Our Activities

Reserves

As at 31 December 2008, the Company had Proven (1P) reserves of 49.6 million barrels of oil equivalent (mmboe) and Proven and Probable (2P) reserves of 66.9 mmboe. The Company also had 886 mmboe of 2C contingent resources, taking the Company’s total 2P reserves plus 2C resources to 953 mmboe. Of these resources, 584 mmboe is associated with the Company’s share of the PNG LNG Project.

Reserves Audit Process

Estimates of reserves and contingent resources are conducted to Society of Petroleum Engineers (SPE) standards. Proven Reserves (1P) and Contingent Resources (1C) are as certified by independent auditors, Netherland Sewell and Associates in Dallas (NSA). Proven and Probable reserves (2P) and Contingent Resources (2C) have been estimated by a combination of independent audit, PNG LNG Project operator estimates and internal assessments. This represents a change from 2007, where the Company reported 2P reserves as certified by the independent auditors only.

In 2008, the Company implemented an audit rotation schedule, where each field is now required to be audited at least once every three years. For the 2008 review, NSA undertook a reserves audit of the Kutubu and Moran oil fields only. The Gobe, SE Gobe, SE Mananda oil fields and Hides GTE Project were not audited as there had been no drilling or significant workover activity in these fields during 2008. The reserves reported for Gobe, SE Gobe, SE Mananda and the Hides GTE Project are based on NSA’s year end 2007 audit, adjusted for 2008 production. As at the end of 2008, NSA had audited the contingent resources in each of the PNG LNG project fields - Kutubu, Moran, Gobe, SE Hedinia, Hides, Angore and Juha.

Reserves - Key Changes

The Company’s 1P and 2P reserves at the end of 2008 reserves were 5.6% and 9.0% lower than at the end of 2007 respectively. This reflected the following:

2008 production of 8.58 mmboe.
The sale of the Company’s Middle East/North African producing assets, which reduced 1P reserves by 0.4 million barrels and 2P reserves by 1.1 mmbbl.
An upward revision to the Kutubu 1P and 2P ultimate recoveries by 3.8 mmbbl and 3.1 mmbbl respectively. This is largely as a result of the successful drilling campaign in the Usano field.
An increase in the ultimate recovery of 1P reserves in the Moran field of 2.2 mmbbl. 2P Moran reserves remained unchanged.

Based on 2008 production rates, the Company has 2P reserves cover of 8 years.

Resources - Key Changes

At the end of 2008, Oil Search had 2C resources, comprising gas and associated liquids, of 886 mmboe, which was 66 mmboe lower than at the end of 2007, with the major changes as follows:

A 40 mmboe reduction in LPG associated with the PNG LNG Project, as LPG extraction is not currently part of the Project’s base development plan. It should be noted that the value of LPG will be captured in the gas stream.
A reduction of 14 mmbbl in the estimate of condensate and black oil to be recovered from the oil fields as a result of a revision in the oil field blowdown plans for the PNG LNG Project.
A 12 mmboe net reduction in resources from other gas fields. This relates to the booking of resources related to the Cobra and Juha North discoveries, the purchase of an additional 10% interest in the Uramu field in PRL 10 from Gedd (PNG) Limited (which is awaiting PNG Government approval) and an upgrade in P'nyang estimates, offset by a reduction in resource estimates for the Kimu, Barikewa, Angore and SE Hedinia fields.

The Company’s 1C contingent resources associated with the Company’s current 34.05% interest in the PNG LNG Project are 353 mmboe, as certified by NSA. The Company’s 2C contingent resources associated with the PNG LNG Project are 584 mmboe, based on estimates from the independent auditor, PNG LNG Project operator and internal assessments.

Proven Reserves

As at 31 December 2008 (1)(2)
NET TO OIL SEARCH

Licence/Field	End 2007 Reserves	Production	Discoveries/ Extensions/ Revisions	Acquisitions/ Divestments	End 2008 Reserves
PDL2 - Kutubu	18.0	3.3	3.8	0.0	18.5
PDL2 - SE Mananda	0.8	0.4	0.0	0.0	0.5
PDL 2/5/6 - Moran Unit	17.5	3.2	2.2	0.0	16.5
PDL 4 - Gobe Main	0.2	0.1	0.0	0.2	0.1
PDL 3/4 - SE Gobe	1.2	0.5	0.0	0.0	0.7
PDL 1 - Hides	14.4	1.0	0.0	0.0	13.4
Yemen Block 43	0.3	0.1	0.0	-0.2	0.0
Egypt East Ras Qattara	0.0	0.0	0.0	0.0	0.0
Egypt Area A	0.2	0.0	0.0	-0.2	0.0
Total	52.6	8.6	6.0	-0.4	49.6

Proven & Probable Reserves

As at 31 December 2008 (1)(2)
NET TO OIL SEARCH

Licence/Field	End 2007 Reserves	Production	Discoveries/ Extensions/ Revisions	Acquisitions/ Divestments	End 2008 Reserves
PDL2 - Kutubu	24.9	3.3	3.1	0.0	24.7
PDL2 - SE Mananda	1.3	0.4	0.0	0.0	0.9
PDL 2/5/6 - Moran Unit	29.9	3.2	0.0	0.0	26.7
PDL 4 - Gobe Main	0.2	0.1	0.0	0.2	0.1
PDL 3/4 - SE Gobe	1.7	0.5	0.0	0.0	1.2
PDL 1 - Hides	14.4	1.0	0.0	0.0	13.4
Yemen Block 43	0.6	0.1	0.0	-0.4	0.0
Egypt East Ras Qattara	0.0	0.0	0.0	0.0	0.0
Egypt Area A	0.7	0.0	0.0	-0.7	0.0
Total	73.5	8.6	3.1	-1.1	66.9

Reserves and Resources Summary

As at 31 December 2008 (1)(2)
NET TO OIL SEARCH

		Proven (1P)			Proven & Probable (2P)
Licence/Field	Oil Search % Interest	Oil ⁽³⁾ MMBBL	Gas ⁽⁴⁾⁽⁵⁾ BSCF	BOE ⁽⁶⁾	Oil ⁽³⁾ MMBBL	Gas ⁽⁴⁾⁽⁵⁾ BSCF	BOE ⁽⁵⁾
RESERVES
PDL2 - Kutubu	60.0%	18.5	-	18.5	24.7	-	24.7
PDL2 - SE Mananda ⁽⁷⁾	72.3%	0.5	-	0.5	0.9	-	0.9
PDL 2/5/6 - Moran Unit	49.5%	16.5	-	16.5	26.7	-	26.7
PDL 4 - Gobe ⁽⁷⁾	10.0%	0.1	-	0.1	0.1	-	0.1
PDL 3/4 - SE Gobe ⁽⁷⁾	25.6%	0.7	-	0.7	1.2	-	1.2
PDL 1 - Hides ⁽⁸⁾	100.0%	1.6	70.5	13.4	1.6	70.5	13.4
Subtotal Reserves		37.9	70.5	49.6	55.2	70.5	66.9

		1C			2C
Licence/Field	Oil Search % Interest	Oil ⁽³⁾ MMBBL	Gas ⁽⁴⁾⁽⁵⁾ BSCF	BOE ⁽⁶⁾	Oil ⁽³⁾ MMBBL	Gas ⁽⁴⁾⁽⁵⁾ BSCF	BOE ⁽⁵⁾
RESOURCES
PNG LNG Project ⁽⁹⁾		45.1	1,846.4	352.9	68.4	3,093.2	583.9
Other Gas ^(10),(11)		-	-	-	33.5	1,610.4	301.9
Subtotal Resources		45.1	1,846,4	352.9	101.9	4,703.6	885.8

Total Reserves & Resources		83.0	1,916.9	402.5	157.1	4,774.1	952.8

Notes:

Number may not add due to rounding.
Proven Reserves (1P) and Contingent Resources (1C) are as certified by independent auditors, NSA. Proven and Probable reserves (2P) and Contingent Resources (2C) have been estimated by independent audit, PNG LNG Project operator and internal assessments.
Oil includes crude oil, separator and plant condensate.
Full wellstream (raw) gas reduced for field separator condensates are quoted for Hides GTE and Other Gas resources.
For PNG LNG Project, shrinkage has been applied to raw gas for the plant liquids recovery, fuel & flare.
Oil equivalent barrels incorporate oil, condensate and gas (converted at 6 mcf / bbl).
NSA did not audit SE Mananda, Gobe and SE Gobe in 2008. Estimate of reserves is based on NSA's end 2007 certification adjusted for 2008 production.
Hides reserves associated with the Gas to Electricity Project only.
PNG LNG Project resources comprise the Kutubu, Moran, Gobe, SE Hedinia, Hides, Angore and Juha fields.
Other Gas Resources comprises the Company's other fields including SE Mananda, SE Gobe, Juha North, P'nyang, Kimu, Pandora, Uramu, Barikewa, Iehi and Cobra.
The Company's share in PRL 10 (Uramu) includes a 10.0% interest purchased from Gedd (PNG) Limited.