INDEPENDENT TECHNICAL SPECIALIST S REPORT ON THE KITO PROSPECT, KILOSA-KILOMBERO LICENCE, TANZANIA. For Swala Energy Ltd

Transcription

1 INDEPENDENT TECHNICAL SPECIALIST S REPORT ON THE KITO PROSPECT, KILOSA-KILOMBERO LICENCE, TANZANIA For Swala Energy Ltd

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3 DECLARATION Swala Energy Limited ( Swala ) has commissioned RISC Operations Pty Ltd ( RISC ) to provide an Independent Technical Specialist s Report (ITSR) on the Kito Prospect. The assessment of petroleum assets is subject to uncertainty because it involves judgments on many variables that cannot be precisely assessed, including reserves, future oil and gas production rates, the costs associated with producing these volumes, access to product markets, product prices and the potential impact of fiscal/regulatory changes. The statements and opinions attributable to RISC are given in good faith and in the belief that such statements are neither false nor misleading. In carrying out its tasks, RISC has considered and relied upon information obtained by Swala as well as information in the public domain. The information provided to RISC has included both hard copy and electronic information supplemented with discussions between RISC and key Swala staff. Whilst every effort has been made to verify data and resolve apparent inconsistencies, neither RISC nor its servants accept any liability for its accuracy, nor do we warrant that our enquiries have revealed all of the matters, which an extensive examination may disclose. In particular, we have not independently verified property title, encumbrances or regulations that apply to this asset(s). We believe our review and conclusions are sound but no warranty of accuracy or reliability is given to our conclusions. RISC has no pecuniary interest, other than to the extent of the professional fees receivable for the preparation of this report, or other interest in the assets evaluated, that could reasonably be regarded as affecting our ability to give an unbiased view of these assets. Our review was carried out only for the purpose referred to above and may not have relevance in other contexts. COPYRIGHT This document is protected by copyright laws and is intended for the use of Swala only. Any unauthorised reproduction or distribution of the document or any portion of it may entitle a claim for damages. i

4 Independent Technical Specialist s Report on the Kito Prospect, Kilosa-Kilombero Licence, Tanzania DOCUMENT CONTROL Client Name Swala Energy Client Representative Neil Taylor RISC Coordinator Nick Eustance RISC Job # Client Order# Approvals Name Signature Date Prepared By Nick Eustance Prepared By Prepared By Peer Review By Conrad Todd Peer Review By Steve Newman Peer Review By Peter Stephenson Editorial Review By Peter Stephenson 12 December2013 Authorised For Release By Peter Stephenson Revision History Revision Date Description Checked By Approved By ii

5 TABLE OF CONTENTS 1. SUMMARY Summary of Kito prospect Licence and Exploration Activity Geological Setting and Basis for Prospective Resource Estimate Assessment of Chance of Discovery Terminology Qualifications REGIONAL SETTING The East African Rift System Structure Geological History and Stratigraphy The East African Rift System Play Summary of Play Source Reservoir Seal Trap Lake Albert Hydrocarbon Discoveries Exploration in Kenyan EARS TANZANIA: KILOSA-KILOMBERO LICENCE Geological Setting Terrain and Surface Geology Structure from Landsat TM Data Structure from Gravity and Aeromagnetic Data KITO PROSPECT Prospect Definition Seismic Interpretation and Mapping Depth Conversion Geological Interpretation Volumetrics Approach Gross Rock Volume Reservoir and Fluid Parameters Recovery Factor Summary of Volumetric Inputs Undiscovered Hydrocarbons and Prospective Resources Chance of Success Play Chance of Success Prospect Chance of Discovery Summary of Kito Prospect LIST OF TERMS iii

6 LIST OF FIGURES Figure 1-1 Location of Kito Prospect in Kilosa-Kilombero Licence, and other SOGTL assets... 2 Figure 2-1 Structural elements in Tanzania with Swala s blocks [green outline] (Baker, 2012)... 7 Figure 2-2 Example of a half graben with interpreted depositional facies Lokichar Basin, Kenya (Morley et al., 1999)... 8 Figure 2-3 Schematic stratigraphy of Lokichar Basin (Thou, 2009) Figure 2-4 Fields and prospects in Lake Albert area (Tullow, 2009) Figure 2-5 Waraga-1 - Seismic line through discovery and wireline logs (Africa Oil) Figure 2-6 Schematic cross section through the Kaiso-Tonya Region (modified from Tullow Oil) Figure 2-7 Ngamia discovery, Kenya (Africa Oil Corp) Figure 2-8 Ngamia-1 well results (Africa Oil Corp) Figure 3-1 3D elevation map (Satellite Radar Topographic Mission) with basic subdivision of areas Figure 3-2 Geological setting of the Kilosa-Kidatu-Kilombero rifts (Nilsen et al., 2001) Figure 3-3 Simplified geological map of Kilosa-Kilombero area (Baker) Figure 3-4 Inferred Neogene basins in Kilosa-Kilombero Block from Landsat TM imagery (Baker, 2012b) Figure 3-5 Naudy basement depth contours on residual Bouguer gravity anomaly in Kilombero rift (SGC). 20 Figure 4-1 Kilosa-Kilombero block 2013 seismic programme Figure 4-2 Dip seismic line Figure 4-3 Dip seismic line Figure 4-4 Strike seismic line Figure 4-5 Stacking velocity data used to derive V0-k function for depth conversion Figure 4-6 Kilombero rift Purple Horizon, interpreted top basement Figure 4-7 Yellow Horizon possible top shallow reservoir, with P50 and P10 closures Figure 4-8 Blue Horizon possible top shallow reservoir, with P50 and P10 closures Figure 4-9 Seismic dip line SKB through Kito Prospect, showing closures Figure 4-10 Porosity-depth plot for Kenyan rifts (Morely 1999) iv

7 LIST OF TABLES Table 1-1 Licence details for Kilosa-Kilombero Block... 2 Table 1-2 Prospective Resources definition (PRMS)... 4 Table 4-1 Interpretation of Kito seismic lines Table 4-2 Kito Prospect- trap areas Table 4-3 Reservoir data from analogue rifts Table 4-4 Volumetric inputs for Yellow (shallow) horizon Table 4-5 Volumetric inputs for Blue (deep) horizon Table 4-6 Kito Prospect Unrisked undiscovered oil in-place Table 4-7 Kito Prospect Unrisked prospective oil resources Table 4-8 Play chances of success for Kilombero rift Table 4-9 Prospect-specific chances of discovery for Kito Prospect Table 4-10 Overall chances of discovery for Kito Prospect v

8 1. S U M M A R Y 1.1. SUMMARY OF KITO PROSPECT The Kito Prospect is a dip and fault closure within potential Neogene sediments interpreted from newly acquired 2D seismic data in the Kilombero rift, Tanzania. The independently-assessed total unrisked prospective resources of the Kito Prospect are: Total Unrisked Prospective Oil Resources (MMstb) Equity Low Estimate Best Estimate High Estimate Kito Prospect (gross) 100% Swala Oil & Gas (Tanzania) Limited 50% Otto Energy Limited 50% Swala Energy Limited* 32.5% * Swala has a 65.13% equity interest in Swala Oil & Gas (Tanzania) Limited The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. The estimates of prospective resources have been calculated using a probabilistic method with ranges of each input parameter, for each of two potential reservoir levels Yellow (shallow) and Blue (deep). The total resources have been derived by arithmetic addition of these two levels, assuming significant dependency. The quoted estimates of prospective resources are unrisked. The prospect carries a chance of discovery in the range 8% (Yellow) to 9% (Blue), which reflect a combination of play and prospect risks. An additional chance of development would apply in the event of success. The Kito Prospect was identified on the evaluation date 1 December 2013 on the basis of the Kilombero Basin seismic survey that was completed on the 8 th November Based on the limited amount of regional seismic data it has not been possible at this stage to define any additional prospects, and associated prospective resources, outside of the volumes reported above. At this early exploration phase, there are no contingent resources or reserves LICENCE AND EXPLORATION ACTIVITY The Kito prospect lies within the Kilosa-Kilombero Licence in Tanzania in which Swala Oil & Gas (Tanzania) Limited (SOGTL) holds a 50% operated interest. Swala has a 65% interest in SOGTL. The licence covers a portion of the East African Rift System (EARS). SOGTL has interests in two onshore blocks in Tanzania (Pangani, and Kilosa-Kilombero) and is currently in direct exclusive negotiations for another (Eyasi), all in portions of the EARS. Licence details are given in Table 1-1, and a location map is given in Figure 1-1. The licence is currently in contract Year 2 (February 2013 to February 2014). The key element of the work programme for this year was Page 1

9 the acquisition of 300 line km of 2D seismic data ($3.50 MM), a portion of which has been used in this assessment. Asset Operator Interest Status Licence expiry date Licence area Work commitments Tanzania Kilosa- Kilombero Licence Swala Oil and Gas (Tanzania) Ltd (of which Swala holds a 65.13% interest) Swala Oil and Gas (Tanzania) Ltd 50% Otto Energy (Tanzania) Limited 50% Exploration PSA 20 February 2016 (with optout after years 1 and 2)* 17,675 km 2 Year 2 - Geochemical sampling, geological mapping, seismic (no well) Year 3 further 2D seismic ** Expiry date is for Initial Exploration Period; two Additional Exploration Periods take expiry to 2023 Table 1-1 Licence details for Kilosa-Kilombero Block Figure 1-1 Location of Kito Prospect in Kilosa-Kilombero Licence, and other SOGTL assets Page 2

10 1.3. GEOLOGICAL SETTING AND BASIS FOR PROSPECTIVE RESOURCE ESTIMATE The Kito Prospect lies within the undrilled Kilombero rift, a portion of the East African Rift System (EARS). This rift is covered by Swala s Kilosa-Kilombero Licence. Interpretation of six 2D seismic lines show a significant rift fill on interpreted basement (Purple horizon) bounded in the west by a major fault and dipping more gently up to the east. Two horizons are proposed as potential reservoir levels (Yellow shallow, Blue - deep), and prospective resources estimated for both levels. An additional horizon (Green) is mapped near the top of a lower reflectivity package, interpreted as possible base reservoir package. Faulting parallel to the main bounding fault cuts the Blue horizon. Depth conversion has been undertaken using stacking velocities. The rift fill shows a structurally closed feature against the bounding fault, and comprises the Kito Prospect. This gentle anticline is a reflection of possible intra-neogene compression. The crest of the Yellow horizon closure lies at some 610m, with most-likely closure at 725m. The crest of the Blue horizon lies at some 1125m, with most-likely closure at 1250m. For both the Yellow and Blue horizon, there are upside structural cases which extend the prospect along to the northeast to be trapped against a basement fault splay. A lower reflectivity package between the Green and the Blue horizons may reflect a more shale prone interval. Probabilistic volumetric calculation using ranges of input parameters gives gross prospective unrisked Best Estimate oil resources of 112 MMstb for the Yellow Horizon and 39 MMstb for the Blue Horizon, totalling 151 MMstb. This total volume falls within the range of published resources, albeit towards the high end. The frontier nature of the play implies a large uncertainty in prospective resources, and the combined total resource ranges from 48 (Low Estimate) to 424 MMstb (High Estimate). These totals use arithmetic summation to account for a likely significant level of dependence ASSESSMENT OF CHANCE OF DISCOVERY Support for the play comes from the discovery of significant commercial volumes of oil in the rift play in the last eight years in the Albertine Graben (Lake Albert area), which has demonstrated pools with recoverable volumes in the range < MMstb. In addition, a recent oil discovery in the Lokichar Basin in Kenya gives encouragement. Nevertheless, it should be noted that each rift or portion of rift within the EARS is a discrete entity, with its own petroleum systems that may or may not be analogous to the Lake Albert area or the Lokichar Basin. Given the current absence of drilling in the Kilombero rift, the various elements required for a working petroleum system reservoir, trap, source/charge are unproven for this frontier area. However, interpretation of the recent seismic data provides strong evidence of rift fill analogous to the drilled rifts elsewhere, and gives encouragement for the prospectivity. Effective reservoir rocks, probably of fluvio-deltaic facies, are very likely to be present in the Kilombero rift, given the eroding adjacent basement blocks. There is a good chance of lacustrine source rocks also being present, although the failure of exploration north and south of the main Lake Albert pools may imply that source facies are not ubiquitous in this play. Levels of maturation and ability to charge the reservoirs is unknown, but are expected to have a realistic chance of working, given the interpreted depth to basement of about 3.3km in the centre of the basin. Given the undrilled nature of the Kilombero Kilosa rift system, a play risk exists. RISC determines the chance of success for the Neogene play to be 39%. The prospect chance of success for Kito is estimated to be 20% Page 3

11 and 22% for the Yellow and Blue levels respectively, giving a combined chance of success of 8% (or about 1 in 13) and 9% (or about 1 in 12) for the Yellow and Blue levels respectively. These chances of success relate to discovery. A separate chance of development would be applicable in the event of success, which given the frontier stage of exploration has not been estimated in this report TERMINOLOGY Petroleum exploration in the Kilosa-Kilombero Licence is currently at an early stage of exploration, with prospective resources being focused on a particular exploration play, a term used extensively in this report. This is a defined term under the internationally recognised Petroleum Resources Management System ( PRMS ) 1, and comprises the least mature category of prospective resources. Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. With the acquisition of seismic data, the Kito prospect has been defined, for which a range of Prospective Resources can be quantified, with associated chances of success. Prospective Resources can be subdivided into Prospect, Lead or Play. The definitions from the PRMS guidelines are given in Table QUALIFICATIONS Table 1-2 Prospective Resources definition (PRMS) Information on the Reserves and Resources in this release relating to the Kito Prospect is based on an independent audit conducted by RISC Operations Pty Ltd (RISC), a leading independent petroleum advisory 1 SPE/WPC/AAPG/SPEE 2007 Petroleum Resources Management System Page 4

12 firm. The audit was carried out by Dr. Nick Eustance under the supervision of Mr. Peter Stephenson in accordance with the SPE-PRMS guidelines. Mr. Stephenson is a RISC Partner whose qualifications include B.Sc, M.Eng Petroleum Engineering, membership of the Institute of Chemical Engineers and more than 30 years of relevant experience. Mr. Stephenson consents to the inclusion of the prospective resource data provided in this document in the manner and context in which it is conveyed above. Nick Eustance has a Ph.D in Geology/Geophysics and more than 30 years geoscience experience in the petroleum industry. RISC is an independent advisory firm who works with companies in the oil and gas industry providing technical and commercial evaluations of their resources and assets. RISC offers the highest level of technical, commercial and strategic advice to clients around the world. RISC services include the preparation of independent reports for listed companies in accordance with regulatory requirements. RISC is independent with respect to Swala Energy in accordance with the Valmin Code, ASX listing rules and ASIC requirements. Page 5

13 2. R E G I O N A L S E T T I N G 2.1. THE EAST AFRICAN RIFT SYSTEM Structure The Kito Prospect lies within the Kilombero rift, which is part of the East African Rift System ( EARS ), the classic example of continental rifting. This forms a narrow ( km wide) system of normal faults defining elongate grabens that stretches some 3500 km (Morley et al ). South of northern Kenya, the EARS consists of two trends, the Eastern Branch and the Western Branch that lie either side of the Archaean Tanzanian Craton. The Eastern Branch enters Tanzania at Lake Natron and itself separates into two distinct extensional domains. This area is known as the North Tanzania Divergence, and includes the Ngorongoro-Kilimanjaro Volcanic Province. To the south of the North Tanzania Divergence, the structure is relatively poorly understood, but includes the Kilosa and Kilombero rifts, which are covered by Swala s block of the same name. The rifts have clear present-day topographic expression. A typical rift consists of a single major border fault, shown typically by the basins in the west, or occasionally a symmetrical pair, linking downwards to a lowangle detachment, together with a series of lesser normal faults outlining tilted blocks. The sense of rift asymmetry depends on the underlying structure Geological History and Stratigraphy The geology of East Africa comprises a series of distinct and separate stratigraphic units, from Precambrian basement through to Recent sediments and volcanism. Precambrian: The Northern Tanzania craton provides the basement within which subsequent rifting and sedimentation and volcanism has occurred. Basement is widely exposed and its erosion provides a local source for clastic sedimentation into rifts. The Precambrian itself reflects a complex and multi-phase history, that incorporates Neoproterozoic (Late Proterozoic) mobile belts which have provided the lines of weakness that have been utilised by the Miocene rifting Karoo: In central, eastern and southern Africa, rifting caused initiation of sedimentation in the Late Carboniferous that continued into the Permian and Early Triassic. These fluvio-deltaic and lacustrine sediments are broadly referred to as the Karoo, an extrapolation of the main Karoo Basin of South Africa. Within the Kilombero rift, however, the Karoo appears to be absent. Palaeogene to Neogene - East African Rift System: Within the area of Swala s assets, rift initiation was primarily in the early Miocene, although the dating of rift development is generally poorly constrained. The Western Branch appears to have been initiated later than the Eastern branch, during the late Miocene, and early deposition may have been in broad depressions with relatively little fault control (Foster et al ). There is much less volcanism than in the Eastern branch. However, both branches are seismically active. As well as the general location and trends provided by the Neoproterozoic mobile belts, the Karoo rift geometry has influenced the form of the EARS. Pliocene to Recent volcanics: Pliocene to Recent volcanics are present in the Ngorongoro-Kilimanjaro Volcanic Province (NKVP) and to the north in the Kenya Rift Figure 2-1). The NKVP is a transverse belt 200 x 50 km, covering numerous volcanic structures and extensive air-fall material. 2 Morley, C. K., D.K. Ngenoh, & J. K. Ego, 1999, Introduction to the East African Rift System, in C.K. Morley ed., Geoscience of Rift Systems Evolution of East Africa: AAPG Studies in Geology No. 44, Foster, A. et al., 1997, Tectonic development of the northern Tanzanian sector of the East African Rift System, Journal of the Geological Society, London, Vol. 154, 1997, pp Page 6

14 Pliocene to Present Day: Where the rift basins have been drilled, extensive deposits of Plio-Pleistocene sediments are seen to be present, dominantly from fluvio-lacustrine deposition. A late cover of alluvialrelated deposits is generally the uppermost fill within the rift grabens. Where there are present day lakes, lacustrine sedimentation is active. Present day deposition is likely simply to be a more subdued version of that which occurred during the rifting. Figure 2-1 Structural elements in Tanzania with Swala s blocks [green outline] (Baker, 2012) Page 7

15 2.2. THE EAST AFRICAN RIFT SYSTEM PLAY Summary of Play The Kito Prospect, within the Kilombero rift, is proposed as an example of a typical East African Rift System (EARS) play. A typical example of this play, from the drilled half graben Lokichar Basin in Kenya, is shown in Figure 2-2, and illustrates the various elements of the play. Comparable geology is seen in the Albertine Graben (Lake Albert), site of the Tullow discoveries. Reservoirs are Neogene in age (Miocene-Pliocene), and range from alluvial fans through to lacustrine gravity flow deposits. Intervening shales provide potential sources and top seals. Trapping mechanisms are likely to be primarily the crests of synrift fault blocks, sealed laterally against shales with downdip closure. Updip pinchout of deep-water sands could potentially provide stratigraphic traps. However, exploration needs to recognise the extreme stratigraphic variability between individual half grabens (Morley et al., ) influencing both reservoir and source distributions. The wells drilled in the Albertine Graben have shown a very high success rate, demonstrating that where the individual elements of the petroleum system are present, this is a very effective play. Given that the Kilombero rift, is undrilled, it is not yet known whether this area will be successful. It is important to note that to the north and south of the main discoveries in the Albertine Graben, exploration has not been successful. Figure 2-2 Example of a half graben with interpreted depositional facies Lokichar Basin, Kenya (Morley et al., 1999) Source Lacustrine source rocks are widespread in the East African Rift System, and have been particularly encountered in areas with well-developed natural oil seeps (Thuo, ). The best example in the EARS is the Lake Albert Rift where oil seeps are numerous and where major oil discoveries have recently been made. In the Lokichar Basin of the Northern Kenya Rift, the Lokone Shales form good source rocks. Morley ( ) states that from a relatively small area (~100 km 2 ), this thick (average 500m) high TOC source is capable of generating billion barrels of oil. Source rocks found in the Ngorora Formation of the Kerio-Baringo 4 Morley, C.K., W.A. Wescott, D.M. Stone, R.M. Harper, S.T. Wigger, R.A. Day, and F.M. Karanjal, 1999, Geology and Geophysics of the Western Turkana Basins, Kenya: in C.K. Morley ed.,geoscience of Rift Systems Evolution of East Africa: AAPG Studies in Geology No. 44, Thuo, P (year of thesis submission), Stratigraphic, petrographic and diagenetic evaluation of Cretaceous/Paleogene potential reservoir sandstones of western Turkana, Kenya. Implications on the petroleum potential of northwestern Kenya: Doctorate thesis for l Université de Bretagne Occidentale 6 Morley, C.K., 1999, Comparison of Hydrocarbon Prospectivity in Rift Systems: in C.K. Morley ed., Geoscience of Rift Systems Evolution of East Africa: AAPG Studies in Geology No. 44, Page 8

16 Basins of the Central Kenya Rift are reported to be of comparable quality (up to 4.3% TOC). However, the variability of facies within the rifts, especially where volcanics may be present, adds uncertainty; for example, the high quality source rocks of the Lokichar Basin are replaced by volcanics and volcaniclastics over a distance of 100km. Absence of local source facies may also be the cause of the lack of exploration success in the blocks to the north and south of the Lake Albert area. Published information on the geochemistry of the Lake Albert source rocks and hydrocarbons is limited, but are postulated to be a mixture of Type I and Type II kerogens derived from lacustrine and higher plant assemblages 7. Crude oil is reported to be typically light (30 34 API) and paraffinic with high wax content. Nevertheless, although oil is the dominant phase within traps in the Lake Albert pools, a number of wells have also encountered (smaller) gas columns, so it is clear that the source rocks in the Lake Albert Rift are both oil and gas-prone unless the gas is a separate biogenic component. There is also a single gas-only discovery at Turaco which has a high CO 2 component. At this undrilled stage, the geochemistry of any potential source rocks and hydrocarbons in the Kilombero Rift is currently unknown. In Kenya, heat flow values from the rift floor lie between 50 and 100 mwm -2 (with a few higher values up to 176 mwm -2 ), compared to mwm -2 on the rift flanks (Wheildon et al ; some 75 measurements). These authors inferred further that rifting and uplift may precede the conduction of a significant thermal anomaly to the surface. This seems to be supported by data from Tanzania. Here, the average of heat flow measurements on the Tanzania Craton provided by Dawson (2008) 9 is 34 (range 21-47) mwm -2, and from the Mozambique Belt 47 (range 39-62) mwm -2 ;. There is no direct information on the heat flow in the Kilombero rift, which may or may not have elevated heat flow. We have not seen discussion of maturation and timing, but the evident discovery success implies that these are not major concerns. Some of the pools in the Lake Albert area are shallow (e.g. Kigogole at 400m 10 ), where any in-situ sources will be immature, so oil has necessarily migrated from deeper levels in the rift. We note also that despite the shallow levels of the same pools, the discovered oil is light, so isolation from surface waters seems to have prevented biodegradation Reservoir The success of the Lake Albert discoveries proves the viability of the syn-rift Neogene reservoirs. The various basins in the Kenyan Rifts Lotikipi, Gatome and Lokichar in the Northern Kenyan Rift (NKR), and Kerio and Baringo Basins in the Central Kenyan Rift (CKR) also offer good to very good reservoir potential (Thuo ). The best examples are the Lapur and Muruanachok Sandstone Formations and the lowest parts of the Lokichar Basin fill. The Lokichar Basin (which has current exploration, see below) also includes the Lokone and Auwerwer Sandstone Formations. The reservoir age is older in this area than that expected for Swala s assets in Tanzania due to the southerly advancement of the rifting through time. However, while we would expect the analogies remain relevant, each rift or portion of rift within the EARS is a discrete entity, with its own petroleum systems and accordingly, the Kilombero rift may not be analogous to these basins. Rift fill tends to show a progradation of coarse-grained fluvio-deltaic systems over lacustrine sediments. Sandstone quality is nevertheless dependent on the source area and transport distance. In these basins, the sandstones are associated with early basin development and tend to be arkosic, and with breakdown of feldspars tend to provide less effective reservoirs. Where present, volcanic components are likely to break down and reduce porosity and permeability. Any of calcite, kaolinite, hematite and/or zeolite cements may 7 Government of Tanzania Petroleum Exploration and Production Dept 8 Wheildon, J. et al., 1994, Heat flow in the Kenya rift zone, Tectonophysics 236, Consistent with Wheildon s view from Kenya that rifting and uplift may precede the conduction of a significant thermal anomaly to the surface. 10 Tullow website 11 Thuo, P., op cit. Page 9

17 also be present. Porosities of 3 to 25% are reported for the Lapur Sandstone Formation. Morley ( ) concluded however that reservoir-quality sandstones (porosity 12-14%) could be encountered down to at least 3 km. In the Albertine Graben discoveries, porosities up to 30% have been reported. The success in the rift play seen at Lake Albert and in the Lokichar Graben has been primarily in the Miocene, viz. the older part of the Neogene. However, the apparent continuity in depositional systems and shale/sand facies from the Miocene to the Pliocene suggests that the Pliocene should also be prospective. At present, although seismic data indicates that a Neogene fill is likely within the Kilombero rift (Section 4.1), there is no information on reservoirs or their porosities and permeabilities. However, assuming a Neogene fill to be present, the presence of effective reservoirs within this fill is relatively low risk Seal Figure 2-3 Schematic stratigraphy of Lokichar Basin (Thou, 2009) Morley (1999) discussed the characteristics of the rifts and compared them to other rift systems in relation to hydrocarbon potential. He concluded that the elements for a successful hydrocarbon play are present in East Africa, but the critical factor was in finding a widespread sealing facies at an appropriate level. Shales interbedded with late rift phase fluivo-deltaics tend to be thin and discontinuous (Figure 2-2). This was a common characteristic of rifts with no or poorly developed overlying thermal sag basins. The illustration provided above of the half graben illustrates that sealing (top seal) is necessarily intraformational. Nevertheless, the Lake Albert and associated discoveries have shown that this is clearly a proven mechanism 12 Morley, C.K., 1999, Comparison of Hydrocarbon Prospectivity in Rift Systems, in C.K. Morley ed., Geoscience of Rift Systems Evolution of East Africa: AAPG Studies in Geology No. 44, Page 10

18 in these rifts. However, given that the Kilombero rift is currently undrilled, it is not known whether comparable seals will be present Trap Trapping mechanisms are predominantly footwall closures, sealed updip laterally against intra-formational shales in the hanging-wall, with dip closure on other sides (Figure 2-2). Fault orientations that are parallel to the main bounding fault (where the geometry is a half graben) and antithetic are both present. In places, rollover due to listric fault geometry, or structural inversion, should provide an element of four-way dip closure. Leading on from the observation that intraformational shales tend to be thin, the sealing of significant columns through updip lateral pinchout against the same shales may also be difficult. In the Albertine Graben discoveries, hydrocarbon columns vary significantly, but reported values range up to about 130m, with net pay seen in wells between 3m and 40m. RISC has no information on what defines the hydrocarbon-filled closure. It is possible that these are defined by the limits of shale facies Lake Albert Hydrocarbon Discoveries Hydrocarbon oil seeps have been recognised in the Albertine Graben which contains Lake Albert - for a number of years. Exploration began in earnest in The key industry player in the area for the last seven years has been Tullow Oil, which holds acreage in Blocks 1, 2 and 3A which together cover the prime acreage in Uganda around Lake Albert (Figure 2-4). Since 2010, Tullow have farmed down interests to Total and CNOOC. Page 11

19 Figure 2-4 Fields and prospects in Lake Albert area (Tullow, ) Waraga-1 was the first well to flow oil to surface in the region. Drilled in 2006, it achieved a combined rate of >12 kbo/d, from 27m net pay (Figure 2-5). A schematic cross section in the vicinity is given as Figure 2-6. Figure 2-5 Waraga-1 - Seismic line through discovery and wireline logs (Africa Oil 14 ) To the south lies the Kingfisher Field. The discovery well (Heritage Oil, 2006) was drilled to a depth of 2,125 m and intersected oil at two levels. A successful DST in the shallower reservoir unit revealed the fluids to be light crude oil (30 0 API) with a low GOR and permeability> 2,000 md. The sidetrack Kingfisher 1ST was drilled to a depth of 3,195 m to intersect the deeper, primary objective, with production testing flowing at 9,773 bopd. Gross hydrocarbon columns in appraisal wells are up to 110m, with cumulative net pay up to 40m. Production testing on Kingfisher-2 gave a cumulative flow rate of 14,364 bpd. In-place oil volumes were reported in February 2012 at some 400 MMstb 15. A schematic cross section in the vicinity of Kingfisher is shown in Figure 2-6. The Turaco is a 2003 deep gas discovery well located to the south-west of Kingfisher. The gas has very high concentrations of CO Tullow Oil November 2009, Overview presentation Page 12

20 Figure 2-6 Schematic cross section through the Kaiso-Tonya Region (modified from Tullow Oil) Hydrocarbon discoveries in the northernmost area of the Albertine Graben include Jobi-1 (formerly Buffalo- 1, 2008) with a gross hydrocarbon-bearing interval of 123m with 43 m net oil and gas pay. This field is described as the largest discovery in the basin to date 16. Resource volumes are not clearly published, but the creaming curve shown below suggests mid-case contingent resources in the order of 350 MMstb. Other discoveries in the basin include Kasamene, Kigogole, Nsogo, Wahrindi, Ngara and Ngege, with individual net pay up to about 40m. Kigogole has moveable light oil in reservoirs at just over 400m depth. Tullow has now drilled over 50 wells in the Lake Albert area, with an exceptional success rate; 26 out of 27 wells (exploration plus appraisal) were reported (November 2009) to have found hydrocarbons. Total resources within the graben are now reported as more than 1 billion barrels 17. A creaming curve for the mid case contingent resource (PESGB ) indicates pool sizes ranging from ~10 MMstb to ~300 MMstb. Tullow have reported commercialised resources for Uganda of 604 MMboe 19. There is an active exploration campaign across the Lake Albert region, with a drilling campaign that includes over 20 appraisal wells. Key focus is the Jobi-Rii discovery area and to a lesser extent the Butiaba-Buliisa region (Ngege and Nsoga). Tullow report that the mean resources targeted by these wells range from 15 to 189 MMboe. However, exploration has been less successful for companies in Blocks 4 and 5A/5B, respectively to the south and north of Lake Albert Tullow Oil, 2011, Results presentation 18 Petroleum Exploration Society of Great Britain (PESGB), 2010, Uganda Exploration - An Overview: Petex Tullow Oil, 2012, Full year results presentation, Page 13

21 Exploration in Kenyan EARS Recent petroleum exploration has been focussed on the Lokichar Basin. In 1992, the Loperot-1 oil discovery was made here by Shell in Block 10BB, some 70km west of Lake Turkana, within the Kenyan Rift Valley. This acreage is now held by an Africa Oil Corporation / Tullow joint venture. In January 2012, they spudded Ngamia-1 20km to the west of Loperot-1 (Figure 2-7), and encountered in excess of 100m of net oil play in multiple reservoir zones over a gross interval of 650m of the Upper Lokhone Sandstone interval (855m to 1,500m) 20. A schematic log is shown in Figure 2-8. The reservoirs are composed of good quality Tertiary age sandstones. Moveable oil with an API >30 was recovered to surface from four intervals. This oil has similar properties to the light waxy crude which has been discovered in Uganda by Tullow. After testing and evaluation of the Upper Lokhone pay zones, the well was drilled through the Lower Lokhone Sandstone interval and encountered an additional 43m of potential oil pay based on logs and the recovery of light oil on an MDT sample over a gross interval of 150m. The well was drilled to a total depth of 2,340m after penetrating the Lower Lokhone objective sequence. The well is now suspended for future flow testing. Africa Oil report the discovery contains gross contingent resources (2C) of 51 MMstb, with an additional 137 MMstb Best case prospective resource. Figure 2-7 Ngamia discovery, Kenya (Africa Oil Corp 21 ) 20 Africa Oil Corp, Sept 2012, Opening a new oil frontier in East Africa: presentation on website 21 Africa Oil Corp, Sept 2012, Opening a new oil frontier in East Africa: presentation on website Page 14

22 Figure 2-8 Ngamia-1 well results (Africa Oil Corp 22 ) Exploration and appraisal continue in this area. Africa Oil Corporation announced 23 that the testing of the Twiga South-1 oil discovery (23 km from Ngamia-1) has been completed, with the fifth and final drill stem test (DST) flowing at 461 bopd bringing the cumulative flow rate up to 2,812 bopd, constrained by surface equipment. With optimised equipment, Africa Oil believes that a cumulative flow rate of around 5,200 bopd could be achieved; the well has been suspended as a potential future production well. High quality 37 degree API waxy sweet crude was flowed from all three zones in the Auwerwer formation with good quality reservoir sands encountered. Notwithstanding the successes seen in both the Lokichar Basin and the Albertine Graben, it is important to stress again that each rift or portion of rift within the East African Rift System is a discrete entity, with its own petroleum systems that may or may not be analogous to these areas. At the very early stage of exploration represented by the Kilombero rift, there is a material play risk associated with success (Section 4.3). 22 Africa Oil Corp., op cit. 23 Africa Oil Corp., 21 Feb 2013, Page 15

23 -6º30' -7º -7º30' -8º -8º30' -9º º30' -7º -7º30' -8º -8º30' -9º 3. T A N Z A N I A : K I L O S A - K I L O M B E R O L I C E N C E 3.1. GEOLOGICAL SETTING Terrain and Surface Geology The Kilombero rift lies within the southerly portion of the Kilosa-Kilombero Licence, an elongate permit that covers two alluvial basins of the EARS, separated by an intervening saddle. The block is bordered to the west by the eastern flank of the Gologolo Mountains, with elevations up to 2000m. The 3D digital elevation map (Figure 3-1) clearly illustrates the relatively flat valley floors and the elevated terrain of the rift shoulders and surrounds. The Kilombero rift and partially contiguous Kidatu rift are separated from the northern Kilosa rift by an uplifted zone, the Gombati Transfer zone 24. The Kilombero rift is separated from the coastal Selous Basin to the east by the irregular terrain of the Uluguru Mountains. Kanga 36º 36º30' 37º 37º30' Turiani SWALA OIL & GAS (TANZANIA) LIMITED KILOSA-KILOMBERO BLOCK Magole TANZANIA 3D Digital Elevation (SE Shade) Kilosa Scale 1 : 500, kilometres February 2012 KILOSA MOROGORO Ulaya Gombati T A N Z A N I A Mikumi Kikoboga Kidodi Matassi Kidatu IRINGA Lugalu Great Ruahu River Kidatu Ifakara Mbingu Kivukoni River River Kilombero Rufiji Chita Kilombero Lewegue River Mahenge Lugala LEGEND Utengule Permit boundary Spot elevations (approx) Rift faults Road Water course Town 36º 36º30' 37º 37º30' Figure 3-1 3D elevation map (Satellite Radar Topographic Mission) with basic subdivision of areas The Kilombero-Kidatu-Kilosa rift province is set into context in the wider Tanzanian geology in Figure 3-2, and a more local geological map illustrates the structural and stratigraphic elements of the area (Figure 3-3). The main rift surrounds are Precambrian basement. This comprises banded Proterozoic gneisses and Late 24 Nilsen, O., H. Dypvik, C. Kaaya & E. Kilembe, 1999, Tectono-sedimentary development of the (Permian) Karoo sediments in the Kilombero Rift Valley, Tanzania: Journal African Earth Sciences, 29, 2, Page 16

24 Proterozoic (Neoproterozoic) high grade metamorphics, the latter constituting a portion of the Mozambique Mobile Belt. The Permo-Trias Karoo outcrops in the Kidatu Rift, along the margin of the Uluguru Mountains; and through a direct southerly extension to the Kidatu rift links into the Selous Basin. The rift valleys of the EARS are filled primarily with surficial deposits related to the current drainage systems and older Recent alluvial fans and sheetwash gravels, plus landslide debris. The Plio-Quaternary alluvium is of unknown thickness. There is no mapped outcrop of Neogene sediments. Kilosa Kidatu Kilombero Figure 3-2 Geological setting of the Kilosa-Kidatu-Kilombero rifts (Nilsen et al., 2001) The present day rift pattern results from an overprint of the Karoo rift with Neogene-Recent faults of the East African Rift System. Le Gall et al ( ) discussed the history of the rifting in the Kilombero area. 25 Le Gall, B. et al., 2004, Neogene-Holocene rift propagation in central Tanzania: Morphostructural and aeromagnetic evidence from the Kilombero area: GSA Bulletin, 116, 3/4, Page 17

25 Figure 3-3 Simplified geological map of Kilosa-Kilombero area (Baker) Structure from Landsat TM Data Landsat imagery and aeromagnetic data have been recently interpreted by Baker ( ; Figure 3-4) The Kilombero Rift is a major, 150 km long Cenozoic rift basin, which originated as a southeast-facing half-graben that subsequently underwent more general thermal sag. The rift is limited in the west and north by enechelon boundary faults. The presence of east-west faults in the Precambrian basement is interpreted by Baker to imply that the northern end of the structure is partly controlled by pre-existing faulting. The Landsat imagery and regional magnetics both suggest that the axial sector is underlain by northeast-trending faults, which may subdivide the basin into a series of horsts and grabens. Northeast to east-northeast trends are attributed by Baker to Cenozoic extension, and are all southeast-facing half-grabens. Baker supports the likely presence of a Neogene rift fill. A re-entrant along the western margin offers a clastic input route. 26 Baker, M., August 2012, Landsat interpretation of Kilombero-Kilosa Rifts, Tanzania (for Swala Energy) Page 18

26 Figure 3-4 Inferred Neogene basins in Kilosa-Kilombero Block from Landsat TM imagery (Baker, 2012b) Structure from Gravity and Aeromagnetic Data Gravity and magnetic data were acquired in the Kilosa-Kilombero Licence by NRG and evaluated by Southern Geoscience Consultants (SGC). The survey involves approximately 9,000 km magnetics and 4,500 km of gravity (over three separate areas in the licence). The gravity data was flown on a 2x8 km grid, the magnetics on a 1x4 km grid; the gravity data at a drape elevation of between 515m and 668m AGL, and the magnetic data between 46m and 94m AGL. SGC assessed a number of different modelling techniques for determining the maximum depth to basement using the magnetic data. The most robust approach appeared to be using the Naudy method. An image of the Naudy depth contours on a backdrop of residual gravity is shown in Figure 3-5. This shows that the interpreted depth to basement reaches 4000m in axial areas. It also demonstrates that the rift is not restricted to the area of seismic lines provided to RISC, but extends significantly to the south, with a similar depth to basement. Page 19

27 Figure 3-5 Naudy basement depth contours on residual Bouguer gravity anomaly in Kilombero rift (SGC) Page 20

28 4. K I T O P R O S P E C T 4.1. PROSPECT DEFINITION Seismic Interpretation and Mapping The Kito Prospect is mapped on the six 2D seismic lines, totaling 110 km acquired by Swala in the undrilled Kilombero rift (Figure 4-1). The seismic data were acquired in October and November There are five dip lines, striking northwest-southeast, and one strike line, southwest-northeast, that ties the dip lines. Additional seismic lines to the south in the Kilombero rift, and lines acquired in other portions of the Kilosa- Kilombero block, were not available to RISC. The lines provided are well-oriented in respect of the southwest-northeast trend of the rift. Data quality is fair to good in the upper portion of the rift section (<1.5s), but deteriorates in the deeper rift fill. The data quality and the sparseness limit the resolution of faulting close to the main westerly bounding fault and faults in the deeper section. Four seismic events have been mapped: Yellow (shallowest), Green, Blue, and Purple (deepest). Seismic character and interpretation are shown in Figure 4-2 to Figure 4-4. Table 4-1, and key seismic line examples are given as Area of interpretation Figure 4-1 Kilosa-Kilombero block 2013 seismic programme Page 21

29 Horizon Seismic character Interpretation Yellow (shallowest) Approximate top of higher reflectivity package. Mapped on seismic peak. Possible top shallow reservoir level Green Top of deeper higher reflectivity interval, clear base of low reflectivity interval. Mapped on seismic peak. Possible base shallow reservoir level / near top possible regional seal Blue Clear base of low reflectivity package; top of higher reflectivity package. Mapped on seismic peak. Base of possible regional seal; top of deep possible reservoir section Purple (deepest) Approximate base of higher reflectivity package. Mapped on peak. Low confidence in many areas. Top Basement; base of possible source interval Table 4-1 Interpretation of Kito seismic lines?top shallow?intra-neogene reservoir?base shallow?iintra-neogene reservoir?top deep?intra-neogene reservoir Top?Basement Page 22

30 Figure 4-2 Dip seismic line 004?Top shallow?intra-neogene reservoir?base shallow?iintra-neogene reservoir?top deep?intraneogene reservoir Top?Basement Figure 4-3 Dip seismic line 006?Top shallow?intra-neogene reservoir?base shallow?iintra-neogene reservoir?top deep?intraneogene reservoir Top?Basement Figure 4-4 Strike seismic line Depth Conversion We have used stacking velocities from a single location on Line 6 (CMP 200) for depth conversion (no other velocity information was available to RISC). Separate linear trends using a V0-k function27 have been derived 27 Yellow and Blue reservoir levels : k = 565, V0 = 1455 m/s; Purple basement level: k = 190, V0 = 2010 m/s Page 23

31 for the general TWT range for the proposed reservoirs and for the deeper proposed source interval (Figure 4-5). The velocities derived in this manner have been discounted to 90% to equate to seismic velocities. Figure 4-5 Stacking velocity data used to derive V0-k function for depth conversion Geological Interpretation Despite the limitation of the available seismic, the overall geometry is clear. Each of the dip lines show a clear large steep normal fault, down faulting to the east. The difference in seismic character suggests that the footwall is primarily basement, and a rift fill constitutes the hanging wall. Given that the seismic lines were not acquired over the topographically elevated rift margin, we consider that the basement interpreted in the footwall represents a terrace downthrown from the main rift margin further to the west. The eastern limb of the rift dips more gently, with the interpreted basement rising through a series of westward-dipping normal faults. The geometry is not a simple half graben as the deepest part of the graben lies within the middle of the rift. This is supported by the form of the Naudy basement depth contours (Figure 3-5). Most importantly, however, the seismic data confirm that the Kilombero rift is a material feature. Without well control, the age of the rift fill is not known, but by analogy to drilled Lokichar and Albertine Graben rifts, it is likely to be Miocene to Pliocene. Opposing rollover dips and discontinuities within the deeper portion of the rift fill (Blue to Purple) indicate that the section close to the main bounding fault is cut by additional faults that parallel the main boundary. The available seismic does not allow these to be defined with great confidence, and thus the faulting shown on the TWT and depth maps at Blue level should be taken as indicative, rather than certain. The TWT and depth maps show a significant structurally closed feature adjacent to the main bounding fault. This is the Kito Prospect. In analogous rifts where drilled, the Miocene-Pliocene interval consists of interbedded clastic sequence, and we consider similar facies are likely to be present here. Without well data, it is not possible to know where reservoirs will be located, but we have proposed that separate shallow and deep reservoir sections are present immediately below the Yellow and Blue horizons respectively. The Blue level is particularly likely to benefit from a proposed primarily shaley section interpreted from the overlying low seismic reflectivity package, both in terms of regional seal, but also proximity to any deeper sources. Page 24

32 From RISC s interpretation, the geological history appears to comprise early and significant faulting with rift fill. The section from Blue down to proposed basement at Purple appears to be more faulted than the succeeding stratigraphy, and at least locally, the Blue level may represent a period of structural adjustment/more faulting and subsequently development of an unconformity. As discussed, the succeeding package of low seismic reflectivity, may potentially be a more shale-dominated section deposited in a time of reduced tectonics. However, some minor compression, perhaps associated with continuing rifting at the conclusion of this period (Green Horizon) is demonstrated by clear onlap onto what would have been a gentle anticline. This is the basis for the Kito Prospect. On a few lines, the development of this anticline is associated with an antithetic fault. Midway through the period represented by the Green to Yellow interval onlap seems to have finished, and sediments continue up to the main fault. Rift fill appears to have continued from that time through to the present in a similar manner. Although fault mapping carries uncertainty, RISC considers that the data are adequate to define the Kito Prospect. There are minor four-way dip-closures at Yellow and Green levels, and a four-way dip-closure cut by the synthetic fault at Blue level, but the majority of the closure at each level is bounded to the west by the main bounding fault. A possible larger closure exists at each level by seal against an apparent fault splay (light pink on maps) from the main fault interpreted at the northeast end of the strike line. The seismic character seen in the footwall of this fault is much more similar to that of the interpreted basement than the rift fill, and thus the footwall is more likely to be a basement terrace. Seismic line SKB shows relatively flat events adjacent to the main bounding fault within structural closure that could be interpreted as potential fluid contacts. However, we consider that a structural interpretation is more likely, and that as discoveries in analogous rifts imply that an oil charge is much more likely than gas, such a direct hydrocarbon indication is unlikely. We have thus not taken it into account directly in our volumetric estimate, but the calculated range (next section) incorporates this possibility. Top basement is interpreted to be represented by the Purple horizon. In the centre of the rift, this is mapped to be about 3300m (Figure 4-6). Support for this comes from the interpretation of aeromagnetic data which had a maximum depth of about 4 km. Top basement is also the base of any potential source interval. Page 25

33 Figure 4-6 Kilombero rift Purple Horizon, interpreted top basement 4.2. VOLUMETRICS Approach We used a probabilistic method using the industry-standard REP software to combine ranges of input parameters to derive distributions of undiscovered hydrocarbons and prospective resources Gross Rock Volume Area and degree-of-fill Without well data within the Kilombero rift, we have adopted a relatively simple approach for prospect gross rock volume for each of the Blue and Yellow horizons. We have used area-depth plots from the depth maps, Page 26

34 in conjunction with a range in areas (potential spill points) to capture the uncertainty in both structural definition (given only six seismic lines) and depth conversion, plus a degree-of-fill factor. The P50 areas (spill points) for both horizons comprise the main dip-and-fault closure in each case, trapped in the immediate vicinity against the main bounding fault (Figure 4-7, Figure 4-8). Our upside closure in each case is the maximum closed structure which relies on trapping by an interpreted splay, which appears to relate to a basement terrace. This area is ascribed as the P10, recognising that the limited control allow it to be larger in a maximum case. The P50 and P10 values are then used to define a log normal distribution. A seismic line though the Kito Prospect, illustrating the closures, is shown in Figure 4-9. Yellow Horizon Depth, m Area, km 2 Crest P P Blue Horizon Depth, m Area, km 2 Crest P P Table 4-2 Kito Prospect- trap areas We have used a degree-of-fill factor of 40% (Minimum) 65% (Most likely) 100% (Maximum), using a Beta distribution. This factor addresses uncertainty in the available hydrocarbon charge and/or constraints created by lateral seal issues. It recognises that the Kito structure is large and that (in the event of success) the ability for it to be filled is unknown. In addition, we have used an area uncertainty of 95% (P90) 100% (ML) 110% (P10), using a Beta distribution; this is biased slightly to the upside to reflect the small additional volume in the north of each P10 closure that is not taken in to account by the area-depth approach used. Page 27

35 Figure 4-7 Yellow Horizon possible top shallow reservoir, with P50 and P10 closures Page 28

36 Location of seismic line 016 (Figure 4-9) shown in bold Figure 4-8 Blue Horizon possible top shallow reservoir, with P50 and P10 closures Page 29

37 ?Top shallow?intra-neogene reservoir?base shallow?iintra-neogene reservoir ML Max ML Max?Top deep?intra-neogene reservoir Top?Basement Location of seismic line shown in Figure 4-8 Figure 4-9 Seismic dip line SKB through Kito Prospect, showing closures Reservoir thickness Discoveries in analogous rifts show the possibility for multiple pay sections, which may or may not be in communication. In part, we have addressed this by our two separate reservoirs intervals, Blue and Yellow. For each reservoir, however, we have then defined a range of net pay thicknesses. These are based on pay thicknesses published for wells in the Albert and Lokichar rifts (Table 4-3). Our net thickness used for both the Blue and Yellow levels are: 10m (P90) 25m (P50) with a log normal distribution, implying upside (P10) of about 62m. The total mean thickness is thus about 65m, with a wide range to reflect the considerable uncertainty. As we have used net thicknesses, the net-to-gross is 100%. Page 30

38 Well Unit Interval, m Net oil pay, m Net to gross, % Waraga-1 340m gross HC interval 27m 8% net pay to gross HC interval Ngamia-1 Upper reservoir Lower reservoir 775m gross reservoir interval 175m gross reservoir interval >100m <43m possible >13% net pay to gross reservoir <25% net pay to gross reservoir Jobi-1 123m gross HCbearing interval 43m 35% net pay to gross HC interval Kingfisher appraisal wells <110m gross HC column <40m <36% net pay to gross HC interval Table 4-3 Reservoir data from analogue rifts The overall gross rock volume derived from these inputs is 288 (P90) 668 (P50) 1355 (P10) km 2 -m for the Yellow Horizon, and 93 (P90) 477 (P50) 1575 (P10) km 2 -m for the Blue Horizon Reservoir and Fluid Parameters Porosity We have derived a range in average porosity from wells in Kenyan rifts, Figure 4-10, Morley (1999, plus more recently reported porosities for the Ngamia-1 well in the Lokichar Basin of 23-29% in an upper section and average values of 14% ( possibly reduced near fault zone ). Our porosity input, using a Beta function, are thus: Yellow level (shallower, slightly better forecast porosities): 20% (P90) 25% (ML) 30% (P10), and Blue level: 15% (P90) 20% (P50) 25% (P10). Page 31

39 Figure 4-10 Porosity-depth plot for Kenyan rifts (Morely 1999) Water Saturation With no direct information we have used the following wide range, using a Beta function, for Sw: 50% (P90) 35% (ML) 20% (P10). Formation volume factor We have made the following assumptions: normally pressured, with a temperatures assuming 20 degc on surface, and a thermal gradient of 30 degc per km. The oil is forecast to be a light crude of 30 API, with a low GOR of around 300 scf/bbl. Parameter Unit Yellow Horizon Blue Horizon Ave. Depth m Ave. Depth ft Pressure Gradient psi/ft Pressure psi Ground Temp degc Thermal Gradient degc/km Temperature degc Temperature degf Range of Formation volume factor used: Range of 1.05, 1.1, 1.2 as much lower pressure and expected lower GOR. Range of 1.1, 1.15, 1.25 allowing for higher GOR Page 32

40 Recovery Factor Wells in both the Lake Albert area and the Lokichar Basin suggest a light crude with low GOR, with no evidence of overpressure. We have assumed some connection to an aquifer. Africa Oil state that their Twiga South-1 discovery is expected to be able to be optimised at rates up to 5200 bopd. We have used different recovery factor ranges for the Yellow and Blue horizons. The Yellow level appears to be largely unfaulted, and due to its shallowness, is forecast to have porosities between 20 and 30%. Permeabilities are expected to be excellent, with some analogue data showing values of ~ 2000 md. Our recovery factor range for the Yellow horizon is thus 20% (P90) - 30% (P50) - 40% (P10). The deeper Blue horizon is still forecast to have reasonable porosities, but the structure appears considerably faulted, and thus compartmentalised. We have used a lower range of 10% (P90) - 20% (P50) - 30% (P10). In the event of success, the STOIIP is potentially large enough to support many production (and injection) wells in case of compartmentalisation or low primary pressure support Summary of Volumetric Inputs Table 4-4 Volumetric inputs for Yellow (shallow) horizon Table 4-5 Volumetric inputs for Blue (deep) horizon Undiscovered Hydrocarbons and Prospective Res ources The estimate of unrisked undiscovered oil in-place is given in Table 4-6, and the unrisked prospective resources are given in Table 4-7. These volumes fall within the range of published resources, albeit towards the high end. Page 33