P1804 RELINQUISHMENT REPORT

BLOCKS 22/21C & 22/26D

Date: 20th March 2014

1. Licence Information:

Licence Number: P1804

Licence Round: UK 26th Round Award – Awarded January 2011

Licence Type: Traditional

Block Numbers: 22/21c & 22/26d

Clearance: Partners have approved this document and DECC is free to publish

the report. All 3rd party ownership rights (on any contained data and/or

interpretations) have been considered and appropriately cleared for publication

by DECC.

2. Synopsis:

Licence P1804 is located within the West Central Graben between the Western

Platform & Forties-Montrose High. See Figure 1.

The application for the blocks comprised a portfolio of Upper Jurassic and

Lower Cretaceous prospectivity. Structural traps with Fulmar and Heather

formation sands were identified as the primary exploration targets with upside

potential in a Lower Cretaceous age stratigraphic trap (Kopervik age

equivalent sands).

Operator: Maersk Oil North Sea UK Limited (45%).

Partners: Premier Oil Ltd (30%) & Centrica North Sea Oil Ltd (25%)

Work Programme (FIRM):

Acquisition of 500km2 3D Long-Offset seismic data

Reprocessing of 500km2 3D Long-Offset seismic data to Pre

stack depth migration (PreSDM)

Work Programme (CONTINGENT):

Drill one well within initial licence term (9th January 2015) to a

depth of 5030m or to the top Pentland formation (whichever is

shallowest).

Licence Status: Licence P1804 has been relinquished. All firm commitments

have been met and the opportunities outlined in the application document

were fully evaluated.

Maersk Oil UK and partners were granted a waiver for the contingent well

commitment on the licence following completion of the subsurface technical

evaluation. This is based on the failure to sufficiently de-risk top seal viability

for key prospects. This is a key component to the trapping mechanism for the

identified HPHT Upper Jurassic prospectivity. After receiving DECC approval

for waiving the contingent well commitment, the licence was relinquished.

3. Work Programme Summary:

The work programme included the acquisition and re-processing of 500km2 3D

Long-Offset seismic data to Pre-SDM. This obligation was met by the

partnership with new data acquired over the entire licenced area and the Pre-

SDM processing covering a 700km2 grid encompassing all identified leads and

prospects. The broadband seismic dataset acquired over the acreage offered a

significant uplift in data quality compared with the vintage regional products

used during the application process (see Figure 2 for comparative analysis).

However it was still not possible to directly image the Fulmar sandstone

reservoir or adequately de-risk the top seal viability for mapped prospects.

Following detailed seismic interpretation of the new 3D dataset, 5 Upper

Jurassic HPHT prospects were identified (Figures 1 & 3) and a series of

technical studies were carried out with an aim to de-risk the key trapping

elements and associated on-block volumes (Table 1). Technical studies

completed by the partnership included: Rock Physics evaluation, 3D Basin

modelling, Reservoir Paleogeographic analysis, 2D Structural Restoration, 3D

acoustic impedance Inversion, Fault Seal Evaluation of Upper Jurassic

prospectivity and Pore Pressure & Fracture Gradient (PPFG) evaluation of

identified prospects and offset wells.

The prospects and leads characterized in the application document were

evaluated and matured so as to make a recommendation as to whether or not

to proceed towards drilling one well within the initial 4 year licence term. As

described, a request to waive the contingent well commitment was requested

and granted.

4. Database:

Figure 4 highlights the regional well and seismic database used in the

evaluation of prospectivity over the P1804 licence.

5. Prospect Analysis:

Pre-award: The 26th Round application highlighted 4 Upper Jurassic structural

traps with potential stacked reservoirs within the Heather turbidites and the

Fulmar shoreface sands (Glengorm, Cringletie, Mansfield & Minard). Further to

this, a Lower Cretaceous lead (Ronan) of Kopervik age equivalent mass flow

sands was also identified which relied heavily on stratigraphic closure.

Post award: Maersk and licence partners highlighted a series of Upper Jurassic

prospects (Glengorm, Cringletie, Mansfield, Minard & Eden) as the primary

focus for exploration, and the most likely candidates for drilling in the P1804

acreage. This was driven by the risk and volume profile associated with the

Upper Jurassic prospectivity where reservoir quality sands are proven by

several nearby wells including 22/21-2, 22/21-7 & 22/27a-1. Upside potential

within the Lower Cretaceous remains (Ronan lead) but was not high graded by

partners following initial screening.

Upper Jurassic prospectivity in the blocks shared a series of common risk

elements. The prospects identified within the P1804 acreage are all structural

traps with an element of fault seal. Structural mapping was carried out on

multiple seismic volumes to confirm closure and an external consultancy

carried out a detailed fault seal evaluation to evaluate the chance of lateral

seal presence. Figure 3 shows the structural map at Top Pentland level which

is used to drive the mapping of the Fulmar reservoir. Figure 5 depicts a

geoseismic section through one of the Upper Jurassic prospects, Glengorm, a

fault bounded structural trap with dip closure in 3 directions. Figures 6 - 8

show interpreted seismic sections over Glengorm and a comparable image

from the 26th Round application.

Structural closure for all prospects is imaged with significantly greater

confidence at Pentland level on the newly acquired data however the top

Fulmar sands (which sit immediately above the Pentland in the stratigraphic

section regionally) remain difficult to map out over the area due to a low

acoustic impedance contrast with the overlying shales.

Primary Upper Jurassic reservoirs were the deep marine, Intra-Heather

formation turbidites and the shallow marine shoreface deposits of the Fulmar

formation. Both reservoirs are proven by several offset wells and

petrophysical evaluation interprets the reservoir quality to be good despite

some variation in thickness regionally. Stacked reservoir potential is

considered likely.

Hydrocarbon charge is considered low risk with several nearby oil and gas

condensate discoveries present in the area. Some of the nearest discoveries

to the P1804 licence include Gannet, Selkirk, Christian, Bligh & Kate (Figure

1). Wells within blocks 22/21c & 22/26d also contain oil shows within the

Upper Jurassic level. Maersk considered the primary HC phase to be oil for the

identified prospectivity although gas condensate charge from the Kimmeridge

Clay, Heather & Pentland source intervals is also feasible. Hydrocarbon

migration into the Fulmar & Heather sands occurs where they are fault-

juxtaposed against mature Kimmeridge Clay source rocks.

The Upper Jurassic prospectivity of the P1804 area has a history of blown /

leaky traps (22/21-7, 22/27a-1 & 22/27a-2 exploration wells) making top seal

capacity a key risk for identified prospects in the licenced area. Implicit

understanding of the pressure gradients from nearby wells was required and a

thorough PPFG evaluation was carried out to determine the viability of these

HPHT prospects. Following this evaluation, it is the view of the partnership that

significant risk still remains with respect to top seal integrity. This has a

serious impact on project risk (Table 1 below) and associated economics (in

part due to identification of two different pressure trend profiles in the Upper

Jurassic sections of the offset wells).

6. Further technical work undertaken:

Rock Physics Study: To determine the seismic character of reservoir units.

The study concluded that at these depths (~15,000ft) it is not expected to be

able to consistently image the top of the Fulmar sands. As a result, the top

reservoir was modelled using an Isopach approach guided by the well imaged

Pentland Coal marker.

3D Basin modelling: To determine hydrocarbon source kitchens, associated

maturities and migration pathways. The study concluded that HC charge and

migration was low risk in this region.

Reservoir Paleogeographic analysis: Biostratigraphic study carried out by

Petrostrat for the partnership enabled paleogeographic maps for the Fulmar

shoreface to be generated.

2D Structural Restoration: The restoration aimed to understand the

structural picture at time of reservoir deposition. This was of particular

importance in an area where the top reservoir cannot be accurately imaged on

seismic data.

3D relative acoustic impedance inversion: A Maersk derived relative AI

volume was used as an additional interpretation tool for the Upper Jurassic

succession.

Fault Seal Evaluation: Badley Geoscience Services carried out a fault seal

evaluation of the key prospect bounding faults within the P1804 acreage. The

analysis concluded there was low risk of lateral leakage across faults.

PPFG (Pore Pressure & Fracture Gradient) evaluation: In house study

carried out by Maersk’s HPHT PPFG team. A number of offset wells in this area

have failed due to top seal limitations. The study concluded that top seal risk

was still significant and remained a key risk for the primary prospects on

block.

7. Resource & Risk Summary:

*Note that all risking and volumetric figures within this text are the view of

Maersk Oil UK as licence operator. Partners each carry an independent view

not documented in this text.

Table 1: Risk & Resource summary for the P1804 identified prospectivity. Risk and resource defined on

rolled-up analysis of Heather and Fulmar prospect segments.

8. Conclusions:

With project minimum economic field size evaluated for both standalone &

tieback development options; the associated volume and risk profiles of the

identified prospects were not viewed as drill-viable for the partnership.

The licence was subsequently relinquished.

9. Maps & Figures:

Figure 1: P1804 licence location in relation to hydrocarbon discoveries, key offset wells, infrastructure & mapped prospectivity.

Figure 2: Seismic montage highlighting uplift in quality from the vintage PGS mega survey data

to the modern day PGS Geostreamer data and derived PSDM processed products. Key uplifts

gained: Deeper imaging capacity providing higher definition Rotliegend seismic marker,

significant improvements in multiple attenuation, increased frequency bandwidth throughout

section and enhanced fault imaging. PSDM products provided further insight into the lateral

velocity variations caused by the complex overburden relationships observed in this region.

Figure 3: Top Pentland structural map (TVDSS ft) with mapped maximum spill points at Glengorm, Cringletie, Mansfield & Eden prospects depicted in red.

Figure 4: Seismic and well database map for the P1804 licence area. PSTM & PSDM seismic

products are highlighted alongside the licence boundary and adjacent hydrocarbon fields and

discoveries.

Figure 5: Geoseismic profile through the Glengorm prospect highlighting max fault throw at crest of prospect & associated spill points. 22/21-2 well is displayed for reference. Note spill points relate to a surface 300ft above the top Pentland marker which relates to the Top Fulmar in this scenario. Independent spill levels are interpreted for the Heather & Fulmar levels.

Figure 6: Seismic dip line over the Glengorm prospect and through the 22/21-2 well. Seismic

displayed is the PSDM Kirchhoff product (in TWT). The Glengorm structural closure is clearly

defined at Pentland level. Fulmar Isopached interpretation (500ft up from Pentland) is also

displayed for reference.

Figure 7: Seismic strike line over the Glengorm prospect, also highlighting the Mansfield horst

block & downthrown Minard trap to the north of the line. Seismic displayed is the PSDM

Kirchhoff product (in TWT). The Glengorm prospect is a robust structural closure with mapping

of Fulmar driven by closure at Pentland level.

Figure 8: 26th Round mapping of the Glengorm prospect on regional PGS mega-survey data.

Prospect bounding faults are poorly defined key seismic markers are perturbed by low

bandwidth, low signal to noise and multiples in the seismic data.

Disclaimer No responsibility or liability whatsoever is accepted and no representation, warranty or undertaking, express or implied, is or will be made by Maersk Oil North Sea UK Limited, any of Maersk Oil UK North Sea Limited’s subsidiaries, Centrica North Sea Oil Limited and any of Centrica North Sea Oil Limited’s affiliates, Premier Oil Ltd and any of Premier Oil Ltd’s affiliates (together, the “Companies”) or any of the Companies’ respective agents, being their directors, officers, employees, contract staff, advisers, representatives or other agents, for any information, projections or any of the opinions contained in this re-port or for any errors, omissions or misstatements in this report. Neither the Companies, nor any of their respective agents makes or has authorised to be made any representations or warranties (express or implied) in relation to any of the matters described herein or as to the truth, accuracy or completeness of this report, or any other written or oral statement provided. This report shall not be deemed to be an offer to sell or invitation to invest in the Companies or any of the Companies’ as-sets and no information set out in this report is intended to form the basis of any contract, investment decision or any deci-sion to purchase or invest in any such assets. Neither the Companies nor any of the Companies’ respective agents undertakes any obligation to provide any recipient with access to any additional information or to update or correct any inaccuracies in or omissions from this report. This report should not be considered as a recommendation by the Companies or any of the Companies respective agents to invest in any securities (including, without limitation, those issued by the Companies) or any other assets. Recipients should rely solely on their own judgement, review and analysis in evaluating the information set out herein.