Strategic Focus

Oil Search's vision is:

• To be an acknowledged leader in oil and gas exploration and development in developing countries
• To be a top quartile performer on the Australian Stock Exchange among the ASX 200 leaders

To achieve this vision, Oil Search has three core strategic objectives:

• To commercialise its large gas resource in PNG
• To deliver value from its existing oil fields
• To create value through exploration in PNG, the Middle East and North Africa

Over the next five years, the Company is seeking develop a world class gas business, underpinned by further growth in its oil operations, and to create value through exploration, and if opportunities are available, by way of acquisitions.  Key aspects for achieving this are outlined below.  These utilise the Company's core strengths, which are:

• A low cost, innovative operator with strong technical capabilities
• Ability to work co-operatively with our host governments and communities
• Financially strong
• A significant undeveloped gas resource in PNG

A major strategic review, designed to set the Company's direction over the next five years, has recently been completed.  Based on this review, Oil Search believes that it is capable of generating superior shareholder returns over the next five years and beyond based on its existing asset base. 

Gas commercialisation

Commercialising Oil Search's very substantial gas resources in PNG is a key priority for the Company.  Together with operator ExxonMobil and other co-venturers, Oil Search is aggressively pursuing a world scale Liquefied Natural Gas (LNG) development, to be located in Port Moresby.  The PNG LNG Project is currently in the Front End Engineering and Design phase, with a Final Investment Decision expected to be made in late 2009.  The Company is also seeking to position itself for a second phase of gas development, based on its remaining large gas resources not dedicated to the PNG LNG Project.

Optimising operating performance

Since Oil Search took control of the PNG oil fields in 2003, production decline rates from the Company's mature oil fields have been reduced. Operating costs have remained highly competitive, despite strong upwards cost pressures globally for oil field equipment and services.   The asset teams will continue to focus on:

• strong cost control 
• production optimisation through improved field/well management
• proactive maintenance strategy to ensure the long term sustainability of the Company's plant and equipment
• seeking new appraisal/development opportunities in order to maximise the value of the assets
• close communication with governments and communities in the areas we operate  

Pursuing growth by through exploration activity and  acquisitions

Oil Search has recently divested a range of assets in the Middle East and North Africa.  It has retained those permits that it believes have the potential to contain material exploration upside.  In PNG, both an oil exploration and a gas exploration/appraisal programme is ongoing.  In addition, the Company continues to look at acquisition opportunities.