63

Oil Search MENA

64

Oil Search MENA Licences

65

Oil Search in the MENA Region

OSH commenced programme of measured diversification into the Middle East/North African region in 2000Focus is on proven petroleum systems with:

Existing infrastructureLow finding & development costsLow well costs to complement PNG activityProduction & deliverability reliability, rapid first oil

OSH has established key strategic relationshipsSpecific National Oil Companies

Manage regional risk issuesSolid Opportunity flowJoint Operating arrangements

Strong cultural & political relationsExcellent databasesExisting long term relationships

Balance of Operated & Non-Operated areasLow cost entry

Seeking to build material positions

66

Why MENA?

Oil Search commenced programme of measured international diversification in 2000Middle East/North Africa (MENA) selected as focus areaRapidly built a material exploration portfolio in areas with proven petroleum systems Oil Search Production Sharing Agreements (PSAs) have attractive fiscal termsMENA has multiple near term drilling opportunities

Cost of typical onshore exploration well ~US$2–6 millionTarget sizes range from 5–100mmbblsLow capital and opex (typically <US$3/bbl and US$4/bbl respectively) with short payback periods

Complements PNG high cost, higher reward prospectsAccess to producing infrastructure in key basins Moderate/high security risk, but manageable

67

Portfolio Build in Progress

In past 12 months, OSH has initiated: 2 drilling rig campaigns in Yemen – onshore and offshore

4 rigs in Egypt – 2 drilling and 2 workover

Further production operations with our quality HSES program embedded

Achieved significant drilling performance improvements in each campaign

Resolved challenging cultural issues in new areas

68

Portfolio Build in Progress

Technical challengesWe haven’t satisfied our exploration objectives

Score = 2 / 11 dry holes in Yemen

= 5 / 5 in Egypt, ERQ & 2nd’y targets in Egypt Area A

= 1 / 1 in Kurdistan

Higher risk end of the portfolio has been drilled in Yemen

So far frontier areas – B15, B35, Bina Bawi

Moderate risk basinal plays with 3D data – B43, B49, ERQ

Mature plays in structurally complex areas with limited ability to de-risk in Area A

Performance over a three year period will be the better judge, cannot achieve portfolio evaluation within calendar year

69

Portfolio Build in Progress

Portfolio ManagementProgramme de-risking occurred prior to much of 2007 program

3D seismic available to technically de-risk many prospects –B15, B43, B49, ERQ

Block 3 acquiring 3D, farmed down to 40%

US$22m exposures reducedB3, B15 and B35 farmed down for carries

Farmed in to B49Acquired 42% from CCC in 2007Farmed out 26% in north area to Virgin for full carry on 2 wellsRetained 42% in southern area with option to increase

Technical de-risking still ongoingProduction testing as an effective appraisal tool

2D/3D seismic being acquired

Area A farm-out ongoing

70

Portfolio Build in Progress

Portfolio is the envy of numerous competitorsBalance of higher/lower risk with high/lower reward

Operational skills are highly valued

Creates opportunities that OSH can capitalise on

Materiality still not there

Lacks a solid production element

Existing fields immaterial

Discovery & rapid development required

Acquisitions are still being reviewed

Further portfolio optimisation will continue

… lack of production is causing significant P&L pressures due negative impact of higher effective tax rate

71

Egypt Area AProduction

Oil Search earns production above specified base production levelSince August, have been in ‘earning’ territory

2 month delay to the start of the development drilling programme, due to the unavailability of a suitable drilling rig

Ongoing workovers /recompletions required in mature fieldsAdditional development candidates under evaluation

Not in forecastNo reserves booked for Area A to dateEstimated 2008 net production of +150mstbo (after 30% farmout)

Jan-

07Apr

-07

Jul-0

7Oct

-07

Jan-

08Apr

-08

Jul-0

8Oct

-08

Jan-

09Apr

-09

Jul-0

9Oct

-09

0

1,000

2,000

3,000

4,000

5,000

6,000

Oil

Pro

du

ctio

n (

bo

pd

)

Development Wells

Work-overs

Gross Production

Net OSH

Baseline +500

72

Egypt ERQ Production

Early production from new discoveries awaits approval from EGPC and inauguration of new OpCo - PetroshardCritical reservoir deliverability information required to assist with further appraisal and development plansShahd-1 production will commence as early as Dec 2007 via trucking operationGhard-1 and Rana-1 production to follow soon after, also to be truckedField reserves to be certified by NSAEstimated 2008 net production of 185mstbo

East Ras Qattara

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jan-

07Apr

-07

Jul-0

7Oct

-07

Jan-

08Apr

-08

Jul-0

8Oct

-08

Jan-

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-09

Jul-0

9Oct

-09

Oil

Pro

du

ctio

n (

bo

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)

Gross Production

Net OSH

73

Yemen Nabrajah Production

Nabrajah-15

Nabrajah-16

Nab15

Nab16 0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Jan-

07Apr

-07

Jul-0

7Oct

-07

Jan-

08Apr

-08

Jul-0

8Oct

-08

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-09

Jul-0

9Oct

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Oil P

rod

uct

ion

(b

op

d)

Gross Production

Net OSH

Nabrajah gross production currently 6,650bopdNabrajah-15 well has proven a new terrace/compartment within the fieldCurrently drilling Nabrajah-16Simulation model being finalised to assess viability of future candidatesEstimated 2008 net production of 268mstbo

74

EgyptExploration

East Ras Qattara, Western Desert

49.5% equity; PSAOperator SiPetrolOngoing exploration programme in ERQ

Area ‘A’, Gulf of Suez4 development and 2 exploration concessionsOSH operator, 100% equity: PSA & ESAExploration scheduled to recommence in Area A in 4Q07

Mesaha Block 630% equityOperator Melrose

2007 OSH Egypt spend around US$40m

75

3 wells drilled to date3 discoveries at 4 stratigraphic levels

Development plans submitted for Shahd and Ghard. Production in 1Q 08No reserve additions booked to dateFurther 3D seismic acquired in 2007 and planned in 2008Rana :

Flowed 850 bbl/d from Kharita on small choke Test on 3 Bahariya zones to resume with w/o rig

Extensive prospect inventory Next wells :

Raheek ~ 8-12 mmbbl (COS = 35%)Salma ~ 100 mmbbl (COS = 15%)

East Ras Qattara“String of Pearls”

Rana-1Discovery

Ghard-1Discovery

Shahd-1Discovery

Raheek-1 currently drilling, to be followed

by Salma Prospect

5km

East Ras Qattara, Western Desert49.5% equity; PSAOperator SiPetrol

76

East Ras QattaraExploration Success and Prospects

and Leads

76

Well Name OSLOil Inventory EquityShahd Discovery Shahd 1 0.495Ghard Discovery Ghard 1 0.495South Shahd 0.495Fahd (SE Shahd) Shahd SE 1 0.495Riffy Raheek 1 0.495Rana (Prospect K) Rana 1 0.495Mesk Mesk 1 0.495SE Mesk SE Mesk 1 0.495Rana NE Rana NE 1 0.495Rana SE Rana SE 1 0.495Dia'a Marwa 1 0.495Heba Rehan 1 0.495Salma (Prospect G) Salma 1 0.495Yara (Prospect F) Yara 1 0.495Yara NW Yara NW 1 0.495Prospect E (J Milha Updip) 0.495Prospect H 0.495Prospect I 0.495Prospect J 0.495Lead 1 0.495Lead 2 0.495Lead 3 0.495Lead 4 0.495Strat Lead North 0.495Strat Lead Central 0.495Strat Lead South 0.495Gas InventoryAlam El Boueib Gas 0.495

Remaining Prospects25+ Remaining P&L2x 3D surveys acquired

Raheek-1Drilling

Rana-18mmstbo 2P

Ghard-12.6mmstbo 2P

Shahd-16mmstbo 2PProduction to

commence 1Q 2008

25 + prospects now defined by seismicProbability of success >40% - first three wells are discoveries (100% success)2 new 3D surveys planned – commencing in December 07Mean field size 5-10mmbo with 4 prospects/leads >50mmboRig availability is challenging – 2 to 3 rigs required through 2008 and into 2009

77

East Ras QattaraDevelopment Plan

Currently developing a full potential development plan for ERQPotential peak gross production of 150-200 kboepdPotential gross reserves 300 mmboe+“String of pearls”exploration program –15-20 wellsFull potential development concept

Cluster development with central production facility Tied in to existing infrastructure north of the block180-200+ development wellsGross development cost of US$1b+

East Ras Qattara - Oil Search Production & Cost Profiles

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

Cap

ex /

Op

ex U

S$

MM

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

'00

0 b

oep

d (

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)

Total Capex Total Opex Total Prodn. Rate

Northern Gas Development

Southern Large Cluster Development w/ single CPFNorthwestern Small Cluster Development

78

Egypt Area A Exploration

Proposed South Gharib-X1

Yusr-AyunAppraisal

Shukheir Bay

Onshore Propsect

Proposed West Zeit-X3

Coastal Leads

El Khalig Appraisal

Shukheir Appraisal

Three well exploration drilling program to commence in 4Q 2007

West Zeit-3South Garib-1Shukheir Bay Onshore-1

In the event of a discovery, rapid tie-in to nearby facilities

79

Participation in 11 exploration wells2 successes (Nab 13 & 15) & 9 dry holes to date (3xB49, 2xB15, 2xB35, 3xB43)

B49 – large residual columnsB15 – downgrade deeper areasB43 - disappointingB35 – proved working hydrocarbon system in block

4 successful wells: Block 432 on production2 completed

2 wells tested1 flowed 0.065 mmscfpd: Block 351 water: Block 49

Yemen: 2007 Drilling CampaignResults

80

Yemen Block 43

Block 43

Nabrajah field

Proposed Shaibah-1

400sqkm 3D Seismic Survey

Basement Structure Map

OSH 28.33%, non-Op (DNO)Interpretation of 3D dataset has identified multitude of in-fill and exploration targets on-trend with Nabrajah Oil FieldIntegrated study of the Nabrajah Naifa & Basement reservoirs ongoingJV considering plans to drill 2-3 exploration wells in Block 43 in 2008

N1

C10

C4-W

D2

C8

C7

Nabrajah Field

D3

C11

N3

N2

Qishn

Basement

Shallow

Deep

Shallow

Deep

81

Yemen Block 49

OSH 31.75% Non-Op(CCC, OSH Drilling Op)

2 additional Exploration wells planned for 4Q 2007 (OSH being fully carried)Ghobata-1 & Kasad-1 wells have residual oil column Significant oil & gas shows prove oil charge across the northeast margin of Block A number of large untested structures still flank the Shabwah Basin in Block 49

Mintaq-1:Oil & Gas shows in Kohlan/basement, Lam, & Qishn

Mature Sourcekitchen

Lead B

Lead C

Lead D

Lead E

Balharak-1:Minor Oil & gas shows

Hufayr-1:Oil & Gas shows in lower section of wellGas condensate discovery

Balharak South-1:Excellent Oil & gas Madbi/Basement tested oil & gasApprox 110bbls of oil recovered

West Ghobata

Lead F

Al Nokhailat-1

Kasad-1

Gohbata-1 Ghobata-1:Oil & gas shows

Kasad-1:Oil shows

82

Yemen Block 35

OSH 32.5%, OperatorAl Magrabah-1 flowed small quantity of gas & recovered 34 API oilProves working petroleum systemProspectivity established, requires further review, analysis, and de-risking

DST#1

DST#2

Al Magrabah-1 Test

83

OSH 35.0%, Operator6 Month licence extension granted, additional 12 month extensions requestedWell results to be integrated into review of remaining prospectivitySharmah-Ras Ghashwahdiscovery to be re-evaluated during licence extensionDeeper Jurassic / Basement targets under evaluation

Yemen Block 15

Block 15

Shuhayr-1 Prospect

165MMbbls

Sarar-1X Recovered 1700 litres 45° API oil from Cretaceous sands

Ras Ghashwah-1X Recovered 38° API oil from fractured Eocene limestone

Hami-1XHeavy oil &

bitumen

Sharmah-1XProduced 3045bopd 43°API oil from fractured

Eocene limestone

84

OSH 40%, OperatorPSA Ratified 7 June 2006OMV’s recent Habban-1 Basement discovery in Block S2 and YICOM’s West Ayadfields are on-trend to untested basement structures identified in Block 3Potential mean reserves range 20 - >100 mmbbls500 sqkm 3D seismic starting late 2007Subject to rig availability, OSH will seek to drill 1 well in Block 3 in 4Q 2008

Block 3

Yemen Block 3OMV Habban

New Basement Discovery>750m oil column

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OSL

OSL

Historical Focus = No Success

Oil Search Opportunity

West Ayad Field ~500sqkm 3D

85

OSH 34%, OperatorPSA signed by Minister 15 April, awaiting ratificationOMV’s recent Habban-1 Basement discovery in Block S2 and YICOM’s West Ayad fields are on-trend to untested Basement structures identified in Block 7Potential mean reserves range 20 - >100 mmbblsThe block is close to infrastructure4 firm wells commencing 2009

Yemen Block 7

Block 3

Block 7

Block S2

Block 8

Block 2

OSH 34%

OSH 60%

OMV HabbanNew Basement Discovery

>750m oil column

S N

Tilted Block

Strat . Traps

Tilted Block

86

Blocks 3 & 7Multiple Plays & Analogues

Block 10 Kharir Basement Field ~ 1 Billion mmbbl

Block S2 HabbanBasement Field ~ 350 mmbbl

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OSL

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Historical Focus = No Success

Oil Search Opportunity

S N

Tilted Block

Strat . Traps

Tilted Block

87

Block 74OSH 34%

Nabrajah

Block 14 Fields>1.2 billion bbls

reserves

OSH 34% OperatorPSA signed by Minister 15 April 2007, awaiting ratificationBlock lightly explored with potential for Basement and conventional Qishn/Saar/Kholan playsPotential mean reserves range 20 - +50 mmbblsThe block is close to infrastructure3 firm wells commencing 2009

Yemen Block 74

Lead A

Quzah West Laed

Lead B

Quzah BasementLead

88

Yemen: Remaining 2007 Activity

Nabrajah-16

BLOCK 7

BLOCK 3BLOCK 15

BLOCK 35

BLOCK 74

BLOCK 49

BLOCK 43

ShirTerminal

West Ghobata-1(20mmstbo, COS=23%)

North Ghobata-1(10mmstbo, COS=20%

500sqkm 3D

Remaining 2007 Activity2 Exploration Wells in B49 testing total ~130mmbbl, OSH fully carried1 B43 Exploration & 1 Nabrajah Appraisal500+sqkm 3D in Blocks 3, continuing into Block 7 in 2008

Dahgah-16mmstbo,

COS = 30%

89

5 Year Exploration Period (ends May 2010)Commitments:

2000 km 2D seismic (completed)500 sqkm 3D seismic (completed)1 Exploration well (to be drilled 4Q 2008)

Libya Area 18

10000km2

Petrobras 70%Oil Search 30%

90

Libya Area 18Prospects and Leads

Reserves Range 100 –450MMbbls

1 Prospect and 3 Leads identified in the block1664km 2D and 830 sqkm 3D Seismic acquisition completed in 20071 exploration well scheduled 4Q08

Libya

91

Tunisia

Tajerouine 100%, operator (to be ratified)

Obligation 1st 4 year period 2D seismic and 1 well

Forward ProgramSigning at the end of October and licence effective 1Q 2008Strong interest from strategic partners to participateStudies & reprocessing in 2008Seismic in 2009

Le Kef 50% & control on operations (to be ratified)

Obligation 1st 4 year period 2D seismic and 1 well

Forward ProgramSigning by end of 2007 and licence effective 1Q 2008Studies & reprocessing in 2008Seismic in 2009

92

IRAN

IRAQ

SAUDI ARABIA

SYRIA

KUWAIT

TURKEY

Baghdad

Mosul

Tikrit

Kirkuk

Zakhu

BasrahOil Field

Gas FieldOil & Gas FieldGas Pipeline

Oil Pipeline

Oil Field

Gas FieldOil & Gas FieldGas Pipeline

Oil Pipeline

KurdistanRegion

0 200km

Iraq – Kurdistan ProvinceBina Bawi EPSA

Strategy20% equity in A&T Petroleum, option to convert to 10% direct EPSA interestLow cost, medium-long term positioning strategy

Establish a position in the prolific ZagrosStrategic position in future Western European energy marketsExposure to large, low risk potential reserves >500 mmbbls - ~2.0 bnbbls

Reasonable and secure EPSA Contract:20yr termRoyalty/production sharing

Bina Bawi EPSA

Kirkuk Field17 billion bbls

Taq Taq Field15,000bopdAddax/G-Energi

DNO Tawke-1wellFlowed oil 7,000bopd from zone at 350m

Bushyhr Project IranKEPS/OSH/Kufpec

93

KurdistanBina Bawi Potential

Proven Petroleum SystemLarge surface anticline: 350 sqkm; 800m closure For comparison: Kutubu 40 sqkmBina Bawi-1 and Bina Bawi-2 wells completed

Gas tested at 6 mmscfdOther zones not yet testedMechanical issues, further appraisal / testing required

Currently acquiring 250km 2D seismic program

Bina Bawi Surface Anticline:

P10: 800m vertical closure40x8km area

P90: 100m vertical closure 9x2 km area(similar area to Kutubu)

Bina Bawi-1 Well Location

Bina BawiEPSA

94

New Business Summary

Exploration - Organic GrowthBuild materiality around existing core areas

Develop assets that have operational synergies

Focus on material step out opportunities Build on established relationships with local partners and NOC’s

Establish reputation in focus areas as operator / partner of choice

Technical excellence and transparent operating style with partners and GovernmentsFocus on Health, Safety, Environment and Security and social development programsLocalisation program & commitment to training opportunities for staff and gov’t secondees

Assessing material acquisitions

95

MENAFocus, Activity and Results

Libya•Entry strategy•1 non-operated area (Petrobras

operator)•Acquired 1664km 2D seismic and

830sqkm 3D in 2007•1 prospect (250mmbbls+ potential)

and 3 leads•Drilling 1 well 4Q 2008

Egypt•Building material exploration position•6 Operated & 2 Non-operated•4 of these are development licences with production•ERQ

• 3 successes (Ghard, Shahd and Rana 7-10mmbo each)

• 25+ additional prospects requiring 2+ rigs• <2 years remaining on license• Require continuously active drilling program

•Area A Expln• 2 Nubia test have come in deep & wet• Incremental oil in shallower horizons• Next expl wells in 4Q 2007, seismic interp’n ongoing

•Block6• 1 well & seismic obligation, well in 2009/10

Iraq (Kurdistan)•Medium-long term

positioning strategy•10% indirect

participation in Bina Bawi EPSA

• Bina Bawi drilling program completed

• Currently acquiring 250km 2D seismic data

•Evaluating other material opportunities

Tunisia•Building material exploration

position•2 blocks captured (1 operated) – to

be ratified 1Q 2008•Work program for each area

includes 2D seismic and 1 well

Yemen•Material exploration position, largest licence holder in country•5 operated & 2 non-operated area•1 of these is a development licence with production (Nabrajah)•Prodn ahead of forecast but upside remains tantalising•Exploration program – 2 successes (Nab 13 & 15) & 9 dry holes

to date (3xB49, 2xB15, 2xB35, 2xB43)• B49 – large residual columns• B15 – downgrade deeper areas• B43 - disappointing• B35 – proved working hydrocarbon system in block

• Initial results disappointing but strong shows in B49 & B35 and proven oil in B15 attest to active petroleum systems

•Subsurface de-risking required in 2008 including 3D seismic in B3, B7 and potentially B49 (dependent on extension)

96

MENA2007/2008 Activity Schedule

2007 2008

3Q 4Q 1Q 2Q 3Q 4Q

Offshore

Onshore (OSH Operated)

Seismic

Onshore (DNO Operated)

Wildcat exploration well

Development Well

EGYPT

Seismic

Commitment Well

YEMENBlock 49

West Ghobata

Block 49Balharak

North

Block 3

Offshore well

Block 43Thoub-1

Onshore A

Onshore ERQ

Blk43Nab-15

ERQRaheek-1

Block18Caliph-1

ERQ North(1000 sqkm)

Block 6(AeromagEgypt

Yemen

Libya

S GharibW ZeitS-22 Area AShukheir BayY-51Y-50

ERQRana-1

ERQSalma-1

ERQSE Shahd-1

ERQYara-1

ERQYara-1

ERQNW Lead

ERQSE Mesk-1

ERQYara NW-1

ERQ Centre(1000 sqkm)

ERQNE Lead

Zeit Updip

Blocks 3 & 7(500 sqkm)

Block 35Reeb-1

Blk43Nab-16

Blk43Dev’t

Block 43Dahgah-1

97

MENA Specific Issues

MENA licences are Production Sharing Agreements compared to PNG licences which are Tax/Royalty

Except Egypt Area ‘A’ which is a Revenue Sharing Service Agreement

Production Sharing Agreements allow for Cost Recovery and Profit Sharing between the Contractor and the Government

Not subject to income taxCosts (exploration, development and operating) are recoverable against any future production subject to a cost recovery limitRemaining revenue after cost recovery is shared between the Contractor and the Government

For Oil Search, MENA costs (including unsuccessful exploration expenses) are not tax deductible against PNG income because of PNG tax law

However, costs are recoverable against any future productionExploration costs in Egypt Area ‘A’ are tax deductible (it is a Revenue Sharing Service Agreement)