RELINQUISHMENT REPORT. UK Traditional Licence P Blocks 12/16b & 12/17b. First Oil Expro Limited (Operator, 46.67%)

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1 RELINQUISHMENT REPORT UK Traditional Licence P.1887 Blocks 12/16b & 12/17b First Oil Expro Limited (Operator, 46.67%) Nautical Petroleum Limited (26.67%) North Sea Energy (UK NO2) Limited (26.67%) February 2016

2 1. Licence Information Licence P1887 was awarded to First Oil in the 26 th Licensing Round as a traditional licence covering blocks 12/16b & 12/17b. A non-mandatory relinquishment of 60% of the original licence acreage was made in Licence interests are First Oil Expro Limited (Operator) 46.67%, Nautical Petroleum Limited 26.67% and North Sea Energy (UK NO2) Limited 26.67%. First Oil confirm that DECC is free to publish this relinquishment report. All 3rd party ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes. Figure 1: Licence P1887, Blocks 12/16b & 12/17b. The original licence area is shown in red and that at the time of relinquishment in blue 2. Licence Synopsis Licence P.1887 was a 26 th Round licence awarded to First Oil Expro Limited in February 2012 with partners Premier Oil (Encore Petroleum) Limited, Nautical Petroleum PLC and North Sea Energy (UK NO2) Limited. Premier Oil withdrew from the licence on May 7 th The partnership applied for blocks 12/16b & 12/17b based on identified amplitude supported prospectivity in the Lower Cretaceous, but has since completed a full analysis of the entire stratigraphic section. There are no work obligations left outstanding. Several high risk prospects and leads have been identified within the licence area, however the risks associated with each of the prospects are numerous and high. Amplitude analysis has not helped to de-risk the prospectivity. In addition, the expected recoverable P50 volumes are modest given the shallow depth of the prospects and the likelihood of biodegradation.

3 3. Work Programme Summary The initial term of licence P.1887 was set to end on 1st February The initial term work obligations were to shoot 250km of 2D seismic data (firm) and drill a well to 915m to evaluate the Lower Cretaceous Coracle Sandstone Member or drop the licence. All firm work obligations have been fulfilled. The licence area is covered partially by a 1986 Western Geco 3D (GE863F0001) seismic survey. In addition to this survey there are numerous 2D seismic lines of varying vintages which cover the licence. In 2012 First Oil acquired a closely spaced (average line spacing 50m) 2D seismic survey, which has been migrated into a 3D cube. The data quality above the BCU, over the Lower Cretaceous target interval, of the new 3D cube is sharper and has more reflectivity evident than the legacy 3D data (Figure 2). Several studies were carried out in support of the technical evaluation including a brief biostratigraphic review, petrophysics, rock physics and seismic inversion study, hydrocarbon charge assessment and structural evolution study. All of this work points to the presence of prospects within the licence area which carry too much risk. Figure 2: First Oil 3D data covering part of 12/16b & 17b. Line location for the above figures shown inset with Western Geco D survey in blue and First Oil D survey in red

4 4. Database Figure 3: Map showing the seismic database and key wells The D data does not fully cover the primary Lower Cretaceous prospectivity, hence in 2012 First Oil shot a closely spaced 2D seismic survey with the intention of fully covering the trap, especially the updip section, and providing a tie to local wells. Well 12/17b-1 is the only well to have been drilled on the original P.1887 licence area. This was spudded by Lundin in 2007 and targeted a tilted fault block. Volgian sandstones were the primary target with the Beatrice Formation the secondary objective. The well found water bearing Volgian sands and drilling was terminated before the Beatrice Formation was reached. First Oil s dry hole analysis suggests that the trap was breached by faulting. There are several other key wells associated with the identified prospectivity within licence P Well 12/23-1 was drilled by Total in 1967 targeting Mesozoic and Palaeozoic reservoirs on the Smith Bank High. The well recovered heavy oil (15 API) from a sidewall core within the Punt Sandstone Member. In addition water was recovered from a drill stem test (DST) over the same interval. In 1969 Total drilled well 12/21-1 targeting, what is described in post well reports, as a reeflike structure, on poor quality seismic data. No hydrocarbon shows were encountered, although the Upper Jurassic and Berriasian target intervals did encounter sandstone. Britoil discovered the Sarclett Field in 1983 with well 12/21-3. The trap is a 3 way dip closure against an updip fault, with 200bpd of 44 API oil having been tested from the tight Alness Spiculite Member.

5 Well 12/22-3 was drilled in 1987 by Arco, targeting a Jurassic high. No hydrocarbon shows were seen throughout, however the well did encounter a 229ft thick gross section of the Coracle Sandstone Member with 206ft net (N:G 0.9) and average porosity of 33%. It was this section which gave encouragement at the application stage for Lower Cretaceous prospectivity updip. One year later 12/16-1 was spudded by Kerr McGee. The objective was the Beatrice Formation in a fault and dip bounded closure. Poor oil shows were encountered in the Kimmeridge and Heather Formations. This same high was later drilled by Kerr McGee in 1995 with the primary target being Kimmeridgian to Late Volgian sandstones, and a secondary target being the Beatrice Formation. The well encountered water bearing sandstones in both intervals. 5. Prospectivity Update Figure 4: Map showing outlines of prospects and leads within P1887 Norfolk Amplitude Prospect The Norfolk Amplitude prospect trapping mechanism is entirely stratigraphic (Figures 5 and 6). The crest of the structure is at 750m. Amplitude extractions and seismic to well ties suggest the reservoir is within the Coracle Sandstone Member. Hauterivian mudstones form the top and lateral/base seals. The prospect is situated within the Caithness Basin and directly overlies Mid Jurassic and Upper Jurassic shales mature for oil. In addition, Devonian lacustrine shales of the Orcadia

6 Formation beneath the prospect are mature for gas. Basin modelling suggests that the Early Orcardia Formation entered the main oil window in the Early Permian, while the Late Orcadia Formation reached this point in the Late Cretaceous. Mid Jurassic and Early Kimmeridgian source rock intervals reached the main oil window in the Early Cretaceous, while the Upper Kimmeridigian reached the oil window in the Late Cretaceous. The top Norfolk amplitude is a hard event which dims with offset giving a class I AVO response. Rock physics modelling suggests this response is associated with brine bearing sands or oil bearing (20-25 API, GOR scf/bbl) sands with porosity of ~25%. Seismic stratigraphy and structural evolution studies suggest that the hard Norfolk amplitude response is likely to be associated with a hardground during a period of limited sedimentary deposition. This prospect carries a relatively low chance of success (PCOS: 16%) with the critical risks being top seal, reservoir quality, charge and biogdegradation. Stochastic volumetrics give a STOIIP range (P90/P50/P10) of 45/ 119/ 317 mmbbls, and a recoverable range of 7/ 22/ 66 mmbbls. Figure 5: 2D seismic section (from First Oil 2012 survey) showing the Norfolk Amplitude, Western Coracle and Valanginian prospects. Inset is a minimum amplitude extraction 30ms below the top Coracle horizon showing the Western Coracle Amplitude prospect

7 Figure 6: Top Coracle Member depth map with Norfolk and Western Coracle amplitude anomaly extents marked Figure 7: Top Valanginian to BCU isochron with Top Valanginian depth contours overlaid, and Valanginian prospect outline in pink

8 Western Coracle Amplitude Prospect The crest of the Western Coracle Amplitude prospect is at 650m (Figures 5 and 6). The reservoir consists of older Coracle sands than the Norfolk Amplitude prospect. The trapping mechanism is entirely stratigraphic, with again reservoir being formed by deep-sea turbidite sands sourced from the north west. Top and lateral/base seal are provided by a combination of intra-hauterivian mudstones and some pinchout against the Base Cretaceous Unconformity (BCU). Basin modelling suggests this prospect is underlain by hydrocarbon generating Mid Jurassic, Late Jurassic and Devonian intervals. Migration is likely to have been via faulting set up in the Early Cretaceous and/or the Tertiary. The seismic amplitude response of this prospect is similar to that at the Norfolk Amplitude prospect and has a similar PCOS (16%). Stochastic volumetrics give a STOIIP (P90/P50/P10) of 61/ 91/ 137 mmbbls, and a recoverable range of 12/ 22/ 38 mmbbls. Valanginian Prospect The Valanginian prospect is defined by an isopach thick between Top Valanginian and Top Berriasian (Figure 7). The reservoir is envisaged to pinch out onto the BCU to the north west and west, while the trap is dip closed to the east and south. The reservoir is expected to consist of interbedded sands, silts and shales of Valanginian age (Punt Sandstone Member). Local wells show this interval to be relatively low N:G (net to gross), however the Valanginian prospect is updip from these wells and closer to the source of sediment. Mudstones in the Kimmeridge Clay Formation form the lateral/base seal while top seal is provided by a transgressive mudstone package at the top of the Valanginian interval. The source and migration story is similar to the previously mentioned prospects. The crest of the structure is at 710m, and is overlain in places by the two previously mentioned prospects. The STOIIP range for this prospect is: 65/ 157/ 287 mmbbls, with a recoverable range of 9/ 29/ 64 mmbbls. The critical risks are lateral/ base and top seal, reservoir, charge and biodegradation. Seismic suggests that the lateral/ base seal has been breached as numerous gas related amplitudes occur in the Upper Jurassic section, updip of the prospect. In addition there is also amplitude led evidence of the top seal having been breached. First Oil has assigned a PCOS of 17% to the prospect. Other Prospectivity Two other leads have been identified within the current licence area; the Punt Channel and Eugenie leads. The former is a relatively small four way dip closure with stratigraphic upside in the Punt Sandstone member, and a structural crest at 1000m. The PCOS is 25% with a relatively small the recoverable volume range (P90/ P50/ P10) of 1/ 4/ 10 mmbbls. Biodegradation is the critical risk for this lead.

9 Eugenie is a tilted fault block lead at Beatrice Formation level mapped on the 1986 Western Geco data, owing to poor signal to noise ratio on the First Oil data set at this depth. Updip seal is formed by two faults which in most places do not appear to go to surface. The lead is dip closed to the south. Top seal is provided by Heather Formation mudstones. The critical uncertainties with this lead are associated with the mapping of faults and top seal integrity, related to faults. The chance of success was set at 27%, but recoverable volumes are relatively low (P90/ P50/ P10: 4/ 9/ 20mmbbls). Figure 8: Crossline from First Oil 2012 dataset, showing the Punt Channel lead. Inset is an isochron from Top Berriasian to BCU, with Top Berriasian depth contours overlaid. The Punt Channel lead is outlined in pink on this map 6. Further Technical Work Undertaken Several studies were carried out in support of the technical evaluation including a brief biostratigraphic review, hydrocarbon charge assessment, petrophysics, rock physics and inversion study, and structural evolution study.

10 7. Resource and Risk Summary STOIIP and recoverable volumes have been calculated for all the prospects and leads within licence P1887: Table 1: Recoverable Resource Summary Table 8. Conclusions Several high risk prospects and leads have been identified within the licence area. However the risks associated with each of the prospects are numerous and high. Detailed amplitude analysis of the D seismic survey has not de-risked the prospectivity. In addition, the expected recoverable P50 volumes are modest, given the shallow depth of the prospects and the likelihood of biodegradation. Eugenie is the only prospect where if oil is present it is unlikely to have been biodegraded, however the estimated recoverable volume range is relatively low.