Oil Search Update€¦ · Oil Search Update June 2014. Oil Search Licence Interests, PNG 2 Port...
Transcript of Oil Search Update€¦ · Oil Search Update June 2014. Oil Search Licence Interests, PNG 2 Port...
Oil Search LimitedARBN 055 079 868
Oil Search UpdateJune 2014
Oil Search Licence Interests, PNG
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Port Moresby
Kumul Terminal
PRL08
PDL7
PDL4PDL3
PRL09
PDL6 PDL5
PRL14
260
233
PPL234
PRL10
PPL244
PPL339
339
339
339
PPL339
339
339 339
PPL260
PRL3
PPL385
PDL1
233
PPL277
PPL277
Juha
Moran
Agogo
SE Mananda
Uramu
P’nyang
Kimu
Kutubu
Proposed JuhaFacility
Hides
Angore
LNG Facility
SE Gobe
Mananda 6,7
Gobe Main
PNG LNG ProjectGas Fields
Hagana
Flinders
Juha North
Barikewa
Hides GasConditioning Plant
& Komo Airfield
PPL219APDL11
PDL9PDL8
PDL2
PRL15
Elk/Antelope
PNG LNG ProjectFacilities
Non PNG LNG Gas/Oil Fields
Oil PipelinePNG LNG Gas Pipeline
OSH FacilityPNG LNG Project FacilityMajor Road
Gas FieldOil Field
Proposed PNG LNGGas Pipeline
Corporate Transformation Underway
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Oil Search is in excellent position to build further value for shareholders. Platform of unprecedented strength:» PNG LNG Project sales commenced in May 2014. Transforms OSH into
significant LNG exporter with steady 20+ year cash flow stream, sufficient to fund both growth opportunities and pay materially higher dividends
» Highlands and PRL 15 LNG expansion opportunities being matured. Potential involvement in two, possibly three, additional high returning LNG trains by end of decade:– Possibility of more than doubling production over next 5 – 7 years, off 2015 base
» Taza oil discovery in Kurdistan being appraised, positive results to date
» Balance sheet strengthened by recent placement to PNG Government and SPP
» Strategic Review underway. Will set direction for next five years
Core Strategies Have Delivered Steady Long-Term Share Price Appreciation
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Shar
e Pr
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(A$) Acquisition of
ChevronTexaco’s PNG assets.
Assume Operatorship
Manage transition to PNG LNG Project PNG LNG FID
PNG LNG production and sales
commencePRL 15
acquisition
PNG LNG Project
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Project Update
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» PNG LNG Project Train 1 commenced production in April, Train 2 in May, both ahead of schedule
» Ramp up to full capacity (6.9 MTPA) in progress
» LNG shipments to Asian markets commenced late May, with first cargos being sold on spot market, prior to start of long term contract sales
» Project expected to be delivered within November 2012 budget of US$19 billion
» Hides liquids being blended with oil field production and sold as Kutubu Blend
PNG LNG – first shipment delivered to TEPCO, Japan
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Spirit of Hela
PNG LNG Plant site
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Feb 2011
Feb 2014
Jetty
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Jun 2011
Nov 2013
Offshore and Onshore Pipelines
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Laying Highlands pipeline
Pipeline rehabilitation, March 2014Pipeline rehabilitation, March 2014
Offshore Pipeline
Pipeline burial
Associated Gas (CPF)
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PNG LNG Project FacilityMajor Road
Nov 2010
Feb 2013
Komo Airfield
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First Antonov 124, May 2013
Dec 2010
Nov 2013
Hides Gas Conditioning Plant
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Mar 2014Aug 2012
Dec 2010
Drilling
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Rig 702 Rig 703
Gas Growth Strategy» Oil Search looking to
leverage existing LNG infrastructure and skills developed by foundation PNG LNG Project
» Upside in 1P reserves at Hides plus substantial discovered undeveloped gas resources
» Oil Search well positioned to realise value from future phases of development, as significant resource and infrastructure owner and proven operator
» PNG remains an attractive investment location
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Port Moresby
Kumul Terminal
PRL08
PDL7
PDL4PDL3
PRL09
PDL6 PDL5
PRL14
260
233
PPL234
PRL10
PPL244
PPL339
339
339
339
PPL339
339
339 339
PPL260
PRL3
PPL385
PDL1
233
PPL277
PPL277
Juha
Moran
Agogo
Kutubu
Proposed JuhaFacility
Hides
Angore
LNG Facility
Gobe Main
Hides GasConditioning Plant
& Komo Airfield
PPL219APDL11
PDL9PDL8
PDL2
PRL15
Undeveloped GasFields
Uramu (100%)
P’nyang (38.5%)
Kimu (60.7%)
SE Gobe (25.6%)
Hagana (40%)
Flinders (40%)
Juha North (24.4%)
Barikewa (45.1%)
Elk/Antelope (22.8%)
Hides Drilling
» Six production wells at three wellpads (B,C and D) complete
» Drilling ongoing: two wells at wellpad G (NW Hides) and PWD well. Will help constrain gas volume in Hides field
» Hides 5 planned to explore Koi-Iange reservoir (~700m below Toro), with drilling scheduled to commence in 4Q14
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Hides 4
Hides 3Hides 2Hides 1Hides G
Toro
Koi-Iange
Ieru
5km
PDL 1/7 – Hides Field8 New Production Wells
PDL 8 – Angore Field2 New Wells
Hides GasConditioning
Plant
KomoAirfield
Hides NogoliCamp
Hides GTE Plant
PWD Well
Hides Well Pad G
Hides 5
Hides 5
P’nyang - PRL 3» Key resource to support potential growth from PNG
LNG:
– Total 2C recoverable gas resources in P’nyang field of 2.5 tcf
» Concept selection work well advanced –engineering, environmental and social mapping
» Development work to continue through to submission of PDL application in early 2015
PRL 3 WI %
ExxonMobil affiliates (operator Esso PNG P’nyang Ltd) 49.0
Oil Search 38.5
JX Nippon 12.5
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Elk/Antelope - PRL 15
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» 22.8% gross interest in PRL 15, containing Elk/Antelope gas fields
» Up to three appraisal wells to be drilled, to prove up sufficient gas resources to support LNG development. First well expected to spud in 3Q14
» Substantial exploration and appraisal upside in PRL 15
» Dispute resolution process underway relating to sale of interest in PRL 15 from InterOilto Total SA. Negotiations to achieve commercial resolution ongoing
Port Moresby
Kumul Terminal
PRL08
PDL7
PDL4PDL3
PRL09
PDL6 PDL5
PRL14
260
233
PPL234
PRL10
PPL244
PPL339
339
339
339
PPL339
339
339 339
PPL260
PRL3
PPL385
PDL1
233
PPL277
PPL277
Juha
Moran
Agogo
SE Mananda
Uramu
P’nyang
Kimu
Kutubu
Proposed JuhaFacility
Hides
Angore
LNG Facility
SE Gobe
Mananda 6,7 Gobe Main
PNG LNG ProjectGas Fields
Hagana
Flinders
Juha North
Barikewa
Hides GasConditioning Plant
& Komo AirfieldPPL219APDL11
PDL9PDL8
PDL2
PRL15
Elk/Antelope
PNG LNG ProjectFacilities
Non PNG LNG Gas/Oil FieldsTriceratops
5km Source: InterOil
Strong production from PNG oil fields» Reservoir performance from
key oil fields remains strong
» Continued success of development drilling and field management activities
» Commissioning gas delivered from Kutubu to PNG LNG Plant (September) and HGCP (December)
» PNG LNG Hides liquids being blended with oil field production and sold as Kutubu Blend
1919
PRL8
PRL11
PDL7
PDL1
PPL233
PPL219
PDL2
PDL5PDL6
PRL9
PRL14
PPL260
PDL4
PDL3
PDL4
PDL7
PPL233
PPL277PDL8
PDL9
PRL11
Kutubu
Moran
Cobra
Iehi
BarikewaKimu
SE Gobe
Gobe Main
Agogo
SE Mananda
Mananda 5,6 & 7
Juha
HidesAngore
Juha North
Oil FieldGas Field
Oil PipelinePNG LNGGas Pipeline
OSH FacilityPNG LNG Project Facility
Proposed PNG LNGGas Pipeline
Production Outlook
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0
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10
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2011 2012 2013 2014F 2015F
Kutubu(2)Moran(2)
GobeSE ManandaHides GTE(3)PNG LNG (T1+T2)(1,3)
Net Production (mmboe)
6.386.69
17 – 20
6.74 6.4 – 6.9
1 LNG sales products at outlet of plant, post fuel and flare2 Oil forecast assumes planned new development wells beyond 20133 Gas:oil conversion rate used in 2014/15: 5,100 scf = 1 barrel of oil equivalent (prior years 6,000 scf/boe)
» Total production guidance for 2014 increased from 14.5 – 17.5 mmboe to 17 – 20 mmboe, due to commencement of LNG production from Train 1 (April) and Train 2 (May) ahead of schedule
» Production from oil fields of 6.4 – 6.9 mmboe (unchanged), up slightly from 2013
» In first full year (2015), PNG LNG will add ~21 mmboe net to Oil Search production
Oil Discovery at Taza, Kurdistan:Appraisal Underway
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IRAN
TURKEY
SYRIA
IRAQJORDAN
SAUDI ARABIA
CaspianSea
PersianGulf
RedSea
KURDISTAN REGIONOF IRAQ
Taza PSC
Erbil OfficeSulimaniyah Office
IRAN
TURKEY
IRAQ
KURDISTAN
Taza PSC
Kirkuk
Miran WestChemchemal
Shaikan
Tawke
Hamrin
Chia Surkh
JamburKor Mor
Taq Taq36°N
37°N
SE JamburLead
Pulkhana
Jambur Kor Mor
Taza 3 Proposed
Taza 2
Taza 5 ProposedTaza 4 Proposed Taza
Taza 1ST2
Oil Discovery at Taza, Kurdistan:Appraisal Underway» Taza 2 appraisal well has found oil in Jeribe,
Dhiban and Euphrates Formations. Presently drilling towards deeper Shiranish Formation, not penetrated by Taza 1
» Taza 3, to appraise southern part of field, planned to spud in 3Q14, plus two more wells and 3D seismic
» Plan to install Early Production Facility (EPF) on one well in 2015
» 3D seismic acquisition underway, including over SE Jambur lead
» New export pipeline through Kurdistan to Turkey operational. Operations have not been impacted by recent unrest in Iraq
NOTE: Proposed well locations subject to change
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Positioning for Next Phase of Growth
» Major Strategic Review underway to set objectives and programmes for Oil Search over next five years
» Review will analyse:
– Asset values and ways to capture full value
– Balance of asset portfolio to deliver growth projects and capital management initiatives
– Company structure, cost base and operating model
– Development of our people and organisation, to deliver continued top quartile returns
» Results to be communicated to shareholders in 3Q14
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Summary
Oil Search has unprecedented platform for further growth:» Delivery of PNG LNG will more than quadruple production 2013 – 2015:
– Delivers material cash flow to invest in high returning projects and fund higher dividends
» Assets have potential to underwrite at least two further LNG trains and expansions
» Taza oil discovery has significant potential. Appraisal taking place
» Oil business remains strong
» Balance sheet will strengthen rapidly with LNG revenues
» Strategic Review will provide programme to deliver continued superior returns
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Appendix 1: Key metrics
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2009 2010 2011 2012 2013
8.1 7.76.7 6.4 6.7
Production (mmboe)
2009 2010 2011 2012 2013
133.7185.6 202.5 175.8
205.7
NPAT (US$m)
2009 2010 2011 2012 2013
65 76
116 114 111
Oil Price (US$/bbl)
2009 2010 2011 2012 2013
4 4 4 4 4
DPS (US cents)
Appendix 2: Treasury Update» Total liquidity of US$711.2 million at end 1Q14
comprising US$411.2 million cash and US$300 million available under non-amortising corporate revolving facility
» Additional A$184 million raised under SPP in May
» US$250 million of funding lines, including L/C facilities to access cash in LNG Project secured accounts, have been established to provide additional near-term funding flexibility
» US$3.91 billion (OSH share) drawn down under PNG LNG Project finance facility at end 1Q14
» 2013 final unfranked dividend of two US cents per share, fully funded via underwritten DRP
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2009 2010 2011 2012 2013 1Q 14
1,289 1,2651,047
488210
411
Cash (US$m)
2009 2010 2011 2012 2013 1Q 14
363304
247
500
300 300
Corporate Facility Available (US$m)
Appendix 3: Investment Outlook
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2009 2010 2011 2012 2013 2014F
Other PP&E
Production
PNG LNG
Exploration & Evaluation
586
1,364
1,568
1,861
1,673
US$m
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Guidance Range (US$1,175 – 1,415m)1
US$25 – 35mUS$100 – 130m
US$650 – 800m
US$400 – 450m2
1 Excludes US$900m upfront payment for acquisition of 22.835% interest in PRL 15, completed March 2014.2 Includes capex associated with appraisal activity in PRL 15
Appendix 4: 2014 Guidance Summary
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Previous Guidance Updated Guidance
Production
Current operations (oil and GTE) 6.4 – 6.9 mmboe1 6.4 – 6.9 mmboe1
PNG LNG Project
LNG 34 – 43 bcf 45 – 57 bcf
Liquids 1.5 – 2.1 mmbbl 1.7 – 2.0 mmbbl
Total PNG LNG Project 8.1 – 10.6 mmboe1 10.5 – 13.2 mmboe1
Total Production 14.5 – 17.5 mmboe 17 – 20 mmboe
Operating Costs
Normalised cash opex (incl corporate costs) US$21 – 26 / boe US$18 – 22 / boe
Hides GTE gas purchase costs US$37 – 40 million US$37 – 40 million
Business development US$10 – 15 million US$10 – 15 million
Depreciation, amortisation and site restoration US$13 – 15 / boe US$13 – 15 / boeNumbers may not add due to rounding1 Gas volumes have been converted to barrels of oil equivalent using an Oil Search specific conversion factor of 5,100 scf per boe, which represents a weighted average, based on Oil Search’s reserves portfolio, using the actual calorific value of each gas volume at its point of sale. The change to a specific boe conversion factor more closely reflects the energy content of the Company’s gas reserve portfolio compared to the previous conversion factor of 6,000 scf per boe.
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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.
Oil Search's estimates of petroleum reserves, contingent resources and prospective resources are based on information prepared by Dr Jon Rowse, Oil Search’s General Manager - Subsurface, who is a full-time employee of the Company and a member of the Society of Petroleum Engineers. Dr Rowse is qualified in accordance with ASX Listing Rules 5.41-5.44, and confirms that the statements are based on and fairly represents information and supporting documentation which has been prepared by him. He has consented to publish this information in the form and context in which it is presented in this presentation.
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