Relinquishment Report

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1 Relinquishment Report Licence P1403 Block 13/22d Chevron North Sea Limited Korean National Oil Company Chevron North Sea Limited December 2009

2 1 SYNOPSIS INTRODUCTION Licence Terms Database 3 3 EXPLORATION ACTIVITIES. 4 4 PROSPECTIVITY ANALYSIS Lower Cretaceous Jurassic MAPS AND FIGURES 7-11

3 1. Synopsis Licence P1403, block 13/22d was awarded to Chevron North Sea Limited 70% (operator) & Korea National Oil Company 30% in the 23rd Licensing Round, from 22nd December 2005 (Figure 1). The Chevron group applied for blocks 12/25, 13/21b and 13/22d after a 2D seismic evaluation of the area highlighted potential hydrocarbon prospectivity in the Jurassic interval. However, the Chevron Group failed in its bid for blocks 12/25 & 13/21b and the partnership was only awarded Block 13/22d. The subsequent block evaluation has focused on the prospective intervals in 13/22d. Evaluation of the Lower Cretaceous indicated the presence of numerous combination traps - 3-way dip closures against the Captain Ridge Southern bounding faults that could be targeted as a series of stacked pay intervals. The Ensign lead is considered to show the most potential, having the biggest area of closure. Further analysis of this lead, however, revealed low geological chance of success reflecting the high risk associated with trap integrity and fault seal. A second stacked pay prospect The East Prospect has also been evaluated and has slightly different associated geological risk and similar stacked resource potential. 2. Introduction 2.1 Licence Terms Licence P1403, block 13/22d is located in the South Halibut Basin in the Outer Moray Firth (Figure 1). It was acquired by Chevron North Sea Limited (Operator) effective from 22nd December 2005 with a drill or drop work programme. Relinquishment of the license was effective on 22nd December Work Programme The partnership proposed to license the Phoenix 3D dataset over Block 13/22 and reprocess the data. The partnership agreed to determine whether to drill one well to the base of the Ross Sandstone/3000m depth (whichever was shallowest) or to drop the block. 2.2 Database The seismic data coverage for the area includes the 3D seismic survey called the Phoenix dataset which covers the entire 13/22 licence block and some 2D seismic on which the potential leads were identified in the license application. The 'Phoenix' 3D seismic survey covering 13/22 Block was

4 purchased from Western GECO in Oct It is brokered data shot in 1992, reprocessed by Western GECO in 1998 as part of a larger Moray Firth mega-merge 3D seismic dataset. In addition to this data, Chevron has a proprietary 3D seismic survey: 'Captain Q marine' reprocessed dataset covering the Captain Field and two thirds of the 13/22d block to the South. It was reprocessed Q for Captain and used to refine the Captain Ridge main fault interpretation for the 13/22d block evaluation. The survey outlines are displayed in Figure 2. The well database that was utilised for evaluation of the Lower Cretaceous in the South Halibut Basin is shown in Figure 3. Exploration Activities No additional data beyond purchase of the Phoenix 3-D survey was acquired for the evaluation of block13/22d. 4. Prospectivity Analysis At the time of licence acquisition, potential hydrocarbon prospectivity had been identified within the Upper Jurassic & Lower Cretaceous intervals. The subsequent evaluation concentrated on these intervals. Interpreted horizons included Top Captain Sandstone, Top Coracle C Sandstone, Top Coracle B Sandstone, Top Coracle A Sandstone, Top Punt Sandstone & Early Volgian Sandstone which is reservoir to the Phoenix gas-condendsate discovery to the south of Block 13/22d. 4.1 Lower Cretaceous Sequence Stratigraphy The Chevron sequence stratigraphic framework for the Lower Cretaceous in this area is shown in Figure 4. Palaeogeographic maps of these Lower Cretaceous sequences from The Millennium Atlas, based exclusively on well control, show a series of north-westerly sourced mass flow sands shedding over the Captain Ridge for both the Captain and Coracle aged sands with a more channelized type deposition of the Punt Sands from the west to southwest, interspersed with mudstones. These sands are thickest and most continuous in the basin low parallel to and up dip towards the Captain Ridge main fault as demonstrated by wells 13/22b-20 & 13/21b-2 with the reservoir intervals thinning up structure to the south as seen in wells 13/22b-4 & 13/22b-19. The presence and quality of the Lower Cretaceous reservoir sands within the block was assessed. Sedimentological evaluation suggests Lower Cretaceous turbidites are likely to be present over the whole of the 13/22d block comprising of a mix of clean and more ratty GR response sands that will

5 potentially form good quality reservoirs (Figure 7) with a mound structure visible on seismic in the location of the East prospect. Well 13/22b-20 penetrated these Lower Cretaceous sands with net thickness of 260 feet with occasional oil shows. Cretaceous Leads Up to 18 stacked closures were initially identified and regarded as leads within the licence area. Further analyses of these structures indicated that a number of them are too small to be economic & the remainder, deemed by Chevron, to carry a high geological risk. Ensign Lead The Ensign Lead is shown on the Top Captain Sandstone map (Figure 5). It is located in a fault terrace on the western side of the Captain Ridge main fault. The structure is defined by faults to the north, east and south with dip closure to the west. The prospect is downthrown in relation to the fault to the north. Mapping suggests the prospect comprises of a former relay ramp bound by a fault to the north and one to the south. The crest of the structure lies to the eastern side of the closure with a spill point to the west (Figure 5). Cross sections of the Ensign Lead are illustrated in Figure 6. Lower Cretaceous deep marine mass flow sands of the Captain Sandstone, Coracle Sandstones (split into 3 units here) and Punt Sandstone Formations are predicted to form a stacked reservoir section for the Ensign Lead. Lower Cretaceous mass flow sands form the reservoirs for the Captain Field to the north, the Surprise discovery to the west and the Blake Field to the southeast of the Licence area. These unconsolidated sands are up to 250ft thick in well 13/22b-20 (gross thickness) and have excellent reservoir quality with average porosity and permeability of 31% and 2 7 Darcie permeability respectively (at 25% phie cut off) verified in the Captain Sands up dip in the Captain Field to the north. Average porosities of 31% are also seen for the 13/22d basin area wells for the Captain and Coracle Sands with average porosity of ~15% shown by the Punt Sandstone. High TOC, mature Upper Jurassic Kimmeridge Clay source rock is present within the 13/22d area and modelled to be in the oil generation window at present day. Well 13/22b-20 has a number of oil shows at various levels within the Lower Cretaceous & Jurassic sections. These marine shales could provide hydrocarbon charge to the closures although fetch area for the prospects may be an issue. Migration up-dip to closures from the deeper basin to the east is likely to have occurred during early Tertiary time, after the traps were formed. Well 13/22b-4 contains the Phoenix gas condensate discovery, in Jurassic Volgian Sandstone immediately to the south of the Licence area. More of an issue is what type of hydrocarbons are likely to be found in the closures with a variety of types demonstrated in the nearby Captain Field - 19 API oil; Blake 31 API oil, Phoenix 48 API gas condensate; Surprise to the West - 21 API & 34.5 API in two separate reservoirs - Coracle and Punt Sandstones.

6 The Upper Cretaceous Chalk Group is predicted to form the uppermost top seal (low risk) to the Captain Sandstone while thinner, intra-formational mudstones (high risk) are proposed for top seals to the individual sand intervals of Coracle C, B, A & Punt further down the section. The E-W trending Captain Ridge southern & northern bounding fault seals of the Ensign Prospect are deemed to be the key risk in this prospect. Results of the volumetric calculations for the Ensign Lead indicate a PMean STOIIP of 125 Mmboe and PMean recoverable reserves of 19MMboe (P10/50/90 rec. reserves of 8/19/42). Although excellent reservoir quality sands are proven in the 13/22b-20 well, the traps are not fully resolved as the sands are seismically indistinct from shales and it is not possible to map the tops and bases of the sands with any degree of confidence so the trap risk is moderate. Hydrocarbon charge generation in the area is considered to be extremely likely although fetch area may be a concern. Also, fault seal & intra-formational presence of top seals are significant concerns for the Ensign Lead and so are characterised by high risks. Overall, the geological chance of success is calculated at 10%. Results of the combined volumetric calculations for the East Lead indicate a PMean STOIIP of 204MMboe and PMean recoverable reserves of 31MMboe (P10/50/90 rec. reserves of 15/31/60). This prospect has similar risks to Ensign apart from the fault seal risk which is considered to be better in the eastern area of the block due to cross fault juxta-positioning with Basement rock or Devonian rock potentially giving a lower seal risk to that of Ensign. The East lead may have slightly thicker sands developed on the downthrown side of the fault and up to five in all. Again, Top seals for individual sands are very thin, risky and are unlikely to be filled to capacity. Overall, this results in a geological chance of success of 14%. 4.2 Jurassic Although Jurassic reservoir rocks are present in the area, imaging of this interval in the immediate vicinity of a huge fault like the Captain Ridge main fault is very poor due to the depth and noise in the fault shadow. For this reason, it was not possible to map any Jurassic level reservoirs all the way into the fault.

7 5. Maps and Figures Figure 1. Location map for P1403, Block 13/22d. Figure 2. Seismic data coverage for P1403.

8 Figure 3. Well database. Most important wells listed below. 13/23a-4, 13/21b-2, 13/22b-4 13/22b-19, 13/22b-20, 13/22c-30 Captain exploration & appraisal wells. Figure 4. Stratigraphic Column for 13/22d area.

9 Figure 5a. Ensign & East Prospects Top Captain Sandstone Depth Structure Map with spill outlines in green. Figure 5b. Ensign & East Prospects - Top Punt Sandstone Depth Structure Map with spill outlines.

SANDSTONES PUNT SST BASE CHALK 2000 VOLGIAN SAND 3000 LOS Chevron 2005 DOC ID N Mid Block Section

10 Figure 6. Seismic cross-sections. West End of Block N S 0 13/22d TOP CHALK 1000 PROSPECTS - LOWER CRETACEOUS SANDS CAPTAIN SST CORACLE SANDSTONES PUNT SST BASE CHALK 2000 VOLGIAN SAND 3000 LOS Chevron 2005 DOC ID N Mid Block Section Through Well 13/22b-20 S 0 13/22b-20 EAST 1000 PROSPECTS - LOWER CRETACEOUS SANDS CAPTAIN SST CORACLE SANDSTONES TOP CHALK BASE CHALK PUNT SST /22d LOS Chevron 2005 DOC ID

N East End of Block S 0 13/22d TOP CHALK 1000 PROSPECT

SANDSTONES BASE CHALK PUNT SST 2000 3000 LOS Chevron

Computed Petrophysical Interpretation for 13/22b-20

PUNT SST E VOLGIAN SST CORACLE SST C CORACLE SST B

11 N East End of Block S 0 13/22d TOP CHALK 1000 PROSPECT LEVELS - LOWER CRETACEOUS SANDS CAPTAIN SST CORACLE SANDSTONES BASE CHALK PUNT SST LOS Chevron 2005 DOC ID Figure 7. Computed Petrophysical Interpretation for 13/22b-20 well. CPI 13/22b-20 CAPTAIN SST 270ft 30%por 90% N/G PUNT SST E VOLGIAN SST CORACLE SST C CORACLE SST B CLEAN BLOCKY SAND RESPONSE INTERBEDDED SAND/SHALE RATTY RESPONSE CORACLE Chevron 2005 DOC ID 30 SST A

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

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