LICENCE P.691 RELINQUISHMENT REPORT

1. Licence Information

Licence Number: P.691

Licence Round: 11, in 1989

Licence Type: Traditional

Block Number: 44/17a

DECC is free to publish the Report, and all 3rd party ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes.

2. Licence Synopsis

Hawksley was under Fallow Discovery status at the time of partial surrender of Licence

P.691. The Licence was awarded to ConocoPhillips U.K. in 1989 with 65% equity and GdF

Suez E&P with 35% equity. Below is a history of Licence updates and the corresponding work

obligations.

I. At the time the Licence was awarded:

Carry out not less than 150km of seismic survey work; and

Drill four exploration wells, provided that the Licensee will not be obligated to

drill a fourth if the Licensee satisfies the Minister that the drilling of such a well

is not justifiable.

II. Deed of Variation dated 1996, which extended the initial term from six to eight

years:

Acquire a 3D seismic survey to complete the coverage of the whole block 44/17;

Review seismic interpretation with DTI before expiry of 30 September 1996; and

Drill one exploration well, provided that the Licensee will not be obligated to

drill said well if the Licensee satisfies the Minister that drilling is not justifiable.

III. Deed of Variation dated 1998, which extended the initial term from eight to nine

years:

Drill not less than two exploration wells.

IV. In 1998, the Licence entered the second term.

V. In 2007, the Licence entered the third term.

VI. As of February 28, 2014, partial relinquishment of the area outlined in Figure 1

was complete.

3. Work Programme Summary

Work obligations as they relate to the initial term were satisfied, and the Licence was in the

third term at the time of surrender.

Wells:

A wildcat well in the Hawksley area, 44/17a-3, commenced drilling 1st May 1994 and reached

its total depth of 12,840’ MD (-12,718’ TVDSS) in the Westphalian B on 21st June 1994.

Although this well discovered unexpected significant reservoir sands in the Westphalian C/D

(WpC/D) and a potential secondary reservoir in the Lower Leman Sandstone, it was

permanently abandoned as a dry hole without any well tests.

The Hawksley Field was discovered in 1998 by the 44/17a-4 well. Drilling commenced on 19th

December 1997 and reached its total depth of 12,960’ MD (-12,631’ TVDSS) in the

Westphalian B Murdoch Sandstone on 23rd February 1998 and was temporarily suspended

as a gas discovery. The 44/17a-4 well was later permanently abandoned by removing the

wellhead on 26th November 2001, which was confirmed by a DSV Aquamarine survey.

The development well, 44/17a-6, was the only planned development well to access gas in

the Hawksley accumulation. Drilling commenced on 9th April 2002 but failed to reach

planned TD. The BHA became stuck in the top Leine Halite at 10,792’ MD and after pumping

freshwater pills and jarring, a fish was left in the hole comprising the bit and motor. No

attempt was made to fish the lost BHA, and subsequently, a cement plug was set above the

fish and the 44/17a-6 well was sidetracked as 44/17a-6Z from 10,375’ MD on 17th May 2002.

44/17a-6Z also failed to reach planned TD following well control problems. Lost circulation

occurred at 12,728’ MD in the Silverpit Formation, and lowering the mud weight from 14.5

ppg to 12.7 ppg and spotting LCM pills halted static losses. However, severe dynamic losses

continued and were such that a cement plug was required to be set below the 9 5/8” shoe,

between 12,728’-10,848’ MD. Well 44/17a-6Z was inadvertently sidetracked as 44/17a-6Y

from a depth of 10,780’ MD on 6th June 2002.

The 44/17a-6Y well reached a total depth of 14,800’ MD (-11,784’ TVDSS). This well was

completed on 30th July 2002 as a directional wellbore. It began production in September

2002 at an initial rate of 165mmscf/d and declined steadily until being backed out by

production from the Munro field in 2007 after 47.6BCf of production. Problems with a

number of well valves led to failed efforts to reinstate the well, and it was subsequently

plugged and sealed in 2011.

The Hawksley Field was developed using subsea technology and is part of the CMSIII

Northern Lobe system, which currently also includes the Murdoch K and McAdam subsea

manifolds and the Munro satellite platform. It is tied back to the Murdoch complex by gas

and methanol pipelines and an electro-hydraulic control umbilical to the subsea manifolds.

Seismic:

ConocoPhillips acquired the 2D survey C44/92-100 in 1992 (Figure 2), followed by the 3D

seismic survey CN953F0001 in 1995; the latter covers the western portion of the Hawksley

field as part of the larger region outlined in Figure 3. These data were subsequently merged

with the 3D survey AT933F0002 provided by Arco. The merged survey provides full coverage

of the Hawksley field determination area and completes coverage of the whole of block

44/17 as per the terms of the 1996 Deed of Variation.

4. Database

Figures 2 and 3 provide maps of the seismic and well database over the relinquishment area

as summarized in Section 3.

5. Prospectivity Update

Remaining prospectivity of the surrendered area is very limited. Figures 4 and 5 show the

structural closure at the primary producing zone, the Lower Ketch. MBal modeling of the

Lower Ketch 2 GIIP yields 51Bcf, which is in line with the mapped GIIP of around 60Bcf.

Additional gas support is believed to be from the Lower Leman and Upper Ketch intervals,

which together contain a mapped GIIP of 26Bcf but are expected to have a low recovery

factor due to poor rock quality. Of the total approximate GIIP of 77Bcf, the field has

produced 47Bcf, leaving 30Bcf. A similar recovery factor of ~60% from a follow-up

development well would yield 18Bcf, as captured in Table 1.

Production to date is from the fault block labelled “Polygon A” in Figure 4. A small Lower

Ketch closure to the south remains untested and is captured as a potential lead in Table 1.

6. Resource Risk Summary

Resource and Risk Summary

Discovery Name P L D

Stratigraphic Level

Unrisked Recoverable Resources geological

chance of success %

Risked P50 Mmboe Gas BCF

Low Central High

Hawksley D

Lower Ketch (with support from Lower Leman and Upper

Ketch)

14 18 23 100 18

Hawksley, S Fault Block

L Lower Ketch 8 10 13 50 5

Table 1. Resource and Risk Summary for relinquishment area.

7. Conclusions

The remaining potential over the relinquishment area is not deemed sufficient to justify

further development.

8. Clearance

Clearance has been granted by all parties in the relinquished area.

9. Maps and Figures

Figure 1. Relinquishment area map.

Figure 2. Map of 2D seismic coverage over 44/17.

Figure 3. Map of 3D seismic and well database over relinquishment area.

Figure 4. Lower Ketch 2 / BPU depth structure map (CI: 100ft, UTM 31 ED50).

Figure 5. Hawksley field depth map and cross sections.

Figure 6. Illustrative seismic sections.