakubi

Lahara seismic acquisition

Foldbelt seismic

Drilling

Seismic

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Yemen 2006Appraisal/Exploration

Proposed Al Harsh-2

Proposed Shaibah-1

Proposed Riyan-1

Proposed Suad-1

NABRAJAH

Complete appraisal programme on Nabrajah: Nab-10 underway, Nab-11 to followComplete acquisition/processing of Block 43 seismicUp to six exploration wells planned 06/early 07

2 Block 15 well: ~150 mmbbl prospect size1-2 Block 3 wells: 20-70 mmbbl prospect size1 Block 43 well: Naifa/Saar/Basement1 Block 35 well

Rig availability will dictate timing

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Egypt & Libya

Egypt - East Ras Qattara3D has substantially increased block potential2 wells commencing 3Q06

Egypt - Area ‘A’15 well/3 years committed development /exploration programmeExploration commences early 2007Focus on prolific Nubian play

Libya - Area 18 : Seismic acquisition during 2006, drilling 2007

Further growth optionsbeing pursued in bothEgypt and Libya during2006

Two Wells

Area A

Wadi DaraExploration

Kareem, Yusr, Kheir& Shukheir

Development

Kareem, Yusr, Kheir& Shukheir

Development

Kareem, Yusr, Kheir& Shukheir

Development

Kareem, Yusr, Kheir& Shukheir

Development

Umm El YusrExploration

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Summary

Production outlook remains unchanged: 2006 production forecast at 11.0 – 11.5 mmboe, +10% in 2007 Gas – priority is to deliver PNG Gas Project and progress next phase of gas developmentsExploration

PNG – range of low risk/near field opportunities and higher risk/large potential exploration wells planned for 2006Yemen - completion of Nabrajah appraisal programme plus up to 3 wildcats in 2H06 First drilling in Egypt

Unhedged exposure to high oil pricesFinancially very strong, with cash of nearly US$500 million

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