All permissions to publish have been obtained (see Section 9)

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1 1. Licence Information Licence Number: P1741 Licence Round: 26 th Round Licence Type: Traditional Block Numbers: 42/13b, 42/17 & 42/18 All permissions to publish have been obtained (see Section 9) 2. Licence Synopsis P1741 was a Traditional 26 th Round licence, awarded to RWE Dea UK SNS Limited (70%) and Sterling Resources (UK) Limited (30%), with a start date of 10/01/2011 (Figure 1). RWE Dea UK was subsequently acquired by L1 Energy (12/03/2015), becoming DEA UK before being sold on to Ineos in December The firm work programme required the acquisition of 450 km 2 of 3D seismic, processed through to PreSDM. There was also a contingent well commitment. The primary lead (Lochran), identified at the time of application, was a fault segmented, potentially dip closed structure at Base Permian Unconformity (BPU) level (Figure 1). There was no 3D coverage over this licence at the time of application. Consequently, the evaluation was based on a broad grid of 2D seismic. However, the overburden is complex and depth conversion resulted in a significant displacement of the Lochran structure westwards, compared with the TWT mapping. The position and presence of a valid structural closure at BPU level was therefore questionable. A new proprietary 3D seismic survey was acquired in 2012 and processed to Pre-SDM (2013) to address this issue. Interpretation of the new dataset failed to confirm the presence of a significant closure at BPU level. Consequently, the criteria for drilling were not met and a waiver of the contingent commitment was sought and obtained from the DECC (26/11/2014) and the obligation reduced to a drill-or-drop. A dip and fault closed Intra-Carboniferous lead (Lochran Deep) was, however, identified within the licence but drilling was not considered to be warranted (Figure 2). A small BPU feature (named SW Breagh) was also identified in the northern part of the licence, adjacent to the Breagh field (Figure 2). The structure extended off-block to the NW into open acreage (42/12), and closure in this direction could not be confirmed on the available seismic data. A partial relinquishment of the licence was made effective on 01/01/2015 and a one year extension to the Initial Term of the licence was granted by the DECC to undertake further evaluation of this lead. A further 3 month extension was then granted following the sale of DEA UK to Ineos. However, given the absence of any significant remaining prospectivity, the licence was subsequently surrendered, effective 15/02/

2 3. Work Programme Summary Firm: shoot 450 km 2 of 3D seismic and process to PreSDM. 650 km 2 of proprietary 3D seismic was acquired by PGS in 2012, using the vessel Atlantic Explorer. The processing was also undertaken by PGS and the PreSDM volume was delivered in mid Contingent: drill a well to 2225m or Top Visean Great Limestone Unit, whichever was the shallower. Drilling was contingent upon the 3D seismic dataset: Enabling clear definition of the Great Limestone unit beneath the Base Permian Unconformity (BPU) over the northern flank of the Lochran lead. Providing a significant improvement in confidence as to the presence of the mapped structure at the BPU. The new 3D dataset demonstrated the absence of any significant structural closure at the BPU over the area of the Lochran lead. A waiver of the contingent well commitment was therefore sought and obtained from the DECC, with the obligation being reduced to drill-or-drop. Figure 3 shows the 2D dip line LJ 91-19, running WSW ENE across Lochran, with the interpretation as at the time of the licence application. Figures 4a-d provide a comparison of 2D line LJ with a series of outputs from an identically-positioned arbitrary line extracted from the D dataset. Figures 4a & 4b show the 2D line LJ and the time-stretched PreSDM version. Whilst all of the major features are evident on the 2D line, the 3D data shows a significant improvement in the imaging, especially at depth. Figures 4c and Figure 4d compare the PreSDM image in TWT and Depth; note the flatness of the Base Zechstein event (at points A and B) on the depth section compared with the equivalent time converted section. This comparison provides significant confidence in the depth conversion presented by the PreSDM processing, which was subsequently directly used in depth mapping. Figure 5 shows the 2D strike line LJ running S-N across Lochran with the interpretation as at the time of the licence application. Figures 6a & 6b provide a comparison of 2D line LJ with an equivalent arbitrary line from the D dataset. The 3D data shows a significant improvement in the imaging, especially within the pre-bpu interval. Again, the flatness of the Base Zechstein event at points C and D on the depth section (Figure 6d) is clear compared to the equivalent time converted section (Figure 6c) from the PreSDM dataset. 4. Database Figure 7 shows the seismic coverage available over P1741 and the wells used to constrain the seismic velocities for the Pre-SDM during processing (42/18-2 and 42/23-1), and which were also used to identify the key seismic reflectors. The majority of the 2D is WesternGeco 1992 vintage data; the quality of which is generally poor below the BPU. The well control is sparse, less than one well per block. 2

3 The proprietary Lochran 3D was acquired for RWE Dea UK by PGS in The processing to PreSDM was undertaken by PGS, starting in July 2012 and finishing in May Survey area was 650 km Prospectivity Update Lochran Lead: at the time of application this was perceived as a fault segmented, potentially dip closed structure at BPU level (Figure 1). 3D seismic data was not available at this time and the mapping was based on a broad grid of vintage 2D lines. The overburden is complex and depth conversion resulted in a significant displacement of the Lochran structure westwards, compared with the TWT mapping. The position and presence of a valid structural closure at BPU level was therefore questionable. A new proprietary 3D seismic survey was acquired in 2012 and processed to Pre-SDM (2013) to address this issue. Interpretation of the new dataset failed to confirm the presence of a significant closure at BPU level. Consequently, drilling was not warranted and a waiver of the contingent well commitment was sought and obtained from the DECC (26/11/2014). However, interpretation of the 3D PreSDM dataset identified two other leads within the original P1741 licence area: SW Breagh: This feature was revealed by the 3D data, and straddles the boundary between blocks 42/12b and 42/18a (Figures 2 & 8). On the available data it is an elongate NW SE structure, with a combination top seal comprising Base Namurian shale on the southern flank and Base Zechstein over the remainder of the trap (Figures 8 & 9). Given its location, the reservoir interval is expected to comprise Breagh Zone 1A & 1B sandstones. The principle concerns are trap presence as mapped and the effectiveness of the proposed but unproven Base Namurian top seal. An additional non-exclusive PreSTM 3D dataset was purchased in 2015 over blocks 42/12 and 42/13 for the remapping of the Breagh field. Preliminary interpretation of this dataset indicated that SW Breagh is fault bounded to the NW and is therefore relatively small. Consequently, drilling is not considered to be warranted. Lochran Deep: this feature was revealed by the 3D data and is an intra- Carboniferous lead that relies on an, as yet, un-proven Base Namurian shale top seal, with reverse fault closure to the North (Figures 10 & 11). Owing to appreciable palaeo-burial and subsequent uplift / erosion, reservoir quality is a significant risk, along with possible cross-fault leakage. Given the risk / resources combination, drilling of Lochran Deep lacked economic / commercial support. 6. Further Technical Work The following additional technical work was also undertaken for the evaluation of this licence: Duncan McLean undertook a review of the biostratigraphic data to aid the stratigraphic interpretation and well correlations An internal review of wells in Quadrants 41 & 42 was completed to assess the potential for intra-formational seals within the Carboniferous. 3

4 Palaeogeographic reconstructions were made for the Brigantian interval to aid the understanding of reservoir distribution. Bunter Shale velocities from wells in Quadrants 41 & 42 were analysed and used to determine the likely maximum depth of palaeo-burial and the potential impact of this on reservoir quality, as the licence lies within the zone affected by inversion. 7. Resources and Risk Summary Lead Lochran Deep SW Breagh Resource & Risk Summary Unrisked Recoverable P Risked Stratigraphic Resources Geological L P50 Level Gas BCF COS % D MMboe P90 P50 P10 L Early Carboniferous * 2.15 L Early Carboniferous * In this case equates to the probability of achieving a sustainable, commercial flow rate in an inclined multi-fracced well. 8. Conclusions There are no significant untested structural closures at the BPU level Consequently the contingent well obligation was waived However, two Intra-Carboniferous leads (Lochran Deep and SW Breagh) were identified using the proprietary (2012/13) 3D dataset. Unfortunately, given the modest recoverable resources and associated COS, commercial / economic support for drilling was lacking. Consequently, the licence was surrendered effective 15/02/ Clearance Ineos UK SNS Limited confirms that the OGA has clearance to publish this report and that all third party ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes. 10. Maps and Figures Please see Following Pages 4

5 Figure 1 - Location map showing licence P1741 and the Lochran lead at the time of award 5

6 Figure 2 - Map showing licence P1741 post partial relinquishment, effective 09/01/2015 and the locations of the Lochran Deep and SW Breagh leads. 6

7 . Figure 3-2D seismic line LJ running WSW ENE across P1741 showing the interpretation and the Base Namurian TWT high (Lochran lead) identified at the time of the licence application. Seismic events tie to well 42/18-2. (Released proprietary ENI seismic data). 7

8 WSW ENE WSW ENE Figure 4 Comparison of the vintage 2D line running WSW ENE seismic with an equivalent arbitrary line from the D Pre-SDM. 4a) 2D seismic line LI (TWT), released proprietary ENI seismic data. 4b) Equivalent time converted arbitrary line from proprietary 2013 seismic survey. Refer to Figure 4 for seismic picks. 8

9 WSW ENE WSW ENE 4c) Time converted arbitrary line from proprietary 2013 seismic survey, as shown in 4b. 4d) Equivalent depth section from PreSDM. Note the flatness of the Base Zechstein (green); moved up at location A and down at location B. 9

10 Figure 5-2D seismic line LJ running S N across P1741 showing the seismic interpretation at the time of the licence application. Seismic events tie to well 42/18-2. (Released proprietary ENI seismic data). 10

11 S N S N Figure 6 Comparison of the vintage 2D S N seismic line with an equivalent arbitrary line from the D Pre-SDM. 6a) 2D seismic line LI (TWT), released proprietary ENI seismic data. 6b) Equivalent time converted arbitrary line from proprietary 2013 seismic survey. Refer to Figure 5 for seismic picks. 11

12 S N S N 6c) Time converted arbitrary line from proprietary 2013 seismic survey, as shown in 6b. 6d) Equivalent depth section from PreSDM. Note the flatness of the Base Zechstein (green); moved up at location C and down at location D. 12

13 Figure 7 Seismic database used for the evaluation of licence P

14 Figure 8 Combined Base Namurian / Base Zechstein depth map showing the SW Breagh Lead Figure 9 SW NE seismic and geoseismic sections through the SW Breagh lead showing the trap style and combination top seal. 14

15 Figure 10 Base Namurian depth map, based on the new PreSDM, showing the Lochran Deep lead Figure 11 Geological cross section through Lochran Deep, illustrating the form of the trap. Figure 10 shows the location of the section. 15