RELINQUISHMENT REPORT LICENCE P.2107 UKCS BLOCKS 42/20A, 42/25B, 43/16 & 43/21C

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1 RELINQUISHMENT REPORT LICENCE P.217 UKCS BLOCKS 42/2A, 42/25B, 4/16 & 4/21C MAY 216 MAY 216

2 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C 1 Licence Information Licence number: P 217 Licence round: 27th Expiry date: 2 th December 217 Licence type: Traditional Area: 69.6 km 2 Blocks: 42/2a, 25b & 4/16, 21c Working interests: Parkmead.4% (Op), Verus Petroleum (Bridge Energy).%, Iona Energy.% P.217 is located in the UK Southern North Sea, immediately north of the Garrow gas field (Fig. 1). The traditional 4-year licence was awarded in 21 to Parkmead (E&P) Limited (.4%), Bridge Energy (SNS) Limited (now Verus Petroleum UK Limited) (.%) and Ithaca Energy UK Limited (.%). Iona Energy Company UK PLC joined the licence group in place of Ithaca Energy in Licence Synopsis The 27 th UKCS Licence Round application was focussed on the Farne prospect; a four-way dip closed structure at Base Permian Unconformity (BPU) level, as well as the Lundy lead, a smaller closure at BPU, and the existing 4/16-2 Carboniferous discovery (Fig.2). The work programme post award has been unable to mature any of the prospects or leads to drillable status and the licensees have therefore decided to relinquish P.217. Work Programme Summary The commitment work programme consisted of the following: Obtain Seismic 6 km 2 of D and 8 line km of 2D. A drill or drop well to m TVDSS or 2m below the Top Carboniferous (Base Permian Unconformity), whichever is shallower. Obtaining a D seismic dataset enabled an improvement in structural mapping when compared to the original licence application work which was based solely on 2D. A D data gap remains between the available D surveys, the location of which corresponds to the mapped crest of the Farne structure and is very close to the mapped spill point. Imaging and mapping of the Intra-Carboniferous has not significantly improved on the new D data. 4 Database At the time of licence award three D seismic surveys were available* covering parts of the P.217 licence. Between the three surveys there is a data gap (c. 28 sq.km) which is covered by various 2D surveys (Fig.). The northern portion of the licence and the 4/16-2 discovery is covered by the proprietary VE8 D shot on behalf of Venture Petroleum in 28 by CGGV. The remaining 2 surveys covering the southern portion of the licence and the Farne and Lundy structures are speculative surveys; the PGS MCQ4 D (1996) and Western Geco (WG) Ravenspurn OBC D (1998). To fulfil the licence work commitment, 525 sq.km of PGS MCD and 75 sq.km of WG OBC data was obtained along with 19 km of WG Spec 2D which was used to infill the D data Gap. The WG 2D lines were of various vintages from 5 separate surveys; acquired from * Polarcus acquired the PS12Q4MC survey in 21, processed and available to multi-client by late 214; it covers the southernmost portions of 42/2a and 4/16 as well as all of blocks 42/25b and 4/21c. Although it covers a small portion of the data gap (c.4 sq.km) this acquisition did not address the D data gap issue and a data gap of 24 sq.km remains. 2 MAY 216

3 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C Released proprietary 2D data was obtained in advance of the 27 th licence round application (varying from in vintage) which was also utilised post award to aid picking of shallow sections and poorly imaged zones of D, as well as to add to infill of the D data gap where possible. Table 1: Seismic Data Contractor Survey Vintage Status Comments WesternGeco Ravenspurn D 1998 Speculative OBC PGS Q4 MCD 1998 Speculative PP96DXQ4 CGGV VE8 D 28 Proprietary Venture GECO-PRAKLA AT852D Proprietary/ Speculative? BP reassigned SS852D12 Halliburton CN912D Proprietary Conoco SC4 Western BP892D Proprietary BP SNS-89 S.S.L PH892D Proprietary Phillips PS89 Halliburton GP842D Speculative WG 2D 7529 Halliburton HB912D Speculative WG 2D 7545 Halliburton GP812D Speculative WG 2D 7558 Western WG82D Speculative WG 2D 559 CGG SF852D Speculative WG 2D Table 2: Offset Well Data (P.217 wells in Bold) Well Year Operator TD (m) Results 42/ Phillips 172 J&A 42/15b Zapex 115 P&A Bunter Gas, Furasta Discovery 42/ Lasmo 284 P&A Carboniferous Dry 42/19a RWE 471 P&A Carboniferous Dry 42/ BP 1195 P&A Bunter Dry 42/ Talisman 54 P&A Carboniferous Gas Shows 4/ Clinton Int 146 P&A Bunter Dry 4/ Lasmo 559 P&A Carboniferous Dry 4/ Lasmo 1568 P&A Bunter Dry 4/ Conoco 1118 P&A Bunter Dry 4/ Conoco 561 P&A Carboniferous Gas Discovery 4/ Amoco 15 P&A Bunter Dry 4/ BG 5591 P&A Carboniferous Gas Discovery 4/ Mobil 164 P&A Bunter Dry 4/ Eni 497 P&A Carboniferous Gas - Garrow 4/ Agip 57 P&A Leman & Carboniferous Dry 4/21a- 4,Z,Y 1997 Talisman 7 P&A Gas Garrow Field 4/21b- 5,Z 29 Venture 55 P&A Carboniferous Carna Discovery 4/ Bow Valley 485 P&A Carboniferous Kilmar Discovery 4/ Bow Valley 5267 P&A Gas Kilmar Field 4/22a-,Z 21 ATP 795 P&A Gas Kilmar Field MAY 216

4 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C Nearby gas production currently takes place from the Garrow Field (~1 Km S of Farne) and the Kilmar Field (~2Km east of Farne) (Fig.1). Together these fields form the Tors development. The smaller Carna discovery lies between the two fields, but is currently unavailable for licensing. 5 Exploration Activity The seismic data purchase undertaken by the licence group involved obtaining portions of all the D surveys available over the licence at the time* as well as selected 2D seismic lines from Western Geco Spec surveys to tie the D surveys and provide coverage of the D data gap across the crestal part of the Farne prospect (Figs & 4). It was possible to make several well ties across the D dataset, although several wells TD in the Bunter, shallower than the licence target Carboniferous reservoir (Fig.). Nonetheless, this allowed for improvements in the reliability of depth conversion to be made. Matching the seismic from survey to survey caused some difficulty and reprocessing from field tapes would help to eliminate this issue. Imaging was generally poor below the BPU for the WG OBC and PGS MCD surveys as well as for the 2D. The D data did allow for an improvement in mapping of horizons and faults, which in turn improved confidence in the presence of structural features. The D data gap remains an issue as it is coincident with the crest of the BPU closure and close to the spill point and reliable fault interpretations cannot be made in this zone. Mapping Intra- Carboniferous units with confidence was not possible across much of the licence due to the high levels of noise and multiple energy present in the data. The D data did not allow for definition of reservoir sands within the Carboniferous. 6 Prospectivity Update A review of the Lower Permian and Carboniferous prospectivity has been undertaken to assess the exploration potential. A map of the Base Permian Unconformity (Fig.4) shows the gross structure of the area. Although Bunter discoveries exist regionally, these all exhibit a DHI. No DHI s were seen in P.217 and the Bunter is therefore not considered to be prospective. 6.1 Leman Potential The Permian Lower Leman sandstone forms part of the reservoir in the neighbouring Garrow field, where it is thin (9-1m) and compartmentalised. The Garrow field is considered to mark the northern limit of the Rotliegendes Leman play fairway (Fig.5) and reveals a mix of fluvial and aeolian sediments that mark the basin feather edge where the sand prone deposits shale out and are replaced with mudstone and halite deposited in the Silverpit Lake, the latter of which is seen in Kilmar and the 4/16-2 discovery. It is considered likely that the Leman sandstone pinches out before reaching P.217, however there is a possibility that it may be present over Lundy, and perhaps even as far as Farne. In such an instance it is unlikely to be effective as a reservoir as it will be thin and of poor quality. Well 42/18-2, located to the west of P.217, encountered a tight 7m thick Lower Leman Sandstone section, with no net reservoir. This supports the interpretation that if the Lower Leman Sandstone is present over P.217, it is unlikely to be an effective reservoir. 4 MAY 216

5 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C D mapping does not reveal a seismic signature for the Leman Sandstone over Garrow as the sandstone thickness is below seismic resolution, hence seismic amplitudes cannot be used to aid mapping of Leman sandstone presence northwards into P Carboniferous Potential The Carboniferous forms the reservoir in the adjacent, Garrow and Kilmar fields, as well as the Carna, Coracle and 4/16-2 discoveries (Fig.1). The Base Permian unconformity subcrop in these discoveries is generally Namurian in age, typically upper Namurian B-C (Millstone Grit equivalent) (Fig.6). The subcrop pattern becomes more complex to the NW of the licence and Westphalian age reservoirs are encountered, however regional mapping shows that the BPU subcrop increases in age towards the Breagh field to the northwest where reservoir is Visean (Dinantian) in age. The uppermost Carboniferous section in Garrow well 4/21-2 has been identified as lowermost Westphalian A, however, the Westphalian is not present in the adjacent well 4/21-4Y (or any of the Garrow development wells), despite being less than 15 m away (source Garrow FDP). The 4/21-2 well drilled just 5m of Westphalian A, yet the presence of this section has led to mapping of an extensive syncline containing potential Westphalian A reservoir over the western portion of P.217 and western most Farne (Fig.6; after Doornenbal & Stevenson, 21). Mapping undertaken by the licence holders of the P.217 blocks and surrounding area has not allowed for picking of a continuous horizon to confirm this interpretation. Given that the Westphalian A typically provides better quality reservoir than the upper Namurian, this has implications for the risk regarding reservoir quality. Mapping of Intra-Carboniferous units over P.217 has been possible to the NW of the licence in the 4/16-2 area using the VE8 D survey. However, over Farne and Lundy imaging is not sufficient for coherent picks to be made within the Carboniferous. Even where the imaging is good on the VE8 D it is still not possible to determine where high quality reservoir sands may be present within the Carboniferous. 5 MAY 216

6 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C Farne Prospect Figure 7 shows the Farne prospect, which is a complex 4-way dip closure at BPU level. The trap geometry consists of a large compressional faulted structure, the north easternmost margin of which is a compressional pop-up feature. The structure is consistent across TWT and depth conversion and is thus considered a relatively low risk element, however further faulting may be present across the crest of Farne than is indicated, adding to potential compartmentalisation. Unfortunately, the coverage of available 2D did not allow for accurate fault mapping in this area. The depth of the spill point to the NW betrays the apparent size of the structure and in fact gives a relatively small four way dip closure (Fig.7), thus adding to the risk. As the potential reservoir within Farne is likely to be Carboniferous it is possible that any gas accumulation may be trapped by intra-carboniferous geometry due to angular subcrop to the BPU, rather than solely by the BPU dip closure. However poor reflectivity within the Carboniferous has not allowed for this to be fully assessed. Another critical risk to the prospect is the effectiveness of the potential reservoir. Several nearby wells have penetrated poor quality Namurian reservoirs with DST rates typically less than.1 MMscf/d e.g. 4/16-2, 4/17-2, 42/25-2 (Fig.8). Volumes derived from the latest mapping (Table ) have been calculated on the small 4-way dip closure at Base Permian level and the chance of success of 24% (Table 5) is based on finding resources on this range. Table : Farne Prospective Resource Estimate (Gas bcf) Parameter Unit P9 P5 P1 Carboniferous GIIP bcf Resources bcf Table 4: Farne Input Parameters For Carboniferous Resource Estimate Parameter Unit Min ML Max Area km Spill m TVDSS Column Height m GRV 1 6 m NTG % Porosity % Shc % GEF v/v RF % Table 5: Farne Prospect Risk Factors Reservoir Source Reservoir Trap present effective present effective present effective COS Carboniferous MAY 216

7 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C Lundy Lead Figure 9 shows the Lundy lead, which is a 4-way dip closure at BPU level. The trap geometry consists of a small compressional pop-up structure, bound by reverse faults. The structure is consistent across TWT and depth conversion and is thus considered a relatively low risk element (Table 8), however, it is very likely to be too small to provide a commercial return. As it is closer to Garrow it is perhaps more likely to have Leman reservoir present, however given the size of the structure and the likely thickness of any Leman present (<1 m) volumes have not been calculated. Prospective resources derived from the latest mapping for the Carboniferous are shown in Table 6. Table 6: Lundy Prospective Resources (Gas bcf) Parameter Unit P9 P5 P1 Carboniferous GIIP bcf Resources bcf Table 7: Lundy Input Parameters For Resource Estimate Parameter Unit Min ML Max Area km Spill m TVDSS Column Height m GRV 1 6 m NTG % Porosity % Shc % GEF v/v RF % Table 8: Lundy Lead Risk Factors Source Reservoir Trap COS Reservoir present effective present effective present effective Carboniferous MAY 216

8 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C /16-2 Discovery The 4/16-2 discovery well encountered poor quality (tight) Namurian A/B age reservoir and tested at only.75mmscfd from the upper sand (Fig.8). Petrophysical analysis indicates a net to gross ratio of 25% with average net porosity of 8% and average water saturation 52%. No core was cut in the well and only valid pressure points were obtained which do not lie on a valid gas or water gradient. There is no obvious gas water contact in the well however the sands below 65m TVDSS failed to flow on test and given the low permeability of the sands it is unclear if the formation is water or gas bearing. Current mapping shows a four way dip closure which includes a narrow compressional pop-up zone to the southwest. The 4/16-2 discovery forms part of a potentially much larger closure including 4/17-2 and 4/18-2Y. However, despite well penetrations, effective reservoir sands have not been encountered within this closure. The connectivity of intra-carboniferous sands is also unproven and is critical for development. It is not possible to identify reservoir sands on the current seismic dataset. Volumes have been calculated for the mapped structural closure (Fig.1, Table 9). Table 9: 4/16-2 Contingent Resources (Gas bcf) Parameter Unit P9 P5 P1 Carboniferous GIIP bcf Resources bcf Table 1: 4/16-2 Input Parameters For Resource Estimate Parameter Unit Min ML Max Area km Spill m TVDSS Column Height m GRV 1 6 m NTG % Porosity % Shc % GEF v/v RF % MAY 216

9 P211 Relinquishment BLOCKS 42/2A, 42/25B, 4/16 & 4/21C 7 Resource and Risk Summary Prospective resource volumes for P.217 are summarised in the table below (Table 11). Table 11: Summary of Risked Resources (Gas bcf) Formation Prospect P5 Resources (bcf) COS Risked P5 Resources (bcf) Farne Prospect Carboniferous Lundy Lead Carboniferous /16-2 Discovery Carboniferous Conclusions Interpretation of the newly acquired 2D & D dataset considerably improved the seismic interpretation, depth conversion and mapping across P.217. Unfortunately the data quality beneath the Base Permian Unconformity was not sufficient to allow identification of reservoir intervals within the Carboniferous. Consequently it was not possible to mature any of the prospects or leads to drillable status and the licence group have therefore decided to relinquish the acreage. 9 Clearance Parkmead (E&P) Limited confirms that OGA is free to publish this report and that all third party ownership rights have been considered and appropriately cleared for publication purposes. 1 References Doornenbal, J.C., Abbink, O.A., Duin, E.J.T., Dusar, M., Hoth, P., Jasionowski, M., Lott, G.K., Mathiesen, A., Papiernik, B., Peryt, T.M., Veldkamp, J.G. & Wirth, H., 21. Chapter 1, Introduction, stratigraphic framework and mapping. In: Doornenbal, J.C. and Stevenson, A.G. (editors): Petroleum Geological Atlas of the Southern Permian Basin Area. EAGE Publications b.v. pp MAY 216

10 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c Licence P.217 Parkmead Licence Acreage Quadrant Boundary Unlicensed Blocks Licensed Blocks Relinquished since start of 28 th round Figure 1: Location Map Gas Field / Discovery - 1- MAY 216

11 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c Farne Prospect Farne Prospect /16-2 Discovery (on block) Lundy Lead 29 8 Gas Field / / P.217 Acreage Gas Field / Lundy Lead Round Application Acreage 27th 4/16-2 Discovery (on block) 1 N Garrow 4/212 Garrow 4/21a4/21a-4Y 4Z 4 2 (25m contours) Figure 2: Location Of Prospects And Leads Within P.217 Blocks Before And After 27th Licence Round Award MAY 216

12 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c Bunter Target/TD Zechstein Target/TD Carboniferous Target/TD P.217 Licence Acreage Quadrant boundary 4/16 Block boundary Gas Field / Disc. D Seismic PP96DXQ4 total survey coverage PP96DXQ4 525 sq.km purchased 42/2a WG97F4 total survey coverage WG97F4 75 sq.km purchased VE8D1 entire survey 42/25b 4/21c AT9F1 entire survey Area of D data gap 28 sq.km 2D Seismic SC4-2D - CN912D2 SSL-2D - AT852D115 Reassigned SS852D12 SC42-2D - CN942D1 BP_SNS-89_2D - BP892D19 PS89_2D_PH892D12 WG Spec 2D Line km Figure : Database Seismic and Wells MAY 216

13 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c D data gap Figure 4: BPU Depth Map Showing The Gross Structure Of Licence P.217. (CI = 1m.) - 1- MAY 216

14 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c 4 P Esmond Breagh Gross Leman Thickness (m) 9 42/18-2: 7m Leman m effective net reservoir Thickness (m) Cavendish Garrow Kilmar Trent 22 Wollaston Whittle Ravenspurn Tolmount Johnston Cleeton 52 Figure 5: Lower Permian Rotliegendes Leman Sandstone Reservoir Thickness (metres) MAY 216

15 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c Block Boundaries P.217 Acreage Westphalian C Westphalian B Westphalian A Namurian Dinantian Gas Field / Discovery Well TD in Bunter Well TD in Zechstein Figure 6: BPU Carboniferous Subcrop Adapted From Doornenbal & Stevenson MAY 216

16 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c TWT W E U. Triassic Bunter Top Zechstein Spill point Spill point to NW on WGeco survey D data gap over crest Base Zechstein WG D Complex structure includes narrow faulted pop-up WG 2D PGS D Depth W E U. Triassic Bunter Top Zechstein Spill point Base Zechstein Base Permian WG D WG 2D PGS D Figure 7: Farne BPU Four Way Dip Closure MAY 216

17 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c 42/2-1 42/ /2-1 West 4/17-2 4/16-2 4/2-2 4/ m 4/ m East m Trent NPHI.45 GR -1 4/ / m. 15 NPHI GR. RHOB NPHI GR. RHOB GR GR. RHOB RHOB Zechstein Top Rotliegendes -.15 RHOB 1.95 NPHI NPHI Silverpit Fm No flow No flow.8 mmscfd.75 mmscfd 4 4 No flow.5 mmscfd Expected subcrop over Licence P mmscfd 8 8 Zechstein Group Rotliegendes 9 15 Carboniferous 14 1 Lower Leman Sandstone Fm 11 Westphalian A 12 1 Silverpit Fm / Silverpit Halite 12 Namurian C 1 Namurian B 14 Namurian A Visean 15 Figure 8: Carboniferous and Permian West to East Well Section MAY 216 Thickness (m) Thickness (m) 5

18 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c TWT XL 7769 PGS D S N Bunter Top Zechstein Lundy Base Zechstein Depth XL 7769 PGS D S N Bunter Top Zechstein Lundy Base Zechstein Base Permian Figure 9: Lundy BPU Four Way Dip Closure MAY 216

19 P217 Relinquishment Blocks 42/2a, 42/25b, 4/16 & 4/21c TWT XL 8 VE8 D S N Bunter 4/16-2 Top Zechstein Base Zechstein Depth S N U. Triassic Bunter Top Zechstein 4/16-2 Base Zechstein Base Permian XL 8 VE8 D Figure 1: 4/16-2 BPU Four Way Dip Closure MAY 216