Licence P1259. Relinquishment report

December 2009 Page 1

Relinquishment Report for

Licence P1259

Full relinquishment of Blocks: 36/15, 36/20, 36/25, 37/11, 37/16, 37/17, 37/18, 37/19, 37/20, 37/21,

37/22, 37/23, 37/24, 37/25, 38/16, 38/21, 38/22, 38/26, 38/27 and 38/28.

December 2009

Prepared by Esso Exploration and Production UK

Licence P1259. Relinquishment report

December 2009 Page 2

1. Header Licence Number: P1259 Licence Round 23rd Round - Awarded 22/12/05 Licence Type: Traditional Seaward Production Licence, with 4 year 1st term Block Numbers: 36/15, 36/20, 36/25, 37/11, 37/16, 37/17, 37/18, 37/19, 37/20, 37/21,

37/22, 37/23, 37/24, 37/25, 38/16, 38/21, 38/22, 38/26, 38/27 and 38/28.

Equity Holdings: Esso Exploration and Production UK Ltd, 75% (Operator) Shell UK Ltd 25%

Work Programme : Reprocess 500 Km seismic 2D data and drill one firm well to

2650m SS Depth or 50M below Devonian Kyle Limestone Programme completed: Reprocessed 514 Km 2D seismic spec data and drilled one well

to 2312m SS Depth. Dispensation for depth obligation granted by DECC on 12th March 2009. No outstanding commitments

2. Synopsis License P1259 was a traditional license awarded on 22/12/05 for an initial, 4 year 1st term. The work programme was completed and the exploration well was unsuccessful. The complete licence was relinquished before the end of the initial 4 year term. 3. Exploration Activities Digital copies of old 2D spec seismic were purchased, plus several new long-offset spec lines. Some of this data (514 Km) was re-processed. Additional released 2D seismic was obtained from DEAL. Basin modelling, Grav/mag modelling, FIV analysis, basin modelling, global analogues and detailed paleogeographic mapping were all completed. One exploration well 37/25-1 (Corbenic) was drilled Feb-March 2009, by the Noble Hans Deul. The well was drilled to a TD of 2312 m TVDSS depth into basement, then Plugged and abandoned. 4. Prospectivity Analysis The exploration target in Licence P.1259 is the Devonian Kyle Limestone which was encountered in several local wells (37/12-1, 38/3-1, 30/16-5, 30/24-3), with the main tie well for the Mid North Sea High area being the 37/12-1 well. Three large closures (named Ardbeg, Bowmore and Corbenic) are mapped in Licence P.1259 at the Kyle Limestone level. Detailed environment of deposition mapping suggested Corbenic had been deposited in the more favourable location for both reservoir (shallower water) and closest to potential source development.

Licence P1259. Relinquishment report

December 2009 Page 3

Figure 1 MNSH Licence P 1259, Infrastructure / Location Map

CATS

(to

Tees

ide)

NORPIPE (to Teeside)

SEA

L (to

Bac

ton)

ZEEP

IPE

/ FR

AN

PIPE

(to

Con

tinen

t)

Corbenic well

Corbenic36/13-1

36/15-1

36/23-1

37/10-1

37/23-1

38/16-138/18-1

38/22-1 38/24-1

38/29-1

43/5-1

The purpose of the 37/25-1 (Corbenic) well was to test the hydrocarbon resource potential of the Middle/Late Devonian Kyle Limestone play and specifically the Corbenic Prospect. The anticipated hydrocarbon type was dry gas. This was a wildcat exploration well on one of the three mapped, large structural closures on the Mid North Sea High. The plan was to TD the well below the Kyle Limestone Group. The well was drilled to a TD of 2312 m TVDSS, 13 m into metamorphic basement. The well was plugged and abandoned as a dry hole. The metamorphic basement came in shallow to prognosis and there was no Kyle Limestone present at the well location, where Pre-Zechstein Sandstone lay directly on basement. The well prognosis Vs. the post well stratigraphy is shown in Figure 2. No top seal or any indications of a valid hydrocarbon source, for the play, were encountered in the Corbenic well. Post-well interpretation of the Kyle Limestone (Figures 3 and 4 ) suggests this reservoir target on-laps/abuts the basement just northwest of the 37/25-1 (Corbenic) well location. This interpretation modifies the original Corbenic prospect, but does not alter the Ardbeg and Bowmore structures previously mapped.

Licence P1259. Relinquishment report

December 2009 Page 4

9 5/8” Casing

@ 1968m

30” x1,5”

Conductor

108m

TD:_______(-2764m)

LITHOLOGY

Cre

tace

ous

QU

ATER

NAR

YC

halk

Upper Old Red Sst

----- (-2216m)

Mon

trose

/ M

oray

/ S

trons

ayG

rps.

Kimmeridge ------ (-1745m)

8½”

Hol

e17

½H

OLE

30” x1” Conductor @110m

Chalk Grp. (Undiff.)

(-1159m)

Dowsing ------(-1799m)

Tertiary (Undifferentiated) ______(-570m)

Seabed at ----(-39.6m)

Batavia/Aurora/Outer Silver Pit ______(-308m)

Markhams Hole ____(-528m)

Z1 and Z2 -----(-1963m)

Yarmouth Roads Fm. ----- -------(-72m)

L-M

Ple

isto

cene

Perm

ian

Tria

sZe

chst

ein

Kyl

e

Tert

iary

Red Chalk ----- (-1699m)Jur.

Mid Devonian Carbonate-------- (-2380m)

Caledonian Basement

--------(-2714m)

Dev

onia

n -

Car

boni

fero

usU

pper

OR

SH

ais.

Hum

K.N.

Dogger Bank Fm. ----(-39.6m)

13 3/8” Casing @ 1180m

12 ¼

”H

ole

Prognosed

9 5/8” Casing

@ 1983m

LITHOLOGY

U. C

reta

ceou

sQ

UAT

ERN

ARY

Cha

lk

Upper Old Red Sst

(-2045m)M

ontro

se /

Mor

ay /

Stro

nsay

Grp

s.

Kimmeridge (-1828m)

12 ¼

”H

ole

8½”

Hol

e

Chalk Grp. (Undiff.)’(-1141m)

Tertiary (undifferentiated) (-529m)

Seabed at ----(-39m)

Batavia/Aurora/Outer Silver Pit (-316m)

Markhams Hole (-428m)

Z1 and Z2 -----(-1975m)

Yarmouth Roads Fm.

(-71m)

L-M

Ple

isto

cene

Perm

Zech

17 ½

”H

ole

Tert

iary

Marl (-1673m)

Jur.

Caledonian Basement (-2300m)

Dev

onia

n ??

Upp

er O

RS

Hum

C.K.

Dogger Bank Fm. ----(-39m)30” Hole

13 3/8” Casing @ 1170m

Primary Target

absent

TD 2312m

Actual

K lwr.

Lwr Cret clay (-1720m)

Figure 2 Prognosed Vs actual stratigraphy

Corbenic Prospect The post-well interpretation of the Corbenic structure suggests it is a large basement high feature, with the Devonian Kyle Limestone only present on it’s northwestern edge (Figures 3 and 4). This results in a Statigraphic (3-way closure) trap of the Kyle Limestone abutting the basement to the south. However, from the 37/25-1 well results, there is no top seal or any indication of a working hydrocarbon system. Nor is there any seismic evidence of “reefal” character. The pre-well interpreted “karsted reefal” character is now interpreted as eroded basement.

Licence P1259. Relinquishment report

December 2009 Page 5

Depth (m)

2500

2500

2500

2500

2500

Corbenic 37/25-1 well

B

B’

max closure2800 m TVDSS

seismic character change re-interpreted asDevonian carbonate abutting basementalong possible linearity (fault?)

Kyle Lst abuts basement high

Kyle Lst on-laps basement

Figure 3, Corbenic prospect post-well interpretation

TWTIn secs

DevonianKyle LstOnlaps

basement

2.0

1.8

2.2

TWTIn secs

SE

2.0

1.8

2.2

2.4

Reef Edge

BCorbenic Prospect

B’NW

Reef Facies

37/25-1Corbenic

Pre-drill interpretation

20 Km

B

B’

CorbenicInterpreted

Reef

CI : 200ms

Base Devonian Carbonate

Top Devonian Carbonate

5 Km Post-drill interpretation

Basement

Top Devonian Carbonate

Base Devonian Carbonate

Zechstein evaporites

20 Km

B

B’

CorbenicBasement

high

CI : 200ms

37/25-1 Corbenic

higher amplitude andmore chaotic, weathered,reflection

Basement?

Figure 4, Pre and post-well (37/25-1) seismic interpretation

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December 2009 Page 6

Ardbeg Lead The Ardbeg Lead is the largest of the three mapped feature at the Top Kyle Limestone. It is a huge anticlinal closure straddling blocks 36/15, 36/20, 36/25, 37/11, 37/16, 37/17, 37/21 and 37/22 with a closing contour of ~2750 m sub-sea depth. However there is a direct seismic character tie to well 37/12-1. Well 37/12-1 drilled a much smaller Kyle Limestone 4-way closure to the northeast and this well was tight (< 3% porosity) and had no hydrocarbon shows. Nor was there any indication of hydrocarbons from FIV analysis. Bowmore Lead The Bowmore Lead (Figure 4) is the central structure of the three 4-way dip closures mapped at the Devonian Kyle Limestone level. It straddles blocks 37/18,19, 23 and 24 with a closing contour of ~ 2750 m sub-sea depth. However there is no seismic evidence for carbonate build-up at Bowmore and the nearby wells (37/12-1 and 37/25-1) do not indicate a working hydrocarbon system.

Depth (m)

37/12-1

37/25-1

B

B’

38/16-1

38/18-1Ardbeg

Bowmore

Corbenic

Figure 5, Devonian Kyle Limestone depth map

Shallow Potential There are no un-drilled Base Zechstein closures on the P1259 acreage and there are no Mesozoic reservoirs encountered in any of the local wells. Hence no shallower prospectivity is recognised in Licence P1259.

Licence P1259. Relinquishment report

December 2009 Page 7

Conclusion The high risk play has been tested by the 37/25-1 (Corbenic) well and found to be absent as there is no working hydrocarbon system. Although the 37/25-1 well did not encounter the Kyle Limestone, the unit is interpreted to still exist over most of Licence P1259. Two large closures remain un-drilled, but are predicted to be tight limestone with no reservoir development. Clearance The Licence partners have reviewed this document and given permission for publication. The owners of the spec seismic data have also given their clearance for publication of the seismic data.