Oil Search : Quarterly Activities Report

FIRST QUARTER REPORT FOR

PERIOD ENDED 31 MARCH 2021

23 April 2021

ASX: OSH | PNGX: OSH | ADR: OISHY

Stronger pricing and improved operated production offset the impact of a short PNG LNG shutdown

• PNG LNG production averaged 8.5 MTPA (gross) in the quarter, impacted by an unplanned Hides shutdown
• Total net quarter production of 6.9 mmboe, down 2.7% from Q4 2020
• First quarter operating revenue of US$301.5 million, up 16% from Q4 2020

Papua LNG and Pikka oil development both achieved important milestones

• Papua LNG Fiscal Stability Agreement signed, and licence extension granted by PNG Government
• Pikka project entered FEED with FID on track for late 2021

Production guidance unchanged, investment expenditure guidance reduced by US$75 -

95 million

• Oil Search operated facility planned shutdowns deferred to 2022 due to COVID-19 travel restrictions
• PNG LNG planned shutdown remains scheduled for Q2 2021
• Non-essentialPNG investment expenditure deferred; Biomass FID delayed

Enhanced safety protocols in response to increasing COVID-19 cases in PNG

• To date there have been no COVID-19 cases reported in Oil Search PNG field operations
• Oil Search assisting PNG Government COVID-19 response through dedicated PNG industry task force to assist with supply chain and logistics as requested

Improved liquidity position

• US$1.57 billion total liquidity (US$676 million cash, US$897 million undrawn credit facilities)
• Net debt reduced 5.7% compared to December 2020

Managing Director Dr. Keiran Wulff said "Oil Search has maintained stable operating performance during the quarter amid challenging logistical conditions imposed by COVID-19 in PNG in particular. With escalating cases in PNG, Oil Search continues to deploy stringent mitigation and protective measures such as strict quarantining of our staff and segregation of our field activities from local communities. Notwithstanding this, Oil Search continues to offer support to the PNG and Australian governments in helping to combat the outbreak.

"Our operated assets at Moran and Agogo significantly outperformed our budget expectations and helped offset lower PNG LNG production, which was impacted by a short shutdown at Hides. Despite the short shutdown, PNG LNG continued to deliver all long-term contracted cargos.

"Following on from our cost reduction and productivity programs in 2020, we are now embedding the initiatives into our business to ensure a sustainable continuous improvement culture. We are strictly adhering to disciplined capital allocation to enhance our funding position as we approach the development periods of our world class growth assets.

FIRST QUARTER REPORT FOR PERIOD ENDED 31 MARCH 2021 - 23 APRIL 2021

"Both of our growth developments achieved important milestones during the quarter. The PNG Government signed the Fiscal Stability Agreement and awarded a five-year licence extension for Papua LNG. The Joint Venture is now reviewing markets and finalising revised pre-FEED engineering ahead of making a Front End Engineering and Design decision (FEED) for Papua LNG in 2022.

"In Alaska, following the significant improvement and reduction in capital costs and breakeven prices for the Pikka project, the Joint Venture entered FEED during the quarter with strong alignment from all stakeholders. The project is on track to be ready for a Final Investment Decision (FID) in late 2021 subject to market conditions. In addition to the FEED decision, Oil Search and our partner have commenced a joint partial divestment process with the objective of finalising a divestment around FID. Oil Search is looking to contribute up to 15% interest in the divestment targeting a final equity interest in the Pikka development of 36%. In addition to the divestment process, we have commenced a project funding program with our financial advisor. Due to the halving of the initial capital required, low breakeven prices and the ability of the project to self-fund expansion, we are well positioned for engagement with potential financiers. The sell down and funding program is being conducted in a way that allows us to best deliver the value of this world class project."

For more information regarding this report, please contact:

Investor Relations	Media
Peter Laliberte	Matthew Park
VP - Investor Relations	VP - Communications and Media
[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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FIRST QUARTER REPORT FOR PERIOD ENDED 31 MARCH 2021 - 23 APRIL 2021

Comparative performance

Production1,2

		QUARTER END			FULL YEAR
('000 boe unless noted)	MAR 2021		DEC 2020	MAR 2020		2020
PNG LNG Project3	6,110		6,419	6,354		25,723
PNG oil production ('000 bbls)	693		564	645		2,619
Other production4	66		78	373		676
Total Production	6,869		7,061	7,373		29,017
Total Sales	6,689		7,181	6,873		28,388

Sales1

		QUARTER END		FULL YEAR
(US$ million unless noted)	MAR 2021		DEC 2020	MAR 2020	2020
LNG and gas sales	214.4		198.4	293.5	854.9
Oil and condensate sales	78.0		52.6	57.6	188.7
Other revenue5	9.1		8.5	8.2	30.6

Total Operating Revenue	301.5	259.5	359.4	1,074.2
Average realised oil and condensate price6 (US$/bbl)	57.38	40.35	49.51	37.22
Average realised LNG and gas price (US$/mmBtu)	7.10	5.99	9.08	6.49

Financial Data1

		QUARTER END		FULL YEAR
(US$ million unless noted)	MAR 2021	DEC 2020	MAR 2020	2020
Cash	675.9	540.8	670.6	540.8
Debt7,8
PNG LNG financing	2,617.0	2,617.0	2,939.4	2,617.0
Corporate facilities	300.0	300.0	715.0	300.0
Net debt	2,241.1	2,376.2	2,983.8	2,376.2

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 31 March 2021, the Company's corporate facilities totaled US$1.20 billion, of which US$300 million had been drawn down and US$3.0 million had been utilised for letters of credit.

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FIRST QUARTER REPORT FOR PERIOD ENDED 31 MARCH 2021 - 23 APRIL 2021

COVID-19 update

Oil Search heightened its safety protocols in its PNG operations due to the increasing number of COVID-19 cases being seen in PNG. Strict controls continue to be maintained to protect our personnel, the communities where we work and the continuity of our operations. We have established long term isolation zones, undertaken strict testing and social distancing protocols, decreased manning levels, limited movements around our operations and amended rosters for both our international and national rotational workers. Through these measures we have been able to protect our staff and keep our operations COVID-19 clear.

Oil Search is also working with the PNG Chamber of Mines & Petroleum and the Australian federal and state governments to establish a model for rotational workers to resume travel between Australia and PNG.

To date, we have conducted more than 11,000 COVID-19 tests at our medical clinics and quarantine facilities in PNG and have sourced and distributed some 450,000 items of personal protective equipment to health workers across the country. We have also extended our offer of assistance to both the Australian and PNG Governments to support any programs or initiatives planned by the Australian Department of Foreign Affairs and Trade and aid agencies in the rollout of the vaccine.

In addition, through the PNG Chamber of Mines and Petroleum, we are joining forces with other resource companies operating in PNG to offer our support in the dissemination of accurate information and provide logistical assistance for the vaccination rollout, as and when directed by the PNG Government.

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FIRST QUARTER REPORT FOR PERIOD ENDED 31 MARCH 2021 - 23 APRIL 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$/boe)	10.50	- 11.50	10.50	- 11.50
Other operating costs4	105	- 125	145	- 165
Depreciation and amortisation (US$/boe)	12.50	- 13.50	12.50	- 13.50
Investment Expenditure
Production Expenditure (PNG)	60	- 80	40	- 60
Development Expenditure	85 - 115	85 - 115
Exploration and Evaluation Expenditure5	110	- 150	100	- 135
Biomass	50	- 70	10	- 15
Other Plant and Equipment	20	- 30	15	- 25
Total Investment Expenditure	325	- 445	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 scheduled service programs for the PNG LNG plant for train one (deferred from 2020) and train two are still expected to proceed in 2Q 2021. A major maintenance shutdown in our operated facilities has been 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. Barrick has announced that subject to definitive agreements the Porgera gold mine is on track to resume operations later this year.

Other Operating Costs for 2021 have been revised for the cost of the hedging program (put options) announced in February and for higher royalties and levies resulting from higher realised prices.

Full Year 2021 Investment Expenditure has been revised down due to cost savings and the effects of travel restrictions in PNG. Production investment expenditure has been revised down to reflect delays in major work programs, including the Kutubu Refinery rebuild, and deferred well planning activities. Exploration and Evaluation Expenditure has been revised down in PNG due to lower expected activity, including deferral of seismic. Biomass investment expenditure has been decreased due to the expected deferral of FID to 2022. Other Plant and Equipment investment expenditure has been reduced and includes various cost savings expected on corporate and IT related work programs.

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FIRST QUARTER REPORT FOR PERIOD ENDED 31 MARCH 2021 - 23 APRIL 2021