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

Transcription

1 O I L S E A R C H L I M I T E D (Incorporated in Papua New Guinea) ARBN PNG GOVERNMENT SECURES FUNDING FOR PNG LNG PROJECT 25 November 2008 The PNG Government and International Petroleum Investment Company (IPIC), an investment company wholly owned by the Abu Dhabi Government, have announced today that they have entered into an agreement whereby IPIC will acquire exchangeable bonds over the PNG Government s 17.6% shareholding in Oil Search. The principal amount of the bonds is A$1.68 billion. This money will be used to fund the PNG Government s equity share of capital costs for the PNG LNG Project (see attached release). Commenting on the transaction, Oil Search s Managing Director, Peter Botten said: This is a very important transaction for both the PNG Government and the PNG LNG Project. The deal has secured the funds required by the PNG Government to finance its full equity component of the PNG LNG Project development cost, estimated to be around US$1 billion. Having the Government equity funding in place is an essential part of the total financing package for the Project. Raising these funds removes uncertainty, as the Project financing team commences discussions with export credit agencies and banks regarding the provision of a competitive financing package and as gas marketing negotiations reach an important stage. It also positions the Project to achieve timely financing milestones in The State will retain its full direct equity entitlement in the PNG LNG Project, estimated to be about 19.4%. Keeping its full interest will maximise the potential value for the State and the people of PNG of this long term legacy project and will provide the State with flexibility in accommodating legitimate equity ownership claims by other PNG stakeholders. Even though this transaction was concluded during a time of unprecedented uncertainty in the financing markets, it demonstrates a value for Oil Search shares well above the recent trading price. Based on the agreed terms, should IPIC exchange the bonds for shares, the PNG Government will have realised an effective sale price of A$8.55 per share, substantially above the current share price and towards the see-through value of assets indicated by the recent AGL PNG asset sale. AUSTRALIAN REGISTERED OFFICE Level 27 Angel Place, 123 Pitt Street, Sydney NSW 2000 Australia. GPO Box 2442, Sydney NSW 2001 Australia. Telephone: (61) Facsimile: (61)

2 The Company expects that its very close relationship with the PNG Government will continue, as the parties develop together a strategy for further gas commercialisation in PNG. At the same time, this transaction introduces a strong potential shareholder who is supportive of the Company s growth aspirations. IPIC is an investment company wholly owned by the Abu Dhabi Government. Its mandate is to invest in the hydrocarbons and related sectors outside Abu Dhabi (see attachment for more details). It has a range of minority shareholdings in both unlisted and listed energy entities, including 9.5% in Compania Espanola De Petroleos, S.A. (CEPSA), which it has held since 1988, and 19.2% in OMV Aktiengesellschaft (OMV), held since While highly commercial in its activities, IPIC s stated objective is to maximise the long term shareholder value of each company in which it invests. IPIC has indicated that it is very supportive of Oil Search s goal to be a leader in the development of PNG s oil and gas sector, particularly the PNG LNG Project and commercialisation of second phase gas. Having IPIC as a stable, financially capable and strategic shareholder would enable Oil Search to continue to implement its strategy of creating long term value growth for all shareholders. While IPIC does not seek to become involved in day to day management or operating activities, we believe that Oil Search may be able to leverage IPIC s extensive experience in the oil and gas industry. This may include providing access to international growth opportunities and potential future participation/partnership in upstream opportunities both in PNG and internationally, as well as facilitation of financing. H.E. Khadem Al Qubaisi, IPIC s Managing Director, said: IPIC s growth strategy involves investment in companies that have a record of superior growth, have quality assets and strong management. Oil Search fits these criteria very well with outstanding further potential, complementing our other investments in the energy sector. We look forward to developing a strong relationship with both the Oil Search management team and the PNG Government and hope that this initial investment will lead to other opportunities to work together in PNG and in other parts of the world. Peter Botten, CBE Managing Director OIL SEARCH LIMITED For further information, please contact: Ann Diamant Investor Relations Manager Tel: +61 (0) Mob: +61 (0)

3 O I L S E A R C H L I M I T E D (Incorporated in Papua New Guinea) ARBN Background on International Petroleum Investment Company International Petroleum Investment Company (IPIC) was established in 1984 to invest in the hydrocarbons and related sectors outside of Abu Dhabi. It is wholly owned by the Government of Abu Dhabi and is governed by an eight member Board of Directors, chaired by H.H. Sheikh Mansour Bin Zayed Al Nahyan. Though IPIC has controlling 70% and 65% shares in its largest investments, it typically targets a significant minority equity participation level of around 25-40%. Its current portfolio comprises the following holdings: Company Quoted % interest Sector Hyundai Oilbank Co Ltd No 70 Pak-Arab Refinery Ltd. (PARCO) No 30 Oil Refining and Marketing Oil Refining/Products Pipeline BOREALIS A/S No 64 Petrochemicals OMV Aktiengesellschaft Yes 19.2 Integrated Oil Arab Petroleum Pipelines Co (SUMED) No 15 Crude Oil Pipeline Compania Espanola De Petroleos, S.A. (CEPSA) Yes 9.5 Clean Integrated Oil/Petrochemicals Gulf Energy Maritime (GEM) PJSC No 30 Hydrocarbons Shipping Oman Polypropylene LLC (OPP) No 20 Polyolefins AMI Agrolinz Melamine Int l. GmbH (AMI) No 50 Melamine/Fertilizer Energias de Portugal Yes 2 Utilities COSMO OIL CO., LTD. Yes 20 Oil AUSTRALIAN REGISTERED OFFICE Level 27 Angel Place, 123 Pitt Street, Sydney NSW 2000 Australia. GPO Box 2442, Sydney NSW 2001 Australia. Telephone: (61) Facsimile: (61)

4 IPIC operates on commercial principles, with the objective of maximising the long run shareholder value of the company. As primarily a financial investor, IPIC does not typically participate in the day to day management of investee companies, except in exceptional circumstances. For more information, go to IPIC s website:

5 JOINT MEDIA RELEASE 25 NOVEMBER 2008 IPIC STRATEGIC INVESTMENT IN OIL SEARCH Port Moresby and Abu Dhabi International Petroleum Investment Company ( IPIC ) and the Papua New Guinea Government ( PNG Government ), through its nominee, Independent Public Business Corporation ( IPBC ), are pleased to announce that they have signed an agreement ( Agreement ) under which, subject to certain conditions, IPIC will acquire IPBC s 17.6% interest in ASX-listed Oil Search Limited (ASX: OSH) ( Oil Search ). The acquisition is structured by way of a five year exchangeable bond ( Bond ) for A$1.68 billion. This strategic investment provides IPIC with material exposure to a significant nearterm LNG project in Asia Pacific, the PNG LNG project ( PNG LNG ), operated by ExxonMobil. At the same time, this transaction provides the PNG Government with the ability to fund its obligations associated with its direct interest in PNG LNG. H.E. Khadem Al Qubaisi, Managing Director of IPIC, said: IPIC recognises the increasing strategic importance of LNG in the evolving energy landscape. IPIC is excited to have the opportunity to partner with Oil Search and at the same time further diversify the IPIC investment portfolio into Asia Pacific. The Hon. Arthur Somare, PNG Minister for Public Enterprises and Development, said: "This is an excellent, transparent transaction that every Papua New Guinean will recognise as being in the national and public interest. It raises funding without diluting the PNG Government s direct interest in PNG LNG." Peter Botten, Managing Director of Oil Search, said: We are pleased to welcome IPIC as a strategic investor in Oil Search. This transaction is another milestone in the development of PNG LNG which will benefit all Oil Search shareholders. The issue of the Bond under the agreement is subject to certain PNG approvals and other conditions. IPIC is advised on this transaction by Deutsche Bank. IPBC is advised by Goldman Sachs JB Were. ENDS

6 For further information, please contact: IPIC H.E. Khadem Al Qubaisi Managing Director Tel: IPBC Glenn R. Blake, CBE Managing Director Tel: Mob: About Oil Search Oil Search operates all of the producing oil and gas fields in Papua New Guinea ( PNG ) and has a 34% interest (pre PNG Government back-in) in the PNG LNG Project. Oil Search has 2P reserves of 72.2 million barrels of oil equivalent and undeveloped gas and associated liquids resources of over 950 million barrels of oil equivalent. Oil Search is incorporated in PNG and is publicly listed on the Australian and Port Moresby Stock Exchanges and trades in the US through the ADR market. It has a market capitalisation of around A$5 billion. About the PNG LNG Project The PNG LNG Project is operated by Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation, on behalf of the joint-venturers which include Oil Search, Santos, AGL, Nippon Oil, Mineral Resources Development Company (MRDC) and Eda Oil. The PNG LNG Project is currently undertaking front end engineering design, securing LNG sales and project financing. It is also consulting with the government and community on plans to address social and environmental impacts. The preliminary schedule indicates a final investment decision in late 2009 with a target of first LNG cargo in 2013 to Once fully constructed, the Project lifetime or production phase is expected to be around 30 years. About IPIC IPIC is wholly owned by the Government of the Emirate of Abu Dhabi. Its mandate is to invest in the hydrocarbon sector outside the Emirate of Abu Dhabi. IPIC has become one of the leading companies in the field of petroleum and energy investment since its inception in IPIC holds equity stakes in Hyundai Oilbank in Korea, Gulf Energy Maritime in Dubai, CEPSA in Spain, Borealis & OMV in Austria, Oman Polypropylene in the Sultanate of Oman, PARCO Refinery in Pakistan, SUMED Company in Egypt, Energia De Portugal in Portugal and COSMO Oil in Japan.