FIRST QUARTER REPORT FOR THE

PERIOD ENDED 31 MARCH 2019

16 APRIL 2019

ASX: OSH | ADR: OISHY | POMSOX: OSH

LANDMARK PAPUA LNG GAS AGREEMENT SIGNED

1Q 2019

4Q 2018

% CHANGE

Total production (mmboe)

7.25

7.44

-3%

Total sales (mmboe)

6.65

7.82

-15%

Total revenue (US$m)

398.1

503.1

-21%

Landmark Papua LNG Gas Agreement signed

In early April, a Gas Agreement was signed between the PRL 15 Joint Venture and the PNG Government, finalising the fiscal arrangements for the development of the Papua LNG Project. This has allowed Front-End Engineering and Design (FEED) related activities, including contractor selection and engineering contracting, for the upstream component of Papua LNG to commence.

Focus on finalising the P'nyang Gas Agreement and other Joint Venture agreements

Following the completion of the Papua LNG Gas Agreement, focus has now turned to finalising the P'nyang Gas Agreement, with a targeted signing in the second quarter of 2019. Substantial progress has also been made on other commercial agreements supporting the proposed three-train, 8 MTPA downstream development at the PNG LNG plant site. A new PRL 15 Joint Operating Agreement has been signed while the three integration agreements governing Papua LNG's access to the PNG LNG site are very close to completion. It is anticipated that FEED for the downstream development at the PNG LNG plant site will commence following the finalisation of the P'nyang Gas Agreement.

PNG LNG production remains well above nameplate

Total production in the first quarter of 2019 was 7.25 mmboe, reflecting a continued strong performance by the PNG LNG Project, offset by lower oil field production. The PNG LNG Project produced at an annualised rate of 8.8 MTPA during the quarter, 28% above nameplate capacity.

Revenues impacted by timing of LNG shipments and lower realised prices

Total revenue for the quarter declined 21% to US$398.1 million. Total product sales were 15% lower than in the fourth quarter, primarily due to the timing of LNG shipments, with three LNG cargoes on the water at the end of the period, compared to one at the end of the previous quarter. Revenue was also impacted by weaker global energy prices, with the realised oil and condensate price down 3% and the realised LNG and gas price 7% lower than in the fourth quarter of 2018.

Mid-termLNG sales and purchase agreement signed

The PNG LNG Project signed a mid-term LNG sale and purchase agreement (SPA) with Unipec, taking total Project volumes under contract to 7.9 MTPA. The SPA involves the supply of approximately 0.45 MTPA of LNG for four years, commencing in April 2019.

2019 FIRST QUARTER REPORT | 16 APRIL 2019 | Page 1

Significant gas discovery made at Muruk 2

In the PNG Highlands, testing of the Toro reservoir in Muruk 2 confirmed the presence of gas with a similar composition and pressure gradient to the gas tested at Muruk 1 ST3, indicating communication between the wells. Following completion of flow testing, an extended shut-in period has commenced to monitor pressure build-up, which will help constrain potential gas resource volumes within the field.

Alaskan drilling programme confirms oil, with likely resource upgrade

Oil Search's inaugural appraisal drilling campaign in Alaska was successful, with oil encountered in all four well penetrations. Initial data analysis supports the Company's view of a likely material upgrade in contingent resources and indicates deliverability from the Pikka Unit will meet the Company's development plan assumptions.

Strong financial position underpins growth project investment

Oil Search ended the 2019 first quarter with liquidity of US$1.46 billion, comprising US$789.5 million in cash and US$671 million in credit facilities.

COMMENTING ON THE 2019 FIRST QUARTER RESULT, OIL SEARCH MANAGING DIRECTOR, PETER BOTTEN, SAID:

"During the first quarter of 2019, Oil Search produced 7.25 million barrels of oil equivalent (mmboe), at a daily production rate similar to the fourth quarter of 2018.

The PNG LNG Project recorded another period of strong performance, producing at an average annualised rate of 8.8 MTPA for the quarter. Following the work undertaken at the Hides Gas Conditioning Plant during the Highlands earthquake shut-in, this is the third consecutive quarter of production at or above 8.7 MTPA, with the Project achieving an annualised production rate of 8.8 MTPA for the nine months to 31 March 2019, almost 30% above nameplate capacity and 6% above the annual production rate pre-earthquake.

Oil production was impacted by two minor outages at the Central Processing Facility and several planned well shut-ins at the Moran field.

Total revenue for the quarter was US$398.1 million. This was 21% below the fourth quarter of 2018, primarily due to the timing of LNG shipments, with three LNG cargos, worth more than US$35 million in revenue net to Oil Search, on the water at the end of the period, compared to one at the end of the previous quarter. In addition, average realised oil and condensate prices were 3% lower than in the prior quarter, at US$62.35 per barrel, while average realised LNG and gas prices declined 7% to US$10.15/mmBtu."

Gas Agreement signed for the Papua LNG Project with material progress towards FEED entry

"In early April, a Gas Agreement was signed between the PRL 15 Joint Venture and the PNG Government, marking a significant step forward for the development of the Papua LNG Project.

The Papua LNG Gas Agreement includes several important provisions, which, together with the fiscal arrangements, result in what we believe is a fair split of the Project's expected returns, to the benefit of all stakeholders. These include a 5% Domestic Market Obligation (DMO), ensuring that a significant volume of gas is available for local use, a National Content Plan, which outlines how the local workforce and businesses will participate in the development, and a deferred payment mechanism for the Government's share of past development costs, easing the up-front financial contribution associated with its equity back-in to the Project. Following this landmark agreement, the contractor selection and engineering contracting process for the upstream development will commence shortly.

2019 FIRST QUARTER REPORT | 16 APRIL 2019 | Page 2

Our focus has now turned to finalising the P'nyang Gas Agreement between the State and the PRL 3 Joint Venture, which is targeted to be signed during the second quarter.

Good progress has also been made on the commercial agreements which will allow the FEED phase of the integrated downstream three-train development to commence. A new Joint Venture Operating Agreement, which will govern the development and operating phase of the Project, has been executed between the PRL 15 Joint Venture partners, while three integration agreements - the Facilities Access Agreement, Downstream Operations and Cooperation Agreement and the Cost Sharing Agreement, which collectively underpin the Papua LNG Project's access to the PNG LNG Project site and infrastructure - are very close to completion. In addition, negotiations for the proposed farm-in of Santos into PRL 3 have progressed during the quarter and the parties anticipate being in a position to execute a binding agreement in the second quarter. Once executed, this will result in greater alignment of the equities in PRL 3 and the PNG LNG Project, helping to facilitate the development of P'nyang through the PNG LNG infrastructure by minimising any commercial issues between the joint ventures.

The Papua LNG, PNG LNG and P'nyang Joint Ventures are targeting a Final Investment Decision in 2020, which would place the proposed three-train development on track to commence deliveries of LNG in 2024. All stakeholders are committed to meeting this market window, when significant new LNG supply is required to meet demand growth and requirements for replacement of expiring contracts. Oil Search's dedicated LNG equity marketing team continues to report strong buyer appetite for LNG from the proposed new trains, underpinned by the reliability of our operators, the proximity of PNG to North Asian markets and the high heating value and quality of LNG from PNG. Many buyers are seeking both geographic and seller diversification, which are highly favourable drivers in support of new equity LNG sellers such as Oil Search."

Final mid-term tranche of PNG LNG volumes contracted with Unipec, taking total volumes under contract to 7.9 MTPA

"In early April, the PNG LNG Project signed a contract with Unipec Singapore Pte Ltd (Unipec), committing to supply approximately 0.45 MTPA of LNG over a four-year period, commencing from April 2019.

Total contracted volumes for the Project are now 7.9 MTPA, comprising 6.6 MTPA under long-term contracts with JERA, Osaka Gas, Sinopec and CPC and approximately 1.3 MTPA under mid-term contracts with Unipec, PetroChina and BP.

Following the Unipec contract, we believe that the PNG LNG Project has the right combination of contracted and spot market sales to maximise value from this globally competitive project."

Major progress made on PNG LNG benefits distributions

"During the quarter, the Government and the PNG LNG Project partners, led by ExxonMobil, worked collaboratively to complete the Landowner Benefits Identification (LOBID) programme for PDLs 1 and 7. Ministerial Determination for both licences was gazetted in March, paving the way for election of chairpersons to represent the identified landowner groups and subsequently assist in the benefits disbursements process. This is a major milestone for the PNG LNG Project, with the LOBID process for all outstanding licence areas targeted to be resolved in the near future, subject to the removal of landowner injunctions."

Oil field optimisation programme ramping up

"During the quarter, Oil Search made a strong start to its multi-year,in-fieldwork-over and drilling campaign, aimed at maximising near-term output from our maturing oil fields in PNG.

The first work-over of the programme was successfully completed on the IDT 21 well at Kutubu, which is expected to be brought online in April. The rig is being mobilised to the Moran field, in preparation for workovers of the M4 and M9 wells, which are expected to commence shortly. This will be followed by drilling of the Moran X development well in

2019 FIRST QUARTER REPORT | 16 APRIL 2019 | Page 3

June, which is targeting oil toward the south-east of the field, and the Usano development well, UDT S, which is expected to spud in late 2019. Preparations are ongoing to mature the drilling sequence for 2020 and 2021.

These low cost, value accretive opportunities have the potential to add significant oil volumes net to Oil Search, as well as slow the production decline rate from our mature oil fields."

PNG exploration and appraisal activity

"In the North West Highlands, initial testing of the Muruk 2 appraisal well has been positive, confirming gas in pressure communication with Muruk 1. This is an encouraging outcome, indicating the likely continuity of the reservoir from the original Muruk 1 gas discovery, which is located only 20 kilometres from the Hides G wellpad, to Muruk 2, nearly 12 kilometres to the north-west. Following the completion of a 10-day flow test, we have commenced an extended shut-in period, using pressure gauges downhole to monitor the well during the pressure build-up phase. This will assist in better assessing the potential resource size. Future drilling prospects along the Hides-P'nyang trend will be derisked with a new phase of seismic acquisition over Karoma and adjacent acreage, scheduled to commence in the fourth quarter of 2019.

During the quarter, the Company continued the second phase of a 2D seismic survey, with approximately 250 kilometres being acquired over licences in the Eastern Foldbelt of the Onshore Papuan Basin. The second phase was initiated following encouraging results from the initial 330 kilometre survey. Data from both surveys will help mature leads and prospects located near to planned Papua LNG infrastructure for future potential drilling."

PNG Power

"Niu Power Ltd, an entity held 50:50 by Oil Search and Kumul Petroleum, completed the construction of a 58 MW gas- fired power station in February. The power station is located adjacent to the PNG LNG plant site, which will contribute 100% of the gas supply.

Commissioning activities were completed in early April, with commercial operations and the sale of electricity to the Port Moresby grid expected to commence shortly. Once operational, the power station will be capable of supplying approximately 75% of the average load of the Port Moresby electricity grid, fueled by a cleaner energy source compared to heavy oil and diesel."

Inaugural drilling campaign in Alaska safely and successfully completed

"The Company's inaugural two rig, two well drilling campaign in Alaska, comprising four well penetrations, was completed safely and efficiently, meeting or exceeding our expectations for planning, safety, environmental management, drilling and subsurface data gathering. This was a major achievement by the new Alaskan team, particularly given the harsh Arctic environment and short winter drilling season.

The objectives of the drilling programme were to prove up additional resource and establish reservoir deliverability. Although the results are still preliminary and further analysis is required, we expect a material upgrade in our contingent resource estimates later this year. In addition, sufficient data has been gathered on reservoir deliverability to support our plans to move into the FEED phase of the planned Pikka Unit development later in 2019.

All four penetrations successfully encountered oil, with the results of the Pikka B well particularly encouraging. As well as encountering the thickest Nanushuk reservoir section seen in the Pikka Unit to date, flow rates from the Pikka B ST1 test were above expectations. This result has upgraded materially the prospectivity in this area of the Pikka Unit and south towards the Horseshoe Block. While the reservoir characteristics at the Pikka C well location were broadly in line with pre-drill expectations, flow rates from the Pikka C ST1 test were impacted by mechanical issues and downhole obstructions. Modelling of the geological properties of the Pikka C well indicate that, without these issues, flow rates would have been much higher.

In early April, demobilisation of the rigs and other equipment from both well sites was safely completed.

2019 FIRST QUARTER REPORT | 16 APRIL 2019 | Page 4

Over the next few months, a full analysis of the well and test results will be integrated into the development plans for the part of the field evaluated by the Pikka Unit drilling. Constructive discussions with other operators on the North Slope continue to highlight the value of collaboration and the use of common facilities to optimise the development, with a focus on early production opportunities. We will continue to assess these opportunities as we refine our development plan prior to a FEED decision later this year.

Planning for the 2019/20 drilling season has commenced, with at least two, and possibly three, wells expected to be drilled. The programme is expected to include drilling in the southern part of the Nanushuk field, to further evaluate the material resource upside in this area.

It is anticipated that we will receive approval from the US Army Corps of Engineers for our Pikka Unit development plan during the second quarter of 2019. The 2019/20 winter programme will include commencement of gravel road construction, which will facilitate full time operations, long duration drilling and testing in the field area.

Interpretation of the results of the recent drilling and testing programme will also inform how we maximise value through the exercise of the Armstrong option and a potential divestment of interests at the opportune time."

2019 FIRST QUARTER REPORT | 16 APRIL 2019 | Page 5

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Oil Search Limited published this content on 16 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 16 April 2019 00:47:01 UTC