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Exploration

Rob Willink

Executive General Manager, Exploration

June 2005

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While the initial focus of petroleum exploration in Australia has been on finding oil, explorers have overwhelmingly found gas……

Source: Geoscience Australia

Estimated recoverable hydrocarbon resources discoveredto 1 January 2003*

-

60,000

120,000

180,000

240,000

Crude Oil Natural Gas, Condensate & LPG

Peta

joul

es e

quiv

alen

t (P

JE)

0

10,000

20,000

30,000

40,000

Mill

ion

barr

els

of o

il eq

uiva

lent

(M

BOE)

Condensate & LPG

Natural Gas

Crude Oil

……with the resulting issue – how do you find or create markets for this gas?

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Australia’s gas inventory discourages further exploration without strategies to commercialise gas already discovered, yet more gascontinues to be discovered, particularly in remote areas

The average time to development for producing fields is around 13 years and growing, with around 125 TCF in the queue and over 60 TCF of gas undeveloped 20 years after discovery

* Gas discoveries > 200 bcf. Sources: Geoscience Australia, Wood Mackenzie, State Government websites

Australia's major gas reserves*

0

25

50

75

100

125

150

175

0 10 20 30 40years from discovery

Prov

ed a

nd P

roba

ble

Rese

rves

(TC

F)

Developed Resources - years from discovery to development

Undeveloped Resources - years from discovery to present

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Despite these conditions, in the mid 1990’s Origin deliberately adopted a gas focus for its of exploration activities, but …………..

• Exploration was targeted where gas would be easy to market, rather than necessarily easy to find

• Efforts were concentrated where Origin could see a competitive advantage

– Geological knowledge

– Operational advantages

• Focussed on areas where potential synergies with other parts of Origin Energy could be realised

– Exploit regional “spark spread” between gas and electricity prices

– Exploit / develop “pull through” of integrated projectsAs a consequence Origin took-up or consolidated acreage positions in the Otway, Bass, Perth, Surat and Bowen Basins, and in New Zealand

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Origin Energy Proved and Probable (2P) Reserves

0

500

1000

1500

2000

2500

Jun 00 Jun 01 Jun 02 Jun-03 Jun-04

Prov

ed a

nd P

roba

ble

Rese

rves

(PJ

e)

2P reserves

Origin’s strategy of looking for gas where it is easy to market, rather than easy to find, has resulted in significant growth in reserves and new contracts…….

Origin Energy Exploration and Production Gas Contracts (by buyer)

0

200

400

600

800

1000

1200

2000 2004

PJ o

f ga

s co

ntra

cted

Contracted to 3rd party

Contracted to Origin

….with significant capital expenditure committed to major projects to convert these reserves into production and earnings growth in the next few years

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Origin 2P Reserves (as at 1 July 04)2220 PJe

NZ liquids2%

Aust Gas (conventional)

37%

NZ gas5%

Aust Liquids (conventional)

9%

CSG47%

5,000

Brisbane

Sydney

MelbourneAdelaide

Hobart

Perth

Darwin

NT

WA

Qld

NSW

Tas

SA

Vic

103447

142305

123

Gas Pipeline

Gas Pipelineunder development

Basin outline

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373

169

Nearly 90% of Origin’s Proved and Probable (2P) reserves are natural gas………..

……….. and 47% of those reserves are contained in CSG located in South East Queensland

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MouraMine

Scotia

TalingaArgyle

Oaky Creek CMM

Berwyndale Sth

Kogan NthTipton West

German Creek CMM

Around 2,800 PJ of reserves have been added by a number of companies

Anglo 100 PJ

Origin 1,000 PJ

Tipperary 600 PJ

Santos 150 PJ

CH4/BHP 200 PJ

Arrow/CSE 100 PJ

QGC JV 500 PJ

Minor Parties 150 PJ

TOTAL 2,800 PJ

Over 1000 PJ of CSG has now been contracted:

• AGL, QAL, Incitec with Origin

• Incitec, CS Energy with QGC

• Enertrade and QNI with CH4

• Energex, AGL (through Origin), Orica with Tipperary

• Energex with Anglo

In Queensland Origin is one of a number of companies adding reserves and signing contracts for CSG…..

…….while the resource potential is several times the current 2P reserves levels

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Origin’s strategy led it to focus on underexploredbasins close to markets, such as the the Otway Basin

• The Otway Basin in south western Victoria is adjacent to the largest gas market in eastern Australia

• Monopoly contracts between Gascor and the Gippsland producers first signed in the 1970’s were due to expire towards 2010

• Market deregulation in the late 1990’s / enhanced the potential of securing market entry for new gas discoveries

• However, long lead times associated with exploration meant early positioning was critical

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Otway Basin - Offshore1999-2006 Exploration History

1999 2000 2001 2002 2003 2004 2005 2006

Bid & award of T/34P (29.75%)

Bid & award of Vic/P43 (25%)

Successful ThylacineAppraisal (30%)

Bid & award of Vic/P37(V) (37.5%)

Adelaide

Port Campbell

SEA Gas PipelineCompleted (331/3%)

Acquired onshore permit PEP 153 (100%) & PEP 154 (90%)from Santos, including depleted fields with storage potential

Investigator 3D in T/30P & Vic/P43

Farmin to T/30P (80%)Farmon to Woodside (30%) Thylacine Gas

Discovery (30%)

Geographe Gas Discovery (30%)

Antares 3D in Vic/P37(V)

Halladale Gas Discovery

Black Watch Gas Discovery

Aragorn 3D in T/34P

Recognised exploration potential in Shipwreck Trough

Peterborough-1

Childers Cove-1

T/30P-Vic/P43 Unitisation (29.75%)

(%) indicates equity

Development feasibility studies

Field production to begin at 60pj pa

Thylacine/GeographeDevelopment Commitment

? Storage facility

? Power station

Aragorn-1

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Otway Basin - Offshore1999-2006 Exploration History

1999 2000 2001 2002 2003 2004 2005

Farmin to T/30P, farmon to Woodside

Award of Vic/P43

Acquisition of Investigator 3D

Thylacine & Geographe gas discoveries

Award of Vic/P37(V)

Award of T/34P

Acquisition of Antares 3D

To Adelaide

Completion of SEA Gas pipeline

Purchase of onshore permits & depleted fields with storage potential from Santos

Commitment to develop Thylacine & Geographe

Halladale & Black Watch gas discoveries

Planned acquisition of Aragorn 3D commences

Planned drilling of Aragorn-1

Planned drilling in T/30P

Planned drilling of Peterborough-1 & Childers Cove-1

Recognised exploration potential in Shipwreck Trough

Thylacine/Geographe production to commence

Development feasibility studies Halladale/Black Watch

Possible construction of storage facility & power station

Successful appraisal of Thylacine field. Unitised T/30P & Vic/P43

2006

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Otway Basin - Offshore1999-2006 Exploration History

1999 2000 2001 2002 2003 2004 2005 2006

Farmin to T/30P, farmon to Woodside

Award of Vic/P43

Acquisition of Investigator 3D

Thylacine & Geographe gas discoveries

Award of Vic/P37(V)

Award of T/34P

Acquisition of Antares 3D

Completion of SEA Gas pipeline

Purchase of onshore permits & depleted fields with storage potential from Santos

Commitment to develop Thylacine & Geographe

Halladale & Black Watch gas discoveries

Planned acquisition of Aragorn 3D commences

Planned drilling of Aragorn-1

Planned drilling in T/30P

Planned drilling of Peterborough-1 & Childers Cove-1

Recognised exploration potential in Shipwreck Trough

Thylacine/Geographe production to commence

Development feasibility studies Halladale/Black Watch

Possible construction of storage facility & power station

Successful appraisal of Thylacine field. Unitised T/30P & Vic/P43

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Exploration Activities2005-2006

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Bass Basin

Proposed Activity 2005/6Proposed Activity 2005/6 Trefoil 3DTrefoil 3D

• Exploration program targets liquids rich gas

• Appraisal of Trefoil discovery first priority

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Perth Basin - Onshore Corybas-2Corybas-2

Hakia-2Hakia-2

Jingemia-5,6,8,9Jingemia-5,6,8,9Beharra Springs-4Beharra Springs-4

Proposed Activity 2005/6Proposed Activity 2005/6

3xOil Exp3xOil Exp

• Exploration progressing with the benefit of newly acquired 3D seismic

• Exploration program targeting oil around Hovea trend and gas in the deeper section

• Appraisal of existing oil and gas discoveries continuing

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Surat BasinGas Exp WellGas Exp Well

Merriwee-1Merriwee-1

New Royal Nth-1New Royal Nth-1

Kyeen Ck-1Kyeen Ck-1

Myall Ck-5 U/BMyall Ck-5 U/B

Ogilvie Ck-1Ogilvie Ck-1

Gambier Pk-2Gambier Pk-2

Horseshoe-4Horseshoe-4

Proposed Activity 2005/6Proposed Activity 2005/6

• Key focus of Surat Basin program is follow-up to the Permian stratigraphic trap with large potential in the Myall Creek / Churchie area

• Further exploration for liquids rich gas (generally small) which if found, may be produced prefentially to satisfy existing contracts

• Some potential for small oil discoveries

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Cooper Basin

10 Wells proposed 2005/610 Wells proposed 2005/6

• Although 10 exploration wells have been nominally been proposed, pool sizes are very small and exploration is in decline

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Taranaki Basin

Proposed Activity 2005/6Proposed Activity 2005/6Tangoroa 2DTangoroa 2D

CEN 05-XXSeismic SurveyCEN 05-XXSeismic Survey

• The driver to search for gas is extremely strong as Maui field is in serious decline

• Geologically extremely challenging

• Initial efforts will concentrate on sparsely explored Western Platform

• Gas discoveries likely to be liquids rich, but exploration is high risk

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New Zealand

Proposed Activity 2005/6Proposed Activity 2005/6 Northland Basin GazettalNorthland Basin Gazettal

TaranakiDeepwater Study

TaranakiDeepwater Study

Canterbury ApplicationCanterbury Application

• New opportunities being evaluated outside the established productive areas, focussing on finding gas to satisfy long term energy requirements in New Zealand

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Exploration

Rob Willink

Executive General Manager, Exploration

June 2005