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Focus On Sustainability

A New Paradigm in Papua New Guinea

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

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Overview

PNG has had a excellent record of Project stability over many yearsPNG is now undergoing major economic development coupled with social changeAn enhanced focus on true sustainability is required to deliver fair distribution of economic benefits and operating stabilityOil Search wishes to take a lead role in driving appropriate social development and stability

A key local company enhancing its social licence to operate, whilst delivering a great community

outcome

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Oil Search and PNGStrong Partners in Sustainability

Oil Search is a little different:A PNG Company established in 1929Operates all of PNG’s producing oil and gas fieldsSignificant PNG ownershipMajor equity owner in PNG LNGDeveloped a corporate culture to optimise position in operations in PNG with focus on social licence to operateDelivered 5 fold increase in market capitalisation over last 5 years by largely investing in PNG

A testament to investment management and stability in PNG

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PNG – Project Area Overview

Facilities, pipelines & licence straddle Southern Highlands, Gulf and Western provincesProduction, pipeline licences, retention & exploration licences = 1 million + ha.3 Provinces & 7 Local level Government areas13 language groupsResident project area population 35,000+6 producing oil fields1 producing gas fieldImpact of PNG LNG development

Kumul Terminal

7°S

Juha

Hides

Moran

Agogo

Gobe Main

Mananda 5

CSG Exploration

Kutubu

Flinders

145°E 146°E144°E143°E

6°S

8°S

9°S

GorokaKundiawa

Mt. Hagan

Mendi

Kerema

Huria

Barikewa

Pandora

SE Mananda

Uramu

P’nyang

100km

Madang

Daru

Wabag

AngoreExploration

Gas Resources

PNG LNG Project

Gas ResourcesNon PNG LNG Gas Resources

SE Gobe

Kimu

Juha North

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Our Operating Environment

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PNG Undergoing Major Economic and Social Change

A changing Operating EnvironmentImpact of PNG LNGOther major project investments being actively reviewedSocial changes in community structures

Better educationBurgeoning young populationSlow decline in tribal traditions and leadershipIncreasing expectationsMobile phone, media, instant communication

Challenges for Government deliveryInterrelationship of politics and landowner issues

An enhanced approach is required to manage the changing operating environment

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The Oil Search Approach

It starts with a focus on safety and environmental management

Over 90% of field personnel are from PNGDiverse cultural backgroundHeavy reliance on local landowner companiesPassionate advocates of a world class safety culture

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World Class Safety Performance

Total Recordable Injury Frequency Rate Data(per Million Hours Worked (All Reported Data))

Fletcher Building

BramblesFoster’s

Macarthur CoalOZ MineralsDowner EDI

United GroupOrigin

Incitec PivotBoart LongyearContact Energy

James HardieHastie Group

CSR

StocklandTransfieldNewcrest

AWEBHP Billiton

Lahir GoldAmcorSantos

OricaWoodside

Oil Search

Fletcher Building

Brambles

Foster’s

Macarthur CoalOZ Minerals

Downer EDI

United Group

Origin

Incitec Pivot

Boart Longyear

Contact Energy

James Hardie

Hastie Group

CSR

Stockland

Transfield

Newcrest

AWE

BHP Billiton

Amcor

SantosOrica

Woodside

Oil Search

0 5 10 15 20 25 300 5 10 15 20 25 30

2009 2010

Source: Company data, Citi Investment Research and Analysis. Note: TRIFR – Total Recordable Injury Frequency Rate per 1 million hoursworked; * Lihir Gold taken over by Newcrest. (September 2010); ** Citi estimate for Macarthur Coal’s Group TRIFR based on operations’weighted average coal production.

FY10YTD data

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The Working Environment

Petroleum Projects have extended but small footprints through a large area of the country and communities

Not an EnclaveProject stability achieved through strong harmonious relationships with local communitiesComprehensive strategy involving multifaceted government and community programmes

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A Comprehensive Approach to Sustainability

Management and Transparency of Benefits StreamsProject Benefits to Government and Landowners include:

Tax Payments to Central GovernmentDirect Project Royalties – An essential componentRoyalties and Development LeviesLandowner Company Development and contract ownershipEmployment, training and educationCommunity Area ProjectsTax Credit InfrastructureCommunity Programmes (The MDG’s)

Health ClinicsMalaria/TB/HIV-Aids ManagementWomen and child health

Sustainable Community Development InitiativesEnvironmental Sustainability

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A Comprehensive Approach to Sustainability

Enhanced focus following major Strategic Review

Ability to more than double company value over the next 5-8 years based on value delivery from PNG AssetsDependent on maintaining stable operating environment Delivery of

PNG LNG on time on budgetLNG expansion and reserves growthSustained oil productionDevelopment of other gas commercialisation initiatives

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A Comprehensive Approach to Sustainability

Oil Search Enhanced FocusPNG Stakeholder Engagement

GovernmentLandowner Leaders and Community EngagementBureaucracy capability enhancementFrom Village to Port Moresby – outside the fence and dealing in the village

Transparency in Benefits Distribution Public payment, contract awardsPromote governance

Independent Sovereign Wealth and Funds

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A Comprehensive Approach to Sustainability

Transparency in ManagementSustainability ReportStakeholder Engagement

Highlight our Commitment to PNGOil Search Health FoundationExpand world class HIV/Aids and malaria management programmesExpand Health of the Nation Programme

Child and Women's healthSupported by Global Fund (Primary Recipient) AusAid and ADB

Environmental SustainabilityISO 14001 accreditationPartnership with WWFEnvironmental EducationWild Life Management Areas

A Major Corporate Focus to Deliver Value

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Sustainability A Compelling Business Case

Promotion of stable operating environmentLong term legacy of improved sustainable and transparent benefits for communities delivered to the grass rootsReputation and Social Licence

Delivers a Compelling bottom line impact

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