Oil Search : Second Quarter Report for period ended 30 June 2021

SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021

27 July 2021

ASX: OSH | PNGX: OSH | ADR: OISHY

FY 2021 production and capex guidance maintained

• On track to deliver full year 2021 production and capex guidance
• Successful completion of PNG LNG major maintenance works, ahead of schedule

Q2 2021 operating revenue up 21.5% from Q1 2021

• Second quarter operating revenue of US$366.2 million, up 21.5% from Q1 2021
• Oil production from operated fields was up 4.6% from Q1 2021, driven by performance of Moran
• Delivered a solid quarter of non-operated production, PNG LNG production averaged 8.0 MTPA (gross)
• Total production of 6.6 mmboe, down 4.1% from Q1 2021, impacted by planned maintenance works

Papua LNG and Pikka oil development progressing as planned

• Papua LNG technical, commercial and financing work underway in Q2 2021
• Pikka project FEED continues, FID subject to appropriate risk allocation and funding

Extensive uptake of the COVID-19 vaccine among PNG workforce

• No COVID-19 cases to date in Oil Search PNG field operations
• Oil Search continues to assist PNG Government COVID-19 response through dedicated PNG industry task force with supply chain and logistics as requested

Strong operating cashflows enabled continued debt repayments

• US$1.2 billion total liquidity (US$504 million cash, US$697 million undrawn credit facilities)
• Net debt reduced 5.3% compared to March 2021

Acting Chief Executive Officer Peter Fredricson said: "Oil Search delivered strong production in the latest quarter, supported by the safe completion of the major planned maintenance campaign at PNG LNG by the operator, ExxonMobil. Operated production from our Moran and Agogo fields continues to perform strongly, and operated gas production was able to offset some reduced production from the Hides Gas Conditioning Plant during upstream maintenance activities.

"The macro environment helped drive an increase in revenue despite the planned rate reduction at PNG LNG during the quarter. Sales volumes were broadly similar to the first quarter due to careful inventory management and flexibility from using the spot market.

"While the COVID-19 outbreak continues to impact Papua New Guinea, strict operating procedures and logistical measures have ensured continued safe and reliable production with no impacts to Oil Search or ExxonMobil operated production facilities. Pleasingly, there has been strong uptake of the COVID-19 vaccine in the Port Moresby office, which has allowed nearly all staff to return to work there.

SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021 - 27 JULY 2021

"In Alaska, the Pikka Phase 1 project is tracking in line with original expectations from a technical and permitting perspective. It is in everyone's interest - Oil Search, shareholders, JV partners - that we commit to FID on this high quality asset only when appropriate funding and ownership levels (across upstream and infrastructure) are in place.

"During the second quarter Papua LNG has progressed financing, technical and commercial work on the expansion scope in preparation for a further ramp up in project activity in 2H 2021. Key deliverables from this preliminary work will allow the project to progress towards its objective of entering FEED in 2022.

"Strong operating cashflows enabled repayment of US$191.2 million of PNG LNG debt and US$100.0 million net repayment of bi-lateral and syndicated corporate facilities during the quarter. Considerable progress was made on several funding opportunities which are expected to strengthen Oil Search's balance sheet ahead of the upcoming investment programs for Pikka and Papua LNG."

The Company's first half results will be issued to the market on 24 August 2021.

For more information regarding this report, please contact:

Investor Relations	Media
Peter Laliberte	Ian Pemberton
VP - Investor Relations	[phone]
[phone]	[e-mail]
[e-mail]

This ASX announcement was authorised for release by the Oil Search Board of Directors

DISCLAIMER

This report contains forward-looking statements. By their nature, forward-looking statements and statements of current intentions involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future and are outside the control of Oil Search. Actual outcomes may differ materially from those expressed in such statements, due to a variety of factors.

Subject to any terms implied by applicable law, which cannot be excluded, or the ASX Listing Rules, Oil Search disclaims any obligation or undertaking to publicly update any forward-looking statement or future financial prospects resulting from future events or new information.

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SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021 - 27 JULY 2021

Comparative performance

Production1,2

	QUARTER END	YTD (6mths)
('000 boe unless noted)	JUN 2021	MAR 2021	JUN 2020	JUN 2021	JUN 2020
PNG LNG Project3	5,801	6,110	6,396	11,911	12,750
PNG oil production ('000 bbls)	725	693	735	1,417	1,380
Other production4	63	66	155	129	528
Total Production	6,589	6,869	7,286	13,457	14,658
Total Sales	6,699	6,689	6,786	13,388	13,659

Sales1

	QUARTER END	YTD (6mths)
(US$ million unless noted)	JUN 2021	MAR 2021	JUN 2020	JUN 2021	JUN 2020
LNG and gas sales	254.8	214.4	229.6	469.1	523.2
Oil and condensate sales	102.9	78.0	28.4	180.9	86.0
Other revenue5	8.5	9.1	8.2	17.6	16.5

Total Operating Revenue	366.2	301.5	266.2	667.7	625.6
Average realised oil and condensate price6 (US$/bbl)	71.55	57.38	23.05	64.66	35.91
Average realised LNG and gas price (US$/mmBtu)	8.61	7.10	7.34	7.85	8.22

Financial Data1

	QUARTER END	YTD (6mths)
(US$ million unless noted)	JUN 2021	MAR 2021	JUN 2020	JUN 2021	JUN 2020
Cash	503.6	675.9	831.4	503.6	831.4
Debt7,8
PNG LNG financing	2,425.8	2,617.0	2,803.5	2,425.8	2,803.5
Corporate facilities	200.0	300.0	360.0	200.0	360.0
Net debt	2,122.2	2,241.1	2,332.1	2,122.2	2,332.1

1. Numbers may not add due to rounding.
2. Gas and LNG volumes have been converted to barrels of oil equivalent using an Oil Search specific conversion factor of 5,100 scf = 1 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. Minor variations to the conversion factors may occur over time.
3. Production and sales net of fuel, flare, shrinkage and SE Gobe wet gas.
4. SE Gobe gas sold to PNG LNG, Hides GTE gas and liquids.
5. Other revenue consists of infrastructure tariffs, rig lease income, shipping revenue, marketing fees, and electricity and naphtha sales.
6. Average realised price for Kutubu Blend including PNG LNG condensate.
7. Excludes lease liabilities recorded as borrowings.
8. As at 30 June 2021, the Company's corporate facilities totaled US$900 million, of which US$200 million had been drawn down and US$3.0 million had been utilised for letters of credit.

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SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021 - 27 JULY 2021

COVID-19 update

Over 80% of the Port Moresby staff have received COVID-19 vaccinations. In response to protecting PNG from the fast spreading Delta variant, the PNG National Control Centre (NCC) released new COVID-19 measures requiring all travellers arriving in PNG to be fully vaccinated and to enter 21 days of quarantine.

As a company essential to the PNG economy, Oil Search, through the PNG Chamber of Mines and Petroleum, requested approval from the NCC for exemptions to the new control measures to allow staff to travel safely, including a seven day quarantine in Oil Search facilities and the ability to travel to PNG with a single dose of the AstraZeneca vaccine, with the second dose given in PNG.

The NCC is receptive to allowing these exemptions due to the strict controls and risk mitigations being enforced by industry participants, which have been audited by independent experts.

To date, Oil Search has conducted more than 28,000 COVID-19 tests at its PNG medical clinics and quarantine facilities, has distributed some 450,000 items of personal protective equipment to health workers, and administered more than 500 doses of the AstraZeneca vaccine. More than 600 Oil Search staff and contractors in PNG have now received at least their first COVID-19 vaccination.

In Alaska, limited field activity is currently underway with robust COVID-19 protocols in place including screening and testing aligned with national, state and local government guidance.

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SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021 - 27 JULY 2021

Revised Guidance for Full Year 20211

(US$ million unless noted)	Previous	Revised
Production2
Oil Search operated (ex-Hides GTE) (mmboe)	2	- 3	2	- 3
Hides GTE (mmboe)	0	- 1	0	- 1
PNG LNG Project3
LNG (bcf)	107	- 110	107	- 110
Power (bcf)	1	- 2	1	- 2
Liquids (mmbbl)	2	- 3	2	- 3
Total PNG LNG Project (mmboe)	23	- 25	23	- 25

Total production (mmboe)	25.5	- 28.5	25.5	- 28.5
Operating Costs
Unit production costs (US$/boe)	10.50	- 11.50	10.50	- 11.50
Other operating costs4	145	- 165	155	- 175
Depreciation and amortisation (US$/boe)	12.50	- 13.50	12.50	- 13.50
Investment Expenditure
Production Expenditure (PNG)	40	- 60	40	- 60
Development Expenditure	85 - 115	85 - 115
Exploration and Evaluation Expenditure5	100	- 135	100	- 135
Biomass	10	- 15	10	- 15
Other Plant and Equipment	15	- 25	15	- 25
Total Investment Expenditure	250	- 350	250	- 350

1. Numbers may not add due to rounding.
2. Gas volumes have been converted to barrels of oil equivalent using an Oil Search specific conversion factor of 5,100 scf = 1 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.
3. Includes SE Gobe gas sales exported to the PNG LNG Project (OSH - 22.34%).
4. Includes gas purchase costs, royalties and levies, selling and distribution costs, rig operating costs, power expense, corporate administration costs (including business development), expenditure related to inventory movements, put option costs and other expenses.
5. Exploration and Evaluation Expenditure includes FEED costs in relation to Pikka Development Unit, and pre-FEED costs for LNG expansion projects in PNG.

Production guidance for 2021 is unchanged. The planned maintenance program for PNG LNG train one (deferred from 2020) and train two were completed ahead of schedule. A major maintenance shutdown in Oil Search operated facilities was deferred from 2021 to 2022 due to COVID-19 restrictions impacting resourcing. Hides GTE continues to be offline due to the ongoing shut-in of the Porgera gold mine.

Other Operating Costs guidance has been revised for the expected increase in royalties, levies, and fuel costs resulting from higher realised prices, and lower inventory driven by higher sales volumes.

Investment Expenditure guidance for 2021 remains unchanged.

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SECOND QUARTER REPORT FOR PERIOD ENDED 30 JUNE 2021 - 27 JULY 2021