1

Good Oil Conference

September 2008

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

2

Summary

Oil Search has delivered sustained top quartile growth over past five years (53% annualised return)Delivery of PNG LNG Project over next four years, together with progressive development of 2nd and 3rd tier gas, has potential to multiply Company value over this periodPNG LNG – The Premier AsiaPac LNG Project:

On track to deliver FID towards end 2009, with first LNG in late 2013/early 2014

Thirty+ year legacy project, with capacity to triple OSH production. Also positively impacts oil field life, value and reservesCurrent share price discounts assessed PNG LNG value and reflects no value for further gas developments or exploration

3

Profile

Established in Papua New Guinea (PNG) in 1929

Operates all of PNG’s producing oil and gas fields. Current gross production ~44,000 boepd, net share ~23,000 boepd

As operator, responsible for generating 22% of PNG’s export revenue and 16% of its GDP in 2007

PNG Government is largest shareholder at 17.6%

PNG’s largest investor and taxpayer

At 1.1.08, 73.5 mmboe 2P reserves plus 950 mmboe undeveloped 2C gas and liquids resource. ~60% of resource is dedicated to PNG LNG, a world scale LNG development operated by ExxonMobil, remainder still to be commercialised

Range of material exploration interests in PNG and Middle East/North Africa

Market capitalisation ~US$5.5 billion. Listed on ASX (Share Code OSH) and POMSOX, plus ADR programme (Share Code OISHY)

4

Consistent strong performance over past 5 years

Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08

Share price (rebased to OSH)

Oil Search

Santos

Woodside

ASX 200

WTI oil

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Ranked No.5 TSR Performer amongst current ASX 100 for 5 year period to Dec 2007 (53% on an annualised basis)

1 Aug 08

0.84 1.02 1.33 1.81 3.00 3.69 4.22 3.35 4.16 4.85 6.67

30.33 32.51 38.67 42.17 59.25 61.06 73.85 60.85 71.10 95.95 140.97

OSH (A$/share)

WTI(US$/bbl)

(Actual values of the 1st of the month)

5.56

123.26

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World ClassSafety Performance

Total Recordable Incidents (TRIs) 1998 – 2007

APPEAOSH OGPTRI / 1,000,000 Hours

1998 1999 2000 2001 2002 2003 2004 20050

2

4

6

8

10

12

14

20072006

Oil Search

Australian Companies

International Companies

8.5

10.69.8 10.7

5.8

1.7

4.7

2.4 2.32.05

12.7

9.1 9.37.8

7.0 7.3

5.2

6.8

4.0 3.1 2.9

9.4

8.2

8.3

6.3

2.7

6

Clear Strategy to Deliver Value

2007/08 Strategy Review defined initiatives to continue top quartile returns by unlocking value

within existing asset baseMajor strategy objectives

2007/08 Strategy Review decision for PNG LNG Project

Transforms Oil Search into significant LNGproducer, 30 plus year legacy project

Position Company to drive 2nd phase gas developments using existing 2C, 3C gas reserves & through gas explorationOptimise PNG oil field operating performance to sustain production and cashflows up to and beyond first gasPursue material exploration opportunities in PNG and MENA

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PNG LNG Project

AsiaPac’s next LNG

development

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Primary Focus - PNG LNG

PNG LNG Project represents PNG’s cornerstone gas development, will more than double country's GDP

“Affects economy of PNG and its balance of trade situation profoundly” (ACIL Tasman report , Feb 2008)

Will underpin Oil Search’s production and profits for 30+ years

Will commercialise ~550 mmboe of Oil Search’s 2C gas resources and add ~20 mmboe to annual net production, tripling current production

Will unlock value for OSH and shareholders

New gas developments at premium prices (BG & Origin, Petronas/Santos, Shell/Arrow, QGC/Sunshine Gas)

AGL sale will provide market a window to project value

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Regional LNG marketsare robust

Notes1. Project Under Construction include: Pluto LNG, Tangguh LNG, Yemen LNG, Qatar Gas 2,3,4, RL3, Angola LNG2. Possible projects include: PNG LNG, Sunrise LGN, Gorgon LNG, Browse, Ichthys, Scarborough, Wheatstone LNG, 4 Gladstone projects, Sulawesi, Abadi, Brunei LNG II,

NLNG VII, Brass LNG, OK LNG, Iran LNG3. Speculative projects include: projects that currently lack any reasonable definition in terms of participants, structure or underlying resources as well as defined supply where

major issues are preventing the project from making substantial progress

Regional market fundamentals remain robust

Steady expansion from existing markets (Japan, Korea, Taiwan)

Growth from emerging markets of India & China and new markets

Decline in existing contracts and concern with new project timing

Supply and Demand imbalance after 2012

Projects under construction do not match capacity

Extensive set of projects in queue from 2013 onwards

Pacific Basin LNG Supply and Demand to 2020mmpta

Onstream Under Construction Possible Speculative Pacific LNG Demand

0

50

100

150

200

250

300

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

“LNG supply unlikely to keep up with demand with high prices set to continue in the medium term”

“Some of these possible projects are tenuous e.g., LNG from Iran, and actual supply will be lower than shown”

Source Wood MacKenzie Global LNG, April 2008

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LNG Projects Under Construction and Proposed

Large number of possible projects under consideration

Not many possible projects will be able to cover the demand gap in 2013

Western Australia: strong cost pressures and competition for resources

Potential first production post 2014/15

Australian CSG projects: 4+ projects competing for 2014 window, new technology with several hurdles to be overcomeIncreasing foreign focus

PNG LNG is an attractive option relative to others

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LNG Pricing

Strong pricing drivers:Supply/demand fundamentalsPull from EuropeDelays in other projectsEnvironmental advantagesPricing and challenges with competing energy sources

Recent contract pricing around oil price parity:

Recent contracts:Sept 07: Petrochina, 2-3 mtpa, 15 - 20 years ex BrowseSept 07: Petrochina, 1 mtpa, 20 years ex Gorgon Nov 07: CPC, 2-3 mtpa, 15 - 20 years ex BrowseApril 08: Petrochina, 3 mtpa, 25 years from 2011 ex QatarGasApril 08: CNOOC, 2 mtpa, 25 years from 2009 ex QatarGas II

0

5

10

15

20LNG ($/mmbtu)

20 40 60JCC ($/bbl)

80 100

Traditional Contracting

Crude Oil Parity

NWS 2007 Contracting

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World Class and World Scale LNG Project2C resources of 9.3 tcf

6.3 mmtpa, 2 train LNG project

Clean gas rich in liquids

No technology issues or concerns

Well positioned for the Asia market

Rapidly advancing in optimal timeframe to satisfy regionaldemand in 2013/2014 period

Joint Venture is strongly aligned with supportive Government

Strong OperatorExxonMobil is the Project operator – excellent record of project delivery on time and on budget, assisted by comprehensive pre-FEED process

Oil Search providing PNG experience

Strong Project team

Real Expansion CapacityNew infrastructure will stimulate additional gas development

Substantial existing 2C and 3C resources

PNG LNG:The Premier AsiaPac LNG Project

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PNG LNG Project

Integrated development of Hides, Angore and Juha gas fields plus associated gas from the Kutubu, Agogo, Gobe and Moran oil fields

Upstream infrastructure including production wells, processing facilities and pipeline network linking to the export pipeline

Gas export pipeline from PNG Highlands to LNG plant near Port Moresby

Liquefaction plant, export loading and support facilities located in Portion 152, 20 km from Port Moresby

See schematic above for detail

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PNG LNG Project Milestones Reached in 1H08

Commercial alignment achieved, with Joint Operating Agreement (JOA) executed in March 2008 amongst the Project Owners

Initial funding interests pre-Government back-in agreed (OSH 34%) Unitisation and redetermination procedures agreedActionable finance plan agreed

Marketing Representative Agreement signed for joint marketing of 6.3 mmtpa, led by ExxonMobil, Project rolled-out to buyers at GasTech in Bangkok in March 2008

Gas Agreement signed May 2008Outlines fiscal terms and legal obligations under which Project will operate over its life The terms include 30% tax rate and Additional Profits Tax (APT) which applies once a certain threshold level of return has been achievedSets terms and mechanism for State equity participation in the Project

Front End Engineering and Design (FEED) commenced in May 2008

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Project Status

High quality project team assembled – ExxonMobil personnel plus secondees from partners including OSHFEED activities proceeding on schedule. Target completion in 3Q09 (13 months):

EOS (KBR/ WorleyParsons JV) conducting upstream FEED comprising:− Preliminary engineering design for gas field developments − Gas conditioning and compression facilities− Pipeline and infrastructure

Downstream FEED (LNG plant, storage, marine facilities) being conducted in two phases: − Non-competitive phase - support from KBR − Second, competitive EPC bid phase involving APCI (Air Products

and Chemicals, Inc) and COP (ConocoPhillips) process licensed contractors

Oil Search-managed associated gas FEED study commenced with WorleyParsonsMany Project enhancements, optimisations being considered

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Project Status

Marketing:Negotiations commenced between Project and selected offtakersProject is strongly positioned, competitive advantages recognised by customers Targeting end 08/early 09 for HOAs, SPAs prior to FID

Government committed and supportive Leadership and co-ordination defined Discussions between Government and Landowners commenced on Benefits Sharing AgreementEnvironmental, licensing and permitting activities underway

JV considering proposal for early works programme subject to marketing, Benefits Sharing Agreement and permitting progress

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PNG LNG Capex Estimates

First phase capex (2008 – 2014) expected to be between US$10 –11 bn (real mid-2007 $s)Historically, ExxonMobil has delivered projects on time and on budget Subsequent capex is several years out (additional Hides drilling, Angore and Juha development and potential LPG extraction if required). Juha timing depends on Hides and Angore outcomes and performance Further updates to capex estimates from EPC bids (3Q 09)Further optimisation will occur during dual FEED

Source: ExxonMobil Analyst Briefing 5th March, 2008.

EM Project Execution Performance

Actual vs. Funded (%)

25

Average2003-07 2007

50

75

100

125

0

Cost Schedule

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PNG LNG Financing

Debt:Joint debt financing approach, led by a Finance Committee co-ordinated by ExxonMobil with key input from OSH. Soc Gen financial advisor

Recent road shows elicited strong interest from Export Credit Agencies, commercial banks and rating agencies. Banks positive attitude to PNG demonstrated by OSH’s recent corporate facilityIncluding capitalised interest through construction, financing fees and funding of the debt service reserve, seeking project finance for ~US$11.5 billion (nominal)

OSH share of project finance ~US$3.2 billion (nominal)

Equity:OSH’s equity contribution (nominal) expected to be ~US$1.3 billion

Funded from existing cash (~US$600m), corporate borrowing from refinancing (US$450m) and oil cash flows between 2009 – 2013 (operating cash flow in 1H08 was US$348m)

Will utilise hedging, if required, to protect cash flow and optimise borrowings

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LNG Project Schedule

FEED

PNG GovernmentApprovals

Benefits SharingAgreement

Project Financing

Detailed EngineeringDesign & Procurement

Construction /Commissioning

2008 2009 2010 2011 2012 2013 2014

FirstCargoLNG

*Schedule is Indicative only

Marketing

FIDPIMClose

Gas Agreement

Entry

Environmental, Licences etc

EPC bids

HOA’s SPA’s

Possible early works

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Economic Importance ofPNG LNG Project

ACIL Tasman Report 6 February 2008“Affects economy of PNG and its balance of trade situation profoundly”GDP will more than double Oil & Gas exports will increase 4 fold Up to 7,500 jobs in initial phase, 20% by nationals; 850 full time positions, developing national workforce over timeHuge cash flows to Government – national and provincial - and landowners through tax, royalties, levies and equity participation over 30 yearsMultiplier effects additional

Government recognises importance. Leadership and Co-ordination defined:

Political leadership through Ministerial Economic CommitteeCo-ordination branch approved and being implemented

Retention Licence renewal:Government has announced PRL 11 and PRL 12 renewal

Commitment to pursue Benefits Sharing Agreement:Targeting 4Q08/1Q09

Strong support for the Project at local community level

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Impact on Oil Search

For Oil Search, the Project will provide:Annual incremental net production of ~20 mmboe Booking of ~550 mmboe of Oil Search’s 2C gas resources providing positive impact on depreciationPast costs pay back by Government on back-in at Final Investment Decision Value additions to the oilfields by:− Incremental reserves due to extension of oil field life (Gobe to

2024, Kutubu to 2048) and revised reservoir opportunities − Abandonment deferral− Additional pipeline tariffs − Cost sharing benefits in oil fields and pipeline export system− Reduction of oil field taxation rate on conversion

Detailed field review has commenced to analyse field management of gas and oil, optimal development and value synergies− New Moran development plan

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Benchmark of OSH Peersby AV/2P Reserves

PNG LNG FID will allow booking of ~550 mmboe of 2P reserves

Notes1. Comparable global E&P independent listed companies with an agg. value larger than US$1Bn.2. Assumes exchange rate of 0.869 AUD/USD3. Share prices as at 20-Aug-2008

Agg. Value / 2P ReservesUS$/boe

Tullo

w

Lund

inW

oods

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ROC

Oil

AWE

Maure

l et P

rom

Adda

x

Dana

Sant

os JKX

Cairn

Vent

ure

Soco

Beac

h Pe

trole

umPA

Res

ourc

es

QGC

DNO

Prem

ier

Oil Se

arch

(+55

0mm

boe)

Nexus

Ene

rgy

Median = US$13.8 boe

0

5

10

15

20

25

60

International Australian

15.014.1 14.1 13.8 13.4

12.7 12.2 11.810.9 10.5

9.48.9

7.9

6.1

54.7

20.4 20.0

18.1

15.1 15.0

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GrowthOpportunities

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Gas Growth Opportunities

PNG LNG Project sets the stage for additional gas-based growth opportunities

Additional LNG developments command the highest value:

Sufficient 2C resources for additional train already exist in PNG fields

Other gas development options also available with robust economics

Oil Search seeking to: Increase contractible gas (exploration, appraisal, acquisition)

Aggregate gas for highest value development option

Key partnerships with State – MOU signed in July

New opportunities need to be considered in a framework of being material for a US$5 bn+ company

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Gas Resource Base

~1/3rd of PNG gas resources are held in the Hides field PNG LNG Project accounts for approximately half of PNG’s discovered gas resource OSH has ~1.6 tcf net of discovered gas plus associated liquids not dedicated to PNG LNG

Technical Gas ~ 17,000 bcfTechnical Gas ~ 17,000 bcfStanley

0.1%

Barikewa4%

Pasca1%

Angore7%Juha

6%

P`nyang10%

Pandora A7%

Kutubu Area8.3%

Hides (Technical Reserve)

Kimu4.8%

Elevala3%

Douglas3%

Elk3%

Ketu2.3%

Uramu2%

Gobe Area2%

Moran1%

Kuru1%

Koko0.1%

Bwata0.3%

SE Mananda0.1%

Iehi1%

Pandora B2%

PNG LNG Project

30%

PNG discovered gas resources by field (Source: Wood Mackenzie Path Finder)

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Oil Search Visionfor LNG Expansion

3.5 – 4.0 tcf additional gas volumes required to underpin construction of additional train

PNG LNG fields comprise Hides, Juha, Angore, Kutubu, Agogo, Moran and Gobe Main

Other Highlands JV partner resources (OSH best estimates) include P’nyang and Juha North

Forelands & Offshore resources include Barikewa, SE Gobe, Pandora & Uramu

Considerable exploration upside. 3 year programme targeting >13 tcf gross resource

3rd Train Threshold

Exploration

0

5

10

15

20

25tcf

PNG LNG

Base Volume

PNG LNG3C

Upside

4th Train Threshold2C

3C

2C

3COther Highlands JV Partner Resources

Forelands & Offshore

Resources

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Other Gas Growth Opportunities

Other gas commercialisation opportunities can also offer attractive returns, diversification and timely delivery. These range from export oriented projects to domestic micro projects including:

Methanol and other derivativesGas to liquids (GtL)Compressed Natural Gas (CNG)Gas for use in mine operations eg extending mine life at PorgeraPower generation and other smaller projects catering to the needs of local communities & industry

Size of dedicated resource important in defining commercial optionRange of study groups are being established with Government and other entities to form non-PNG LNG gas development ‘master plan’

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PNG Oil Operations

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Oil Operations:Providing Cash for Growth

Since Oil Search took over operatorship of PNG oil fields in 2003, fields have produced ~45 mmbbl in excess of previous operator’s expectations and field life extended

Aim is to optimise PNG oil cash generation over the next 5 years to support PNG LNG Project funding requirements

Existing oilfields are mature (decline rate of 15-20%) but with appropriate investment, expect to mitigate decline curve for 2-3 more years

PNG production is highly profitable – in 1H08, cash opex of US$10/bbl, realised oil price of US$118/bbl

Need to balance work programmes and hence production outcomes with demand for rigs for exploration and gas drilling

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Field Development Drilling Activity

Usano:2008 : 4 wells2009 : 1 wells

SE Gobe:2010 : 1-2 wells

Kutubu:2009 : 3 wells

Agogo:2009 : 2 wells

Moran:2008 : 1-2 wells2009 : 1-2 wells

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Production Summary

Net Production (mmboe)

MENA

Hides GTE

SE Mananda

SE Gobe

Gobe Main

Moran

Kutubu

0

1.0

2.0

3.0

4.0

5.0

6.0

1H 06 2H 06 1H 07 2H 07 1H 08

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Exploration

33

PNG Exploration

Iwa

Wasuma

Cobra

Cecilia

34

MENA Exploration

Sana’a Office

Dubai Office

Block 3

Block 7

Tajerouine

Le Kef

Area 18

Bina Bawi

Shakal

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FinancialOverview

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~US$600 million in cash following receipt of MENA asset sale funds. No debt

Refinancing of 5 year US$ oil facility in final stages:Very positive response from bank market with competitive offers for more than twice the amount soughtFacility size increased by US$50 million to US$450 millionPricing and facility terms more favourable than those on the facility it is replacingAlmost half the facility provided without political risk insurance – strong endorsement for PNG

With cash and finance facility, liquidity is >US$1bn

No oil hedging undertaken during first half of year or currently in place

Treasury Update

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Summary

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Gas set to dominateportfolio over time

Substantial unrealised value exists within Oil Search’s current asset portfolio (particularly PNG gas)

Current share price discounts assessed PNG LNG value and reflects no value for further gas developments or any oil exploration success

Value calibration anticipated from:

PNG LNG: Key milestones reached (LNG HOA’s, early works) Progress on demonstrating value growth options (exploration and appraisal programme, agreements etc.)

2008 2009 2010 2011 2012 2013 2014 2015 2016

Value

Cash

Fourth Train

Third Train

PNG LNG

Oil

NPV Over Time (Unrisked)

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Summary

PNG LNG Project and commercialising remaining gas will drive Company value. Rising NPV over time, as cash flows get closer and Project de-risks

Core PNG oil business remains robust, with stable production and cost outlook, provides cash flows to support LNG and other development options

Exploration activities wound back from 2007 high levels, but material prospects still to be drilled in both PNG and MENA

AGL asset sale provides industry value benchmark, with partial value see-through. May provide opportunity to increase PNG LNG interest, but only in the right circumstances – series of gates for decision-making

Considerable upside value in existing asset base still to be recognised by market

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