Oil Search : 2016 Annual Meeting Chairman's Address

Ladies and Gentlemen, as you know 2015 was one of the most challenging in Oil Search's history, with the average global oil price falling nearly 50% from 2015 levels. However, it was also one of the most successful for the Company, with production reaching an all-time high of 29.3 mmboe, more than 50% higher than in 2014, and some four times more than 2013 production. The increase was driven by a full year of uninterrupted LNG production. During 2015 Oil Search was firmly established as a significant LNG exporter and the Company has forged strong foundations for its continued success.

Ever since the commencement of production and exports from the PNG LNG Project in May 2014, the Project has performed above expectations. In recent months, the Project has been consistently producing at around 8 MTPA, well above its nameplate capacity of 6.9 MTPA. This is a great achievement by the operator, ExxonMobil PNG Limited.

Our operated fields are also performing well. In 2015, we supplied 12% of PNG LNG's gas and handled and exported all the Project condensate, which together with oil from our PNG oil fields totalled nearly 60,000 barrels per day.

Incorporated in Papua New Guinea ARBN 055 079 868

Port Moresby Papua New Guinea

1 Bligh Street

Sydney NSW 2000 Australia

GPO Box 2442

Sydney NSW 2001 Australia

Tel: +61 2 8207 8400

Fax: +61 2 8207 8500

www.oilsearch.com

Most importantly, in 2015 we recorded our third consecutive year of improved safety performance, with the important milestone of zero lost time injuries being recorded for the first time.

While we, like all oil and gas companies globally, were impacted by lower oil and gas prices, the Company delivered a core profit before impairments of US$360 million, a good result given the difficult pricing environment. Following a detailed review of our assets, we are comfortable that the carrying value of all our PNG assets is appropriate, despite the lower oil price outlook. We did, however, take to account a non-cash impairment of US$399 million relating to our investment in the Taza PSC in the Kurdistan Region of Iraq, following disappointing drilling results during the year.

In line with our policy to pay out between 35 and 50% of core profit to shareholders, OSH paid dividends of 10 US cents per share in 2015, equivalent to 29 toea. This equated to 42% of the 2015 core profit of US$360 million. The Board continues to believe that paying dividends that are a proportion of our profits is the correct policy, given our reliance on the oil price, movements of which are outside our control. This approach provides a good balance between providing cash returns to shareholders while retaining the flexibility to reinvest in our value creating growth projects.

Oil prices remain very volatile. As can be seen in this chart of the Brent oil price, the oil price has rallied strongly from the low point of US$26 per barrel in January 2016, to US$46 per barrel currently. However, it is still trading some 53% below the average oil price in 2014 and 11% lower than in 2015.

These moves have not only affected the price we receive for our oil production but also our gas and LNG sales prices, which are closely linked to the oil price. Due to an approximate three month lag between the spot oil price and LNG contract prices, our LNG revenues remained relatively buoyant in the first quarter of 2016, but are likely to fall in the second quarter of 2016 as low first quarter oil prices flow through to LNG pricing. We are, of course, very pleased to see the recent oil price recovery but still believe it is appropriate to plan on the basis that the price will remain under pressure for at least another 6 to 12 months.