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Reserves

As at 31 December 2012, the Company had Proven (1P) reserves of 338 million barrels of oil equivalent (mmboe) and Proven and Probable (2P) reserves of 552 mmboe. The Company also had 395 mmboe of 2C contingent resources, taking the Company’s total 2P reserves plus 2C resources to 948 mmboe. Of these resources, 504 mmboe is associated with the Company’s share of the PNG LNG Project and SE Gobe gas sales volumes.

Reserves Audit Process

Under the Company’s audit rotation schedule, all oil fields were audited in 2012 by independent auditors, Netherland Sewell & Associates, Inc. (NSAI) in Dallas.

Estimates of reserves (IP and 2P) and contingent resources (2C) are conducted to Society of Petroleum Engineers (SPE) standards.

Oil field proven reserves (1P) and proven and probable reserves (2P) are as certified by NSAI.

1P PNG LNG Project reserves are as certified in 2008 by NSAI. PNG LNG Project 2P reserves and 2C contingent resources have been estimated by a combination of independent audit, PNG LNG Project operator estimates and internal assessments.

Reserves

In 2012, a comprehensive independent review of oil reserves in all the Company’s producing oil fields was carried out by Netherland Sewell and Associates Inc (NSAI). This work included a full analysis of the impact on our oil fields of the commencement of gas production for the PNG LNG Project. This year, liquids reserves associated with PNG LNG were included in the proven (1P) category for the first time.

The review resulted in a 7.6 mmboe increase in 1P reserves, to 337.7 mmboe, after accounting for 2012 production of 6.4 mmboe, with proven and probable (2P) reserves remaining essentially flat at 552.4 mmboe.

In addition to changes related to the PNG LNG Project, other key drivers included:

Upward revisions relating to the recent strong oil field performance and the results of in-field and nearfield drilling.
The inclusion of SE Gobe sales gas and condensate, which were previously included in contingent resources (2C), with the expectation that a gas sales agreement with the PNG LNG Project will be executed shortly. These reserves are now carried in the PNG LNG Project reserves category.
SE-Mananda gas, previously carried under 2P PNG LNG Project reserves, being transferred to contingent resources.

Gas associated with the oil fields has not been recertified.

Resources

A key objective for Oil Search is to build its gas resource position to underpin our LNG expansion strategy. One of the highlights of 2012 was the discovery of gas and liquids at P’nyang South. This was the primary driver of a 77.4 mmboe, or 24%, increase in best estimate (2C) contingent resources, comprising oil, gas and associated liquids, from 317.7 mmboe in 2011 to 395.1 mmboe.

The 2012 resource position also reflected the following:

Revised resource estimates for Kimu and Uramu based on NSAI’s independent audits in 2012.
An increase in Oil Search’s interest in Uramu to 100% as a result of the purchase of ML Energy Investment Fund Upstream (PNG) Pty Ltd’s 40.45% interest in PRL 10.

Reserves and Resources

The Company’s total 2P reserves and 2C resources increased by 9%, from 870.3 mmboe to 947.5 mmboe. Of these reserves, 503.8 mmboe is associated with the Company’s share of the PNG LNG Project and SE Gobe gas sales volumes.

Proven Reserves

As at 31 December 2012 ⁽¹⁾⁽²⁾
NET TO OIL SEARCH

Licence/Field	End 2011 Reserves	Production	Discoveries/ Extensions/ Revisions	Acquisitions/ Divestments	End 2012 Reserves
PDL2 - Kutubu	9.6	3.3	9.5	-	15.9
PDL2 - SE Mananda	0.1	-	-	-	0.1
PDL 2/5/6 - Moran Unit	9.1	1.9	4.1	-	11.3
PDL 4 - Gobe Unit	0.1	-	-	-	0.1
PDL 3/4 - SE Gobe	0.3	0.2	0.4	-	0.5
PDL 1 - Hides	10.3	1.0	-	-	9.3
PNG LNG Project	300.6	-	-	-	300.6
Total	330.1	6.4	14.0	-	337.7

Proven & Probable Reserves

As at 31 December 2012 ⁽¹⁾⁽²⁾
NET TO OIL SEARCH

Licence/Field	End 2011 Reserves	Production	Discoveries/ Extensions/ Revisions	Acquisitions/ Divestments	End 2012 Reserves
PDL2 - Kutubu	16.4	3.3	9.0	-	22.1
PDL2 - SE Mananda	0.5	-	(0.2)	-	0.3
PDL 2/5/6 - Moran Unit	19.2	1.9	(1.4)	-	15.9
PDL 4 - Gobe Unit	0.2	-	-	-	0.2
PDL 3/4 - SE Gobe	0.6	0.2	0.3	-	0.7
PDL 1 - Hides	10.3	1.0	-	-	9.3
PNG LNG Project	505.4	-	(1.6)	-	503.8
Total	552.6	6.4	6.2	-	552.4

Reserves and Resources Summary

As at 31 December 2012 ⁽¹⁾⁽²⁾
NET TO OIL SEARCH

		Proven (1P)			Proven & Probable (2P)
Licence/Field	Oil Search Interest	Liquids ⁽³⁾ MMBBL	Gas⁽⁴⁾⁽⁵⁾ BSCF	Oil Equi- valent⁽⁶⁾ MMBOE	Liquids ⁽³⁾ MMBBL	Gas ⁽⁴⁾⁽⁵⁾ BSCF	Oil Equi- valent⁽⁶⁾ MMBOE
Reserves
PDL2 - Kutubu	60.0%	15.9	-	15.9	22.1	-	22.1
PDL2 - SE Mananda⁽⁷⁾	72.3%	0.1	-	0.1	0.3	-	0.3
PDL 2/5/6 - Moran Unit	49.5%	11.3	-	11.3	15.9	-	15.9
PDL 4 - Gobe Unit	10.0%	0.1	-	0.1	0.2	-	0.2
PDL 3/4 - SE Gobe	25.6%	0.5	-	0.5	0.7	-	0.7
PDL 1 - Hides⁽⁷⁾	100.0%	1.1	48.8	9.3	1.1	48.8	9.3
Oil Fields and Hides GTE reserves		29.0	48.8	37.2	40.4	48.8	48.6
PNG LNG Project reserves ⁽⁸⁾	29.0%	38.4	1,572.8	300.6	61.5	2,653.9	503.8
Total Reserves		67.5	1,621.6	337.7	101.9	2,702.7	552.4

Contingent Resources		1C			2C
Other gas and liquids resources ^(9)(10)		-	-	-	31.5	2,181.7	395.1
Total Resources		-	-	-	31.5	2,181.7	395.1

Total Reserves & Resources		67.5	1,621.6	337.7	133.4	4,884.4	947.5

Notes:

Numbers may not add due to rounding.
Oil field proven reserves (1P) and proven and probable reserves (2P) are as certified by independent auditors Netherland, Sewell & Associates, Inc. (NSAI) in 2012. 1P PNG LNG Project reserves are as certified in 2008 by NSAI. 2P PNG LNG Project reserves and contingent resources (2C) are based on a combination of independent audit, PNG LNG Project operator and internal assessments.
Liquids include crude oil, separator and plant condensates.
Full wellstream (raw) gas reduced for field separator condensates are quoted for Hides GTE. Other gas resources include a combination of raw gas, raw gas reduced for condensate production and fuel and flare.
For the PNG LNG Project, shrinkage has been applied to raw gas for field condensate, plant liquids recovery and fuel and flare.
Oil equivalent barrels incorporate oil, condensate and gas (converted at 6 mcf/bbl).
Hides reserves associated with the GTE Project only.
PNG LNG Project reserves comprise the Kutubu, Moran, Gobe Main, SE Hedinia, Hides, Angore and Juha fields. In addition, third party sales gas and plant condensates have been included for SE Gobe in 2P reserves, at the post-sales agreement SE Gobe field interest.
Other gas and liquids resources comprise the Company’s other fields including SE Mananda, Juha North, P’nyang, Kimu, Pandora, Uramu, Barikewa, Iehi and Cobra fields, as well as the 2010 Al Meashar-1 and Mananda 5 discoveries.
Included in these volumes are 191.1 bcf for PRL 1 Pandora. Tenure to this licence expired on 22 February 2013.

The information in this reserves statement has been compiled by Jon Rowse, Oil Search’s General Manager - Subsurface, who is a full-time employee of the Company. Dr. Rowse has over 24 years of relevant experience, is qualified in accordance with ASX Listing Rule 5.11 and has consented to publish this report.