North Sea Business Unit Fay Licence Relinquishment P.1260, Block 22/2b (Premier Oil 100% Operator) Section Contents 1 Header 2 Synopsis 3 Exploration Activities 4 Prospect Analysis 5 Reserves Summary 6 Maps and Figures 7 Clearance 1 11 th February, 2014
1. Header Licence Number: P.1260 Licence Round: 23 rd Block Number: 22/2b Operator: Premier Oil Work Programme (2 nd term): None 2. Synopsis Licence P.1260 is located in the Fisher Bank Basin. It was awarded as a traditional licence to OilExco (op., 100%) in the UK 23 rd Licensing Round with a start date of 22 nd December 2005. The original application was made for block 22/2b (190.7sq.km) and contained the Fay prospect at Lower Cretaceous Kopervik Fm. The licence was awarded with a 4-year initial term and a work commitment of 3D seismic inversion, drilling of a firm well to a depth of 2530m within one year and a contingent second well to a depth of 3960m. All commitments were fulfilled by OilExco, in particular the drilling ones as they drilled on Shelley Discovery the following wells: - In 2006, 22/2b-13 and 7 side-tracks (fulfilling firm commitment) - In 2007, 22/2b-14 and 13 side-tracks (fulfilling contingent commitment) - In 2008, 22/2b-15 and 1 side-track Subsequently, Premier took over OilExco in 2009. Licence P.1260 expired on 21 st December 2013. It was covering then 88sq.km after relinquishing 102.7sq.km at the first term expiry (21 st Dec. 2009). The main prospect remaining, Fay, is a Lower Cretaceous Kopervik trap. Another lead, Dino, is made of injected Eocene sands similar to the nearby Chestnut Field (Figure 1). The hydrocarbon phase in the Fay Prospect is expected to be mostly gas, as demonstrated by the nearby 22/2-2 well which tested a similar interval as Fay, in poor, thin sands. Gas cannot be handled by nearby fields and must be tied back to Britannia or another host. A cost for a well in these potentially high pressure conditions and down to 5,500m target was deemed too high for a commercial outcome (equity 100%). The Dino Lead did not exhibit a robust AVO anomaly and therefore remains a high risk lead. The evaluation of the licence prospectivity showing little materiality, the licence was relinquished. 3. Exploration Activity The exploration activity mainly focused on the Shelley Field with the drilling of numerous boreholes, the main target being the Palaeocene Forties sands. The Shelley Field proving very disappointing, with production lasting only a year (between August 2009 and July 2010).The Fay prospect at Kopervik level was seen as the most promising lead remaining on the licence but its evaluation suggests that 2 11 th February, 2014
it is very high risk with sub commercial resources. Little other materiality was seen in other plays. 4. Prospectivity Analysis The main prospect Fay is characterised by Lower Cretaceous Kopervik sands that would be draped over a Jurassic north-south trending ridge. The nearby well 22/2-2 (Burmah, 1983-84) penetrated ca. 50 feet of gas-filled mildly overpressured Lower Cretaceous Britannia-age sands (and 50 feet of gas-filled highly overpressured Piper -age sands). They were tested but flowed gas at very low rates. Similar Britannia-age sands were also found hydrocarbon-bearing at 22/3a-1 with 200 foot impregnation; sands exhibited poor net-to-gross and the reservoir was not tested. Well 22/2-3 did not find any Lower Cretaceous sands. The Fay structure is a robust Jurassic ridge, ensuring a four-way dip closure. The top seal is provided by claystones of both K40 and base of K50 sequences. Reservoir is modelled as deep water mass flow sands belonging to Lower Cretaceous sequences and. The regional Kopervik map (from Ternan study) and a correlation cross-section across the area shows that Fay prospect lies on the southern edge of where these sands can be expected (Figure 2). The sands in the sequence seem to thin abruptly, with downgraded reservoir properties to the East, towards Fay area, where most of the prospectivity is seen in the interval. However, a thickening of sequence is identified on seismic, which shows a channel feature crossing the southern edge of the Fay structure (Figure 3). Two intervals were thus evaluated, the main one being at level and a secondary one at level. Risk is seen very low in trap and charge so it is essentially being carried by reservoir, both presence and quality. Following disappointing results from the DST of well 22/2-2, the reservoir productivity is seen as the key risk. The reservoir risk is seen slightly less important for the interval as there is evidence for its local thickening on seismic. A secondary lead, Dino, was seen at Eocene level. It is made of injected sands which were identified as a diffuse amplitude anomaly on the seismic full stack data. The Top of the reservoir could not be mapped, which made the trap the main prospect risk. The Chestnut Field, 2km to the North, is reported to be producing 17MMbbl. However, the evaluation of the amplitude response and the AVO behavior characterizing the Dino Lead gave negative indications as to the presence of hydrocarbons. No further evaluation was carried out on Dino. 5. Reserves / Resources Summary Volumetrics for Fay-Kopervik are summarised here below: Rec. res. P90 P50 P10 PMean Bcf 2.8 5 8.4 5.4 MMboe 0.5 0.9 1.5 0.9 Bcf 27.2 48.9 81.7 52.3 MMboe 4.8 8.7 14.5 9.3 Table 1. Shows a summary of recoverable resources for Fay Kopervik &. 3 11 th February, 2014
6. Maps and Figures Licence P.1260 Dino (Eocene) 22/2-2 22/3a-1 Fay (Kopervik) 22/2-3 Figure 1 - Map of Licence P.1260 (block 22/2b) outlined in yellow, highlighting Chestnut Filed, Shelley Field (abandoned) and Shelley North Discovery (Note: reference wells for Kopervik highlighted ) Fay Fay Fay structure Figure 2: Correlation Cross-Section Across the Area with Fay Prospect in relation with the Kopervik Fairway (map from Ternan) 4 11 th February, 2014
SW Full Stack North Nelson Seismic NE Thickening T T B BCU Figure 3: strike seismic section illustrating the Fay structure and the target intervals A 7. Clearance It is hereby confirmed that DECC is free to publish the results contained in this relinquishment report 5 11 th February, 2014