Relinquishment Report. for. Licence P1605, Block 220/27

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1 Relinquishment Report for Licence P1605, Block 220/27 November 2013 Licence P.1605 Relinquishment Report August of 11

2 CONTENT 1 Introduction 2 - Exploration Summary 2.1 Exploration Activity Overview of Blocks 3 - Prospectivity Analysis 4 Conclusion 5 Clearance 6 References LIST OF FIGURES Figure 1: Location Map Figure 2: Well & seismic database Figure 3: Representative stratigraphic column Figure 4: BCU Map Figure 5: Upper Jurassic Isopach Map Figure 6: Bajocian Palaeogeographic Map Figure 7: Lookout Prospect Seismic Line Licence P.1605 Relinquishment Report August of 11

1 - Introduction Licence Number: P.1605 Licence Round: 25 th Round Awarded 12 February 2009 Licence Type: Traditional Block : 220/27 Equity Holding: Nexen Petroleum U.K.

3 1 - Introduction Licence Number: P.1605 Licence Round: 25 th Round Awarded 12 February 2009 Licence Type: Traditional Block : 220/27 Equity Holding: Nexen Petroleum U.K. Limited 100% Licence Work Programme Summary: Firm commitments: Obtain 240 km 2 of 3D seismic data Drill or Drop commitments: Drill one well to 3500m or to the Base Cretaceous, whichever is shallower, or allow the Licence to automatically cease and determine. Licence P.1605 was determined on 1 August The Block was applied for in a single 25 th Round Application on the basis of a Triassic structure (the Lookout Prospect). The Block lies on the Margarita Spur, an intrabasinal high within the Magnus Basin (Fig 1). Figure 1 Block location Licence P.1605 Relinquishment Report August of 11

4 2 Exploration Summary 2.1 Exploration Activity The original evaluation of Block 220/27 was carried out using available 2D data in the UK and Norway, and subsequent to award the ST0503 PGS spec 3D was Licensed. Figure 2 shows the location of 2D and 3D data. There is limited well data in the area; wells UK 211/2-1, 220/26-1, and NOR 6201/11-1 & 2 are relevant to the Block. Figure 2 Well & seismic database 2-2 Overview of Blocks The Blocks are located approximately 200 km northeast of the Shetland Isles. Water depths range from m. Block 220/27, which is covered by this application, is situated in the Magnus sub-basin area of the North Viking Graben (Fig 1). The Magnus Licence P.1605 Relinquishment Report August of 11

Basin formed during the Cretaceous and is associated with the opening of the North Atlantic Margin and has a significantly different trend than the older Upper Jurassic north-south rift system that

5 Basin formed during the Cretaceous and is associated with the opening of the North Atlantic Margin and has a significantly different trend than the older Upper Jurassic north-south rift system that characterized the region to the south of the Møre Basin. A prominent ridge is developed to the north of the Magnus Basin (The Manet Ridge). This ridge delineates the northern-most extent of the North Sea Triassic-Jurassic petroleum system. Sands of the Middle Jurassic Brent and Dunlin Groups and Upper Triassic Lunde Formation are the key reservoir targets in the area. A representative stratigraphic column is shown below. Figure 3. Representative stratigraphic column Licence P.1605 Relinquishment Report August of 11

The Location of key wells is shown on the Regional BCU Map: Figure 4 BCU Map CI 100M Dry hole 211/2-1 was drilled by BP in 1978, and tested a structure on the Manet Ridge.

6 The Location of key wells is shown on the Regional BCU Map: Figure 4 BCU Map CI 100M Dry hole 211/2-1 was drilled by BP in 1978, and tested a structure on the Manet Ridge. An argillaceous Jurassic sequence was encountered and a succession of thin sandstones and red-brown mudstones in the Triassic well 220/26-2, in the Magnus trough, targeted Triassic alluvial sandstones subcropping beneath the BCU. A thin Cretaceous sandstone was encountered immediately overlying the Triassic section. The Triassic section consisted predominantly of pale grey to red/brown argillaceous sandstone. The sandstone was well cemented with illite/smectite, and locally calcite occluding inter granular porosity. Both wells were dry. The 1987 NOR 6201/11-1 exploration well penetrated the Triassic Lunde Formation directly beneath the Base Cretaceous Unconformity. Good oil shows were observed and further shows were also recorded in Hordaland Group limestones, Balder Formation Licence P.1605 Relinquishment Report August of 11

claystones and Cretaceous sandstone stringers. The well flowed ca 500 bopd on test but due to the tightly cemented reservoir, resources are considered relatively small.

7 claystones and Cretaceous sandstone stringers. The well flowed ca 500 bopd on test but due to the tightly cemented reservoir, resources are considered relatively small. The 6201/11-2 dry hole targeted what was believed to be a syn-rift turbidite package of Kimmeridgian age between the Triassic high on which the 6201/11-1 well was drilled, and a second Triassic high to the west (the Lookout prospect). The prospect relied on stratigraphic trapping but no potential reservoir rocks were encountered. Biostratigraphic data was difficult to interpret, but it appears that a Triassic shale was encountered overlying Late Jurassic Heather, which was interpreted as a slumped package from the neighbouring ridge. 3 Prospectivity Analysis Over the Manet Ridge fault movement in the Late Jurassic and Early Cretaceous resulted in extensive erosion of the Jurassic and Triassic section. In some areas, erosion in the footwall has resulted in a Permo-Triassic subcrop to the Base Cretaceous Unconformity. An Upper Jurassic Isopach Map is shown below, indicating that the Upper Jurassic is absent over the Licence. Figure 5 Upper Jurassic Isopach Map CI 100M Licence P.1605 Relinquishment Report August of 11

The Middle Jurassic is also not prospective as the Brent delta did not extend this far north and the Middle Jurassic is present as an Offshore Marine Facies (Figure 6).

8 The Middle Jurassic is also not prospective as the Brent delta did not extend this far north and the Middle Jurassic is present as an Offshore Marine Facies (Figure 6). Figure 6 Bajocian Palaeogeographic Map Modified from Husmo et al., 2003 The Lower Jurassic Statfjord and Nansen sandstones form the main reservoir in the Snorre Field and a secondary reservoir in Gullfaks and Statfjord. There is potential for these Lower Jurassic sandstones to be encountered in Block 220/27. The Statfjord formation consists of interbedded sandstones, siltstones and mudstones with minor coals. The sandstones are fine to very coarse grained, sometimes pebbly, micaceous, variably kaolinitic, and sometimes cross-bedded (Mudge et al. 2005). The Nansen Formation was deposited in a shallow-marine shelf environment, with upward-fining, coastal channel sandstones near its base. Vollset and Doré (1984) introduced the term Hegre Group, comprising the Lomvi and Lunde formations (Figure 3). These were encountered in exploration well 6201/11-1. The Lomvi Formation is composed predominantly of fine to coarse grained kaolinitic Licence P.1605 Relinquishment Report August of 11

9 sandstones. The Lunde Formation is characterised by a thick mudstone at its base marking the start of an upward coarsening sequence of sandstones, mudstones and marls. The formation was deposited across a wide flat alluvial plain occupied by fluvial and lacustrine environments. The depositional setting expected is a sheetflood dominated environment, with some influence of alluvial fans in the Lunde Formation. Reservoir quality tends to be a critical risk for Triassic reservoirs. The Lookout Prospect, where the Triassic sub-crops to the Base Cretaceous Unconformity, is in an ideal situation for an effective trap because reservoir quality may be enhanced by leaching. Net/gross ranges from , porosties 19-29% (average 24%), and permeabilities of md (Hollander, 1987). The 6201/11-1 well tested 37.7 API oil from the Triassic Lunde Formation with a GOR of 4480 scf/bbl. The Lookout prospect on trend would expect similar oil quality, and could be sourced locally from an Upper Jurassic package in the region of the 6201/11-2 well or from further down flank to the southeast. Maturation data from wells suggest the Kimmeridge Clay is mid-mature in the 33/5-2 well south of Block 220/27 area. Regional mapping indicates the application area is underlain by source rock having a Ro% equating to early-late mature. 3. Prospectivity of Block The Lookout Prospect consists of a fault bounded structural trap, located 6km west of the 6201/11-1 discovery (Figure 4). The Upper Triassic Lunde Formation is the expected reservoir, and the Lower Jurassic Statfjord Formation forms a secondary target. NOR 6201/11-1 was drilled in a similar structural setting on the Manet Ridge east of the Lookout prospect. The Lookout structure consists of two parts: A high-side 3-way faultbounded closure and a corresponding low-side, 3-way fault bounded closure (Fig. 4) at the Base Cretaceous level. The lead straddles the border between the UK and Norway. The seismic line shown in Fig 7, demonstrates the play concept. Well 211/2-1, drilled 3 km south of the lead, is located on a separate and smaller structure. This well penetrated a thin Brent and Dunlin interval before encountering the Triassic. There were no shows in this well, but it is possible that this well may have been drilled out of closure. Licence P.1605 Relinquishment Report August of 11

Figure 7 Lookout Prospect MS99 released Seismic Line Volumetrics: Based on an estimated net reservoir of 30-100ft and areal closure of between 4 & 9 Km 2, Nexen assessed a resource range of 10-30mmbo.

10 Figure 7 Lookout Prospect MS99 released Seismic Line Volumetrics: Based on an estimated net reservoir of ft and areal closure of between 4 & 9 Km 2, Nexen assessed a resource range of 10-30mmbo. Following the 3D interpretation, the volume in UK waters decreased, and approximately 45% ( mmbo) is considered to lie on Block 220/27. Technical Chance of Success was assessed at 29%, but the expected volumes are considered non-commercial. 4 Conclusion On the basis of the post-award assessment of prospectivity on the Licence, potential is considered small and uneconomic; and, it was agreed to determine the Licence six months ahead of the end of the first term. Licence P.1605 Relinquishment Report August of 11

11 5. Clearance Nexen Petroleum U.K. Limited confirms that DECC is free to publish this document, and that any relevant third party ownership rights have been cleared for publication purposes. References: Hollander, N.B., Snorre. In: Spencer, A.M. et al. (eds.), Geology of the Norwegian Oil and Gas Fields, Husmo, T. et al Lower and Middle Jurassic in The Millennium Atlas: Petroleum Geology of the Central and Northern North Sea. Mudge, D., Holdoway, K. & Goodall, T Regional Play Fairway Evaluation of the North Sea. Ternan Ltd. Vollset, J. and Doré, A.G., A revised Triassic and Jurassic lithostratigraphic nomenclature for the Norwegian North Sea, Bulletin of the Norwegian Petroleum Directorate No.3, 53 pp. Licence P.1605 Relinquishment Report August of 11

Licence P Relinquishment Report

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