DRILLING REPORT – 6 May 2004 - Home - Oil Search 2017 · Half yearly report 30 June 2007 ... previously holding various senior technical and ... a company which has a 52% interest

OIL SEARCH LIMITEDand its subsidiariesARBN 55 079 868

Half yearly report30 June 2007

APPENDIX 4D

This information should be read in conjunction with theFinancial Report for the half-year ended 30 June 2007

Results for announcement to the market

US$'000 A$'000 a US$'000 A$'000 a

Revenue from operations down 5.5% 305,402 377,692 323,250 436,706

EBITDAX b down 9.7% 249,821 308,955 276,784 373,931

EBIT down 44.4% 119,001 147,169 213,947 289,039

Net profit after tax, before significant items down 59.3% 46,921 58,027 115,342 155,825

Net profit after tax attributable to members down 87.5% 46,921 58,027 373,905 505,141

Net operating cash flow down 9.2% 242,249 299,591 266,862 c 360,527 c

US cents A cents US cents A cents

Interim dividend paid per security d - 4.00 TBA e 4.00 5.23 e

Basic earnings per share (before significant items) down 59.3% 4.19 5.18 a 10.30 13.92 a

Net operating cash flow per share down 9.5% 21.63 26.75 a 23.91 32.30 a

a. Amounts shown have been converted from US$ to A$ at the average exchange rate for the half-year of 0.8086 (2006: 0.7402).b. Earnings before interest, borrowing costs, income tax, depreciation and amortisation, and exploration costs expensed.c. Restated the effect of the 2006 sale of joint venture interests to AGL.d. No franking credits available on dividends, as Oil Search Limited is incorporated in Papua New Guinea.e. The Australian dollar amount will be fixed at the rate of exchange applicable on the day of the record date for determining entitlements to the interim ordinary dividend, being 28 September 2007 (2006: 29 September 2006).

30 June 2007 30 June 2006

Half-year ended Half-year ended

Half-year ended

30 June 200630 June 2007

Half-year ended

OIL SEARCH LIMITED and its subsidiaries

ARBN 055 079 868

Financial Report for the half-year ended 30 June 2007

OIL SEARCH LIMITEDand its subsidiaries

Financial Report for the half-year ended30 June 2007

Page

Directors' report 1Auditors' independence declaration 6Condensed Consolidated income statement 7Condensed Consolidated balance sheet 8Condensed Consolidated statement of cash flows 9Condensed Consolidated statement of changes in equity 10Selected explanatory notes to the financial statements 11Directors' declaration 18Independent audit report 19


Directors' Report

The directors submit their report for the half-year ended 30 June 2007.

DIRECTORS

The names, details and shareholdings of the directors of the company in office during or since the end of the financial half-year are:

Mr BF Horwood, B.Comm., F.A.I.C.D., F.C.P.A. (Chairman), 65 yearsMr Horwood was appointed a director on 28 May 2004 and Chairman of Oil Search on 1 June 2004. Prior to joining Oil Search, Mr Horwood had 35 years experience with the Rio Tinto Group, having held executive positions in Australia, the United Kingdom and Papua New Guinea. Most recently, Mr Horwood was Managing Director, Rio Tinto-Australia. Mr Horwood was, until January 2005, the Chairman of Energy Resources of Australia Limited and Coal and Allied Industries Limited. He has been a member of the Business Council of Australia and a director of the Minerals Council of Australia. Ordinary shares, fully paid: nil; Options: nil

Mr PR Botten, B.Sc. ARSM, (Managing Director), 52 yearsMr Botten was appointed Managing Director on 28 October 1994, having previously filled both exploration and general manager roles in the company since joining in 1992. He has extensive worldwide experience in the oil and gas business, previously holding various senior technical and managerial positions in a number of listed and government owned organisations. Mr Botten is presentlyPresident of the Papua New Guinea Chamber of Mines and Petroleum and is on the Executive Committee of the Australia PNG Business Council.Ordinary shares, fully paid: nil; Options: nil; Performance Rights: 1,799,091

Mr F Ainsworth, AM, B.Comm., F.A.I.C.D., F.C.P.A. 61 years Mr Ainsworth joined the Board in October 2002. Mr Ainsworth has extensive energy and resources industry experience. He spent 26 years with CSR Limited, mainly in CSR's resources businesses, including 7 years in CSR's Oil and Gas Division, and 5 years as Managing Director of Delhi Petroleum Pty Ltd ("Delhi"). When CSR sold Delhi he became Managing Director and CEO of Sagasco Holdings Limited, then the 4th largest oil and gas company listed on the ASX. In 1994 he co-founded Potential Energy Pty Limited, an energy consulting business, and remains an executive director of that company. Mr Ainsworth is also Chairman of Horizon Oil Ltd and a non-executive Director of Envestra Ltd (both ASX listed companies) and, from 1 January 2006, Chairman of the unlisted Tarac Australia Ltd. He was formerly Chairman of SA Generation Corporation (the South Australian Government owned coal mining and electricity generating Corporation).Ordinary shares, fully paid: nil; Options: nil

1


Directors' Report

Mr G Aopi, CBE, 53 yearsMr Aopi was appointed an Executive Director in May 2006 and presently fills the position of General Manager PNG (Papua New Guinea), a post he took up in August 1998. Mr. Aopi has substantial public service and business experience in Papua New Guinea, having had a long and distinguished career in government, filling a number of important positions, including Secretary for Finance and Planning and Managing Director of Telikom PNG Ltd. He is presently Chairman of Telikom PNG and is a Director of Steamships Trading, Bank of South Pacific and a number of other private sector and charitable organisations in Papua New Guinea.Ordinary shares, fully paid: 35,100 ; Options: nil ; Performance Rights: 199,072

Mr KG Constantinou, OBE, 50 yearsMr Constantinou joined the Board in April 2002. Mr Constantinou is a prominent business figure in Papua New Guinea, holding a number of high level public sector and private sector appointments. He is a director of various companies, including Hebou Constructions Limited, Airways Hotel & Apartments Limited and Lamana Hotel Limited. He is also Deputy President of the Employers Federation of Papua New Guinea, a director of the Bank of Papua New Guinea, Chairman of the National Capital District Physical Planning Board, Honorary Consul for Greece in Papua New Guinea and Trade Commissioner of Solomon Islands to Papua New Guinea.Ordinary shares, fully paid: 12,000; Options: nil

Mr R Igara, CMG, M.B.A, B.E., Grad.Dip.(International Law), 54 yearsMr Igara joined the Board in April 2002. At that time he was one of Papua New Guinea's most highly placed civil servants and he has extensive experience in the public sector. He served as a diplomat in Fiji and Australia and as the Secretary to the Department of Trade & Industry. He was formerly Chief Secretary to the PNG Government, Acting Secretary for Treasury and Chairman of Mineral Resources Development Company Limited. Mr Igara was an independent director of Orogen Minerals. He has also held Chairmanships of other Boards, including Chairman of the Boards of PNG Investment Promotion Authority, National Forest Authority and PNG/Halla Cement Corporation. He was a member of the Board of the Bank of Papua New Guinea from 2001 to 2005, and a director of PNG Sustainable Energy Ltd since 2004. He has been the Chief Executive Officer of PNG Sustainable Development Program Ltdsince November 2002, a company which has a 52% interest in Ok Tedi Mining Ltd.Ordinary shares, fully paid: nil; Options: nil

Mr MD Kriewaldt, B.A., Ll.B., F.A.I.C.D., 57 yearsMr Kriewaldt joined the Board in April 2002. Mr Kriewaldt was a director of Orogen Minerals Limited and provides advice to Allens Arthur Robinson. He is Chairman of Opera Queensland Limited, President of the Queensland division of the Institute of Company Directors, and a director of GWA International Limited, Suncorp Metway Limited, Campbell Brothers Limited and Peptech Limited. He has previously served as a director of QDL Limited, Chairman of Suncorp Insurance and Finance, Chairman of Infratil Australia Limited, Hooker Corporation Limited and Airtrain Citylink Ltd.Ordinary shares, fully paid: 12,000; Options: nil

2


Directors' Report

Mr JL Stitt, F.A.I.C.D., M.A., 64 yearsMr Stitt joined the Board in April 1998. He has extensive experience in the international oil and gas business, having worked for 33 years with the Royal Dutch/Shell Group of companies including inter alia being responsible for Shell's world wide procurement, Director of Finance for Shell Australia, and President and CEO of Shell Japan. Mr Stitt is a former director of Woodside Petroleum Limited, Mitsubishi Chemicals K.K. and Showa Shell Sekiyu K.K.Ordinary shares, fully paid: 9,600; Options: nil

Mr TN Warren, B.Sc. (Hons), 58 yearsMr Warren joined the Board in May 2006. Mr. Warren has had a long and distinguished career with the Shell Group of Companies, spanning many different areas of its business. He retired as Chairman of the Shell companies in Australia and the Pacific Islands on 1 May 2006, after more than 35 years with the Group. Prior to 2002, Mr Warren served as Business Director for Asia-Pacific and Australasia (2001-2002), Director of Exploration and Production Research and Technical Services (1995-2001), General Manager Western Division of the Shell Petroleum Development Company in Nigeria (1993-1995), and General Manager Operations for the Shell Petroleum Development Company in Nigeria (1992-1993). Mr Warren also held various other senior positions within the Group and was a member of Shell’s Global Executive Committee for the Exploration and Production Business (1995-2002). Mr Warren was previously a director of Woodside Energy Ltd and was a member of the Business Council of Australia (2002-2006). Mr Warren is a Director of the Save The Children International Alliance. Ordinary shares, fully paid: nil ; Options: nil

Mr CP Hildebrand, B.E., M.A., D.Univ., FAusIMM, F.A.I.C.D., 69 yearsMr Hildebrand retired from the Board on 4 May 2007.

GROUP SECRETARYMichael Sullivan, B.A., Ll.B., Ll.M., FCIS, 49 years Mr Sullivan joined Oil Search in 1997 as General Counsel after an extensive period in private practice specialising in banking and finance law. Mr Sullivan was a partner at Gadens Ridgeway before joining Oil Search. He assumed the role of Group Secretary in 1999. Michael is admitted as a lawyer in New South Wales and Papua New Guinea. He is a Fellow of the Chartered Institute of Secretaries and a Public Notary in New South Wales.Ordinary shares, fully paid: nil ; Options: nil ; Performance Rights: 370,286

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Directors' Report

RESULTS AND REVIEW OF OPERATIONS

Financial

During the period, the economic entity made a profit from operations of US$46.9 million (June 2006: US$115.3 million, excluding a profit of US$258.6 million realised on the sale of a range of joint venture interests to AGL). This profit was after providing for income tax of US$82.5 million (June 2006: US$107.2 million).

Operations

Revenue from operations for the first six months of 2007 was US$305.4 million, slightly down on the record first half result of US$323.3 million in 2006. This result reflected stronger oil prices but lower oil and gas sales volumes compared to the previous corresponding period. The average realised oil price for the first half of 2007 was US$70.73 per barrel, up US$1.79 from the average price realised in the first half of 2006. Oil Search remained completely unhedged to oil price movements during the period.

Total oil and gas production for the first half of 2007 was 4.74 million barrels of oil equivalent, 9% lower than in the first half of 2006. Production was impacted by the natural production decline in the mature PNG fields, a planned PNG shut-down in February 2007 for essential maintenance work, the shut-in of the NW Moran field for six months following the delay in the awarding of a Production Development Licence by the PNG authorities and a lower contribution from the Nabrajah field in Yemen. The delayed arrival of a tanker due to bad weather conditions on the east coast of Australia led to an underlift position of 233,000 barrels at the end of the half-year. Operating expenses were US$42.5 million compared to US$32.4 million in the previous corresponding period, reflecting the impact of a stronger Australian dollar (in which a proportion of the Company's operating costs are denominated), expenditure on maintaining and improving the PNG infrastructure base and general industry cost pressures.

Exploration and evaluation costs expensed during the first half of 2007 totalled US$66.2 million compared to US$17.2 million in the previous corresponding period, reflecting the substantial increase in exploration activities undertaken during the period

Income tax expense fell from US$107.2 million in the first half of 2006 to US$82.5 million in the current period, consistent with lower operating earnings and higher exploration and evaluation costs in PNG, which are tax deductible.

Operating cash flow of US$242.2 million (June 2006: US$266.9 million) was generated during the half-year, a decrease of 9% on the corresponding period in 2006. At 30 June 2007 the Company held cash of US$487.0 million (December 2006: US$477.9 million), and was debt free, after investing a net cash amount of US$185.6 million in capital expenditure and paying US$44.8 million in dividends during the current period.

4


Directors' Reportp

DIVIDENDSSubsequent to balance date, the directors have approved the payment of an unfranked interim dividend of US 4 cents per ordinary share to ordinary shareholders in respect of the half-year ended 30 June 2007.The due date for payment is 12 October 2007 to all holders of ordinary shares on the Register of Members on 28 September 2007. Dividends paid and declared during the period are recorded in note 7 to the financial statements.

AUDITORS' INDEPENDENCE DECLARATIONDeloitte Touche Tohmatsu's Independence Declaration is included on page 6.

ROUNDINGThe majority of amounts included in this report are rounded to the nearest US$1,000 (where rounding is applicable).

Signed in accordance with a resolution of the Directors.

..........................................................BF HORWOODChairman

..........................................................PR BOTTENManaging Director

Sydney, 21 August 2007

5


Half-year ended Half-year ended30 June 2007 30 June 2006

Note US$'000 US$'000

Revenue from operations 2 305,402 323,250

Operating expenses - producing assets (42,484) (32,355) Amortisation - site restoration (5,856) (3,266) Amortisation - oil and gas assets (55,370) (39,210) Depreciation - operating assets (1,577) (1,526) Royalties, development and mining levies (4,988) (5,376) Costs of sales (110,275) (81,733)

Gross profit from operating activities 195,127 241,517

Other income 803 -

Other expenses 3 (10,725) (10,366)

Profit from operating activities 185,205 231,151

Exploration costs expensed (66,204) (17,204) Contractual adjustments to profit on sale of joint venture interests (677) - Profit on sale of joint venture interests 4 - 258,563 Gain on sale of other non-current assets 40 - Interest income 11,595 10,114 Borrowing costs (511) (1,510)

Profit from continuing operations before income tax 129,448 481,114

Income tax expense 5 (82,527) (107,209)

Net profit after tax 46,921 373,905

US cents US centsBasic earnings per share (before significant items) 6 4.19 10.30 Basic earnings per share (after significant items) 6 4.19 33.40 Diluted earnings per share (after significant items) 6 4.17 33.19

The condensed consolidated income statement should be read in conjunction with the accompanying notes.

Condensed Consolidated Income statement for the half-year ended 30 June 2007

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30 June 2007 31 December 2006Note US$'000 US$'000

Current assetsCash 487,031 477,884 Receivables 124,892 161,608 Inventories 45,111 30,102 Other current assets 2,856 3,026 Total current assets 659,890 672,620

Non-current assetsReceivables 42,326 50,527 Exploration and evaluation assets 8 387,583 351,351 Oil and gas assets 9 628,527 628,356 Other property, plant and equipment 48,923 29,485 Deferred tax assets 97,924 70,416 Total non-current assets 1,205,283 1,130,135

Total assets 1,865,173 1,802,755

Current liabilitiesPayables 131,315 147,578 Provisions 8,667 8,285 Current tax liabilities 131,910 96,249 Total current liabilities 271,892 252,112

Non-current liabilitiesProvisions 99,493 79,916 Deferred tax liabilities 148,993 129,747 Total non-current liabilities 248,486 209,663

Total liabilities 520,378 461,775

Net assets 1,344,795 1,340,980

Shareholders' equityShare capital 639,474 638,883 Reserves 11 3,486 2,389 Retained profits 701,835 699,708 Total shareholders' equity 1,344,795 1,340,980

The condensed consolidated balance sheet should be read in conjunction with the accompanying notes.

Condensed Consolidated Balance sheetas at 30 June 2007

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Note US$'000 US$'000 a

Cash flows from operating activitiesReceipts from customers 321,713 375,257Payments to suppliers and employees (33,882) (49,938)Interest received 10,057 8,096Borrowing costs paid (511) (1,510)Income tax paid (55,128) (65,043)Net operating cash flows 242,249 266,862

Cash flows from investing activitiesPayments for property, plant and equipment (22,844) (6,335)Payments for exploration and evaluation expenditure (113,115) (40,405)Payments for oil and gas expenditure (49,658) (85,197)Proceeds from sale of property, plant and equipment 56 -Cash (outflow)/inflow on sale of joint venture interest (677) 371,459Net investing cash flows (186,238) 239,522

Cash flows from financing activitiesProceeds from share issue - 732Repurchase of employee share options (2,070) -Dividend paid 7 (44,794) (55,959)Borrowings repaid - (126,000)Net financing cash flows (46,864) (181,227)

Net increase in cash held 9,147 325,157 Cash balance at the beginning of the period 477,884 212,163

Cash balance at end of period 487,031 537,320

a. Restated the effect of the 2006 sale of joint venture interests to AGL.

The condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Condensed Consolidated Statement of cash flowsfor the half-year ended 30 June 2007

9


Share capital ReservesRetained

profits TotalConsolidated US$'000 US$'000 US$'000 US$'000Balance at 1 January 2007 638,883 2,389 699,708 1,340,980 Repurchase of employee share options (2,070) - - (2,070) Net exchange differences 24 - - 24 Employee share-based remuneration 2,637 - - 2,637 Net profit after tax for the period a - - 46,921 46,921 Exchange differences on translation of foreign operations b - 1,097 - 1,097 Dividends provided for or paid - - (44,794) (44,794) Balance at 30 June 2007 639,474 3,486 701,835 1,344,795

Balance at 1 January 2006 632,248 - 388,465 1,020,713 Employee share options exercised 732 - - 732 Employee share-based remuneration 2,204 - - 2,204 Foreign exchange translation - 7 - 7 Net profit after tax for the period a - - 373,905 373,905 Dividends provided for or paid - - (55,959) (55,959) Balance at 30 June 2006 635,184 7 706,411 1,341,602

a. Net profit after tax plus exchange differences equate to total income and expenses recognised in the period.b. Exchange differences equate to net foreign exchange income and foreign exchange expenses recognised directly in equity.

The condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Condensed Consolidated Statement of changes in equityfor the half-year ended 30 June 2007

10


Notes to the Financial Statementsfor the half-year ended 30 June 2007

1 Summary of significant accounting policies

Basis of accounting


US$'000 US$'0002 Revenue from operations

Oil sales 287,538 309,968 Gas and refined product sales 11,017 8,081 Other field revenue 6,847 5,201

305,402 323,250

3 Other expensesSalaries and employee benefits (20,482) (16,014) Post-employment benefits (1,561) (1,355) Employee share-based remuneration (2,637) (2,204) Premises, and equipment - operating leases (1,741) (1,632) Other expenses (16,258) (11,207) Corporate cost recoveries 35,645 23,677 Net corporate expenses (7,034) (8,735) Depreciation (1,813) (1,631) Foreign currency losses (1,878) -

(10,725) (10,366)

The half-year financial report is a general purpose financial report prepared in accordance with the reporting requirements of the Australian Stock Exchange Listing Rules and IAS 34: “Interim Financial Reporting”. The half-year financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the 2006 annual financial report.

The accounting policies adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the 2006 annual financial report.

11




US$'000 US$'0004 Significant items

Proceeds on sale of joint venture interests - 378,588 Assets and liabilities disposed - (120,025) Net profit on sale of joint venture interest - 258,563

5 Income taxThe major components of tax expense are:Current tax expense 90,699 102,956 Prior year adjustment 2,390 - Deferred tax expense relating to the origination and reversal of temporary differences (8,260) 7,001 Recognition of deferred tax assets (2,302) (2,748) Income tax expense 82,527 107,209

Reconciliation between tax expense and the pre-tax net profit multiplied by the applicable tax rate is set out below:Pre-tax net profit 129,448 481,114

Tax at PNG rate for petroleum (50%) 64,724 240,557 Effect of differing tax rates across tax regimes 2,937 (341)

67,661 240,216

Tax effect of items not tax deductible or assessable:Foreign losses/(income) not assessable 14,090 (1,580) Prior year adjustment 2,390 - Sale of assets to AGL - (129,258) Non-deductible expenditure 688 579 Recognition of deferred tax assets (2,302) (2,748) Income tax expense 82,527 107,209

The amount of the deferred tax (benefit)/expense recognisedin the income statement in respect of each type of temporary difference and unused tax loss:Exploration and development (9,270) 7,549 Provisions 1,010 (548) Deferred tax expense (8,260) 7,001

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US cents US cents6 Earnings per share

Basic earnings per share (before significant items) 4.19 10.30 Basic earnings per share (after significant items) 4.19 33.40 Diluted earnings per share (after significant items) 4.17 33.19

Weighted average number of ordinary shares used inthe calculation of basic earnings per share 1,119,841,193 1,119,366,757

Weighted average number of ordinary shares used inthe calculation of diluted earnings per share 1,126,273,394 1,126,575,168


US$'000 US$'0007 Dividends paid or proposed

Unfranked b dividends in respect of the half-year, proposed subsequent to the reporting period:

Ordinary dividends a 44,793 44,780

Unfranked b dividends paid during the periodin respect of previous year 44,794 55,959

a.

b. As Oil Search Limited is a Papua New Guinea incorporated company, there are no franking credits available on dividends.

On 21 August 2007, the directors declared an interim unfranked dividend in respect of the current half-year, of US 4 cents per ordinary share, to be paid to the holders of ordinary shares on 12 October 2007. The proposed dividend is payable to all holders of ordinary shares on the Register of Members on 28 September 2007. The estimated dividend to be paid is US$44,793,648 and has not been included as a liability in these financial statements.

Basic earnings per share have been calculated on an operating profit after tax of US$46.921 million (2006: US$373.905 million).

Diluted earnings per share have been calculated on an operating profit after tax of US$46.921 million (2006: US$373.905 million). There are 5,941,088 options (2006: 2,934,353) and 10,263,760 rights (2006: 5,560,154) which are dilutive potential ordinary shares and are therefore included in the number of shares for the calculation of diluted earnings per share.

13



Half-year ended Year ended30 June 2007 31 December 2006

US$'000 US$'0008 Exploration and evaluation assets

At cost 418,873 382,641 Less impairment (31,290) (31,290)

387,583 351,351

Balance at start of year 351,351 330,822 Prior year adjustment - 936 Expenditure incurred during the period 107,923 120,929 Exploration costs expensed during the period (66,204) (46,330) Impairment losses - (31,290) Disposals - (22,757) Transferred to assets in development (1,775) (959) Transferred to producing assets (3,712) - Balance at end of period 387,583 351,351

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US$'000 US$'0009 Oil and gas assets

Assets in developmentAt cost 11,070 -

Balance at start of year - 140,603 Transferred from exploration and evaluation assets 1,775 959 Additions 9,295 294 Changes in restoration obligations - 2,102 Amortisation of site restoration - (530) Amortisation - (607) Exploration costs expensed during the period - (435) Transferred to producing assets - (142,386) Balance at end of period 11,070 -

Producing assets At cost 1,426,165 1,378,754 Less accumulated amortisation and impairment (808,708) (750,398)

617,457 628,356

Balance at start of year 628,356 573,729 Prior year adjustment - (2,069) Transferred from exploration and evaluation assets 3,712 - Transferred from assets in development - 142,386 Additions 29,977 143,367 Disposals - (114,229) Impairment losses - (33,890) Changes in restoration obligations 19,578 14,205 Amortisation of site restoration (5,856) (4,024) Amortisation (58,310) (91,119) Balance at end of period 617,457 628,356

Total oil and gas assets 628,527 628,356

15



10 Segment ReportingPrimary Reporting - Geographical Segments

US$'000 2007 2006 2007 2006 2007 2006Revenue from operations 287,393 298,611 18,009 24,639 305,402 323,250

ResultsSegment profit from operating activities 183,219 218,234 316 10,691 183,535 228,925 Exploration costs expensed (37,639) (9,670) (28,565) (7,534) (66,204) (17,204) Profit/(loss) on sale of other non-current assets 42 - (2) - 40 - Net interest and borrowing costs 11,018 8,501 - - 11,018 8,501 Segment profit from continuing operations before income tax 156,640 217,065 (28,251) 3,157 128,389 220,222 Unallocated profit from operating activities 1,670 2,226 Profit on sale of joint venture interests - 258,563 Contractual adjustments to profit on sale of joint venture interests (677) - Unallocated net interest and borrowing costs 66 103 Total profit from continuing operations before income tax 129,448 481,114 Income tax expense (82,527) (107,209) Net profit after tax 46,921 373,905

Non-cash expensesAmortisation - site restoration (5,856) (3,266) - - (5,856) (3,266) Amortisation - oil and gas assets (48,579) (34,869) (6,791) (4,341) (55,370) (39,210) Depreciation - operating assets (1,577) (1,526) - - (1,577) (1,526) Depreciation - other - - (27) (23) (27) (23) Segment non-cash expenses (56,012) (39,661) (6,818) (4,364) (62,830) (44,025) Unallocated depreciation (1,786) (1,608) Employee share-based remuneration (2,637) (2,204) Total non-cash expenses (67,253) (47,837)

Middle East and PNG and ConsolidatedNorth Africa Australia

30 June 30 June 30 June

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items primarily comprise profit on sale of joint venture interests and related costs, interest income and borrowing costs.

The Oil Search Group operates primarily in Papua New Guinea but also has activities in Yemen, Egypt, Libya, Iraq and Australia. Production from the designated segments is sold on commodity markets and may be sold to other geographical segments.

16




US$'000 US$'00011 Reserves

Foreign currency translation 3,486 2,389

12 Subsequent eventsSubsequent to balance date, the Directors declared an unfranked interim dividend of US 4 cents per share in respect of the current half-year to the holders of ordinary shares, to be paid on 12 October 2007.

There were no other significant events after balance date.

17


Directors' Declaration

In accordance with a resolution of the directors of Oil Search Limited, the directors declare that:

(a) the attached financial statements and notes thereto of the economic entity:

(i) give a true and fair view of the economic entity’s financial position as at 30 June 2007 and its performance for the half-year ended on that date; and

(ii) comply with International Financial Reporting Standards; and

(iii) the attached financial statements and notes thereto comply with the reporting requirements of the Australian Stock Exchange Listing Rules; and

(b) in the opinion of the directors, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due or payable.

Signed in accordance with a resolution of the directors.

On behalf of the Board of Directors

..........................................................BF HORWOODChairman

..........................................................PR BOTTENManaging Director

Sydney, 21 August 2007

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DRILLING REPORT – 6 May 2004 - Home - Oil Search 2017 · Half yearly report 30 June 2007 ... previously holding various senior technical and ... a company which has a 52% interest