Licence P.1659 Relinquishment Report – February 2017

Relinquishment Report

Licence P. 1659 Block 20/07

UKCS

Submitted to the Oil & Gas Authority February 2017

Document No: EXP-MFA-GEN-PM-00047-RP-01

Document last updated 26-01-2017 15:36 GMT

December 2016 1

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Relinquishment Report P.1659

1 Licence Information 1

2 Licence Synopsis 2

3 Work Programme Summary 4

4 Database 5

5 Prospectivity Update 9

5.1 Ettrick Reservoir 125.2 Additional Reservoir Analysis 15

6 Additional Technical Work Undertaken 16

7 Resource and Risking Summary 17

8 Conclusions 18

9 Clearance 19

List of figures

2.1 Map highlighting the 20/07 Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Map highlighting the updated P.1659 licence outline following 50% surr . . . . . . . 3 4.1 P.1659 Seismic & Well Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4.2 A map showing the orientation of the seismic section (Figs. 4.3 & 4.4) su . . . . . . . 6 4.3 SW-N orientated composite seismic line demonstrating the quality of the . . . . . . . 7 4.4 SW-N orientated composite seismic line demonstrating the quality of the . . . . . . . 8 5.1 Inner Moray Firth Semi-Regional Structure Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.2 Top Ettrick Member Depth Structure Map (ft TVDSS) . . . . . . . . . . . . . . . . . . . . . . . . 10 5.3 A geoseismic line illustrating the main play elements & trapping mechani . . . . . . 11 5.4 Stratigraphic Column highlighting the position of the Ettrick Sandstone . . . . . . . . 11 5.5 Sand fairway and distribution model for the Bardolph prospect area. . . . . . . . . 12 5.6 Bardolph 20/07-7 well CPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5.7 Stratigraphic column highlighting additional play types in the P.1659 lice . . . . . . 15 7.1 Pre- and Post-Drill Volumes for the Bardolph Prospect . . . . . . . . . . . . . . . . . . . . . . . . 17

List of tables

2.1 L i c e n c e S y n o p s i s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5.1 I n t e r p r e t e d p r o s p e c t i v i t y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1 Licence Information

The Licence P.1659 is summarised below: Licence Number: P.1659 Licence Round: 25th UK Offshore Licence Round Licence Type: Traditional Block Number: 20/07 Start Date: 12th February 2009 Initial term End Date: 11th February 2013 Second Term End Date: 29th January 2015 Firm Commitments Reprocess 200 km2 3D seismic data Drill-or-drop One well to 3050m or to the Upper Jurassic, whichever is shallower Initial Drill or Drop Decision Point 11th February 2013 Driver for relinquishment: Licence entered second term following the execution of the 20/07-7 well. Prospectivity on the retained portion of the licence was evaluated as non-economic. Nexen Petroleum U.K. Limited (51% equity holder of Licence P.1659), has approved this relinquishment report for publication by the DECC on behalf of Nexen Petroleum U.K Limited, Agora Oil & Gas, Carrizo Oil & Gas & MPX North Sea. OGA is free to publish the Report and all 3rd party ownership rights have been considered and appropriately cleared for publication purposes

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2 Licence Synopsis

Operator Nexen Petroleum U.K. Ltd

Partnership Nexen Petroleum U.K. Ltd (51%) Agora Oil & Gas (19%) Carrizo Oil & Gas (15%) MPX North Sea (15%)

Licence Status Second Term relinquishment

Licence Extension 2nd Term entered on 12th January 2013, following drilling of 20/07-7 well

Prospectivity Identified attime of Application

Upper Jurassic Bardolf prospect

Undeveloped discoveries N/A

Table 2.1: Licence Synopsis

Block 20/07 (Fig. 2.1) was awarded to Carrizo Oil & Gas in 2009 (70% Operator) and MPX (30%) during the 25th Licence Round. Carrizo and MPX presented a farm-in opportunity for the licence in 2010, at the London Prospex Conference. Nexen proceeded to farm-in to the licence in January 2012 and took over operatorship. The partnership agreed to drill a well (20/07-7), targeting the Bardolph prospect, in Q4 of 2012, fulfilling the drill-or-drop licence commitment. The P.1659 licence moved into its second term in January 2013, surrendering 50% of the 20/07 block area, where further evaluation of the remaining potential occurred. No further drilling activity took place. Fig. 2.2 shows the areal extent of the P.1659 licence following on from the 50% surrender in January 2013. Following evaluation of the remaining prospectivity on the retained portion of the licence, the licence was relinquished on 29 January 2015.

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Fig. 2.1 Map highlighting the 20/07 Block

Fig. 2.2 Map highlighting the updated P.1659 licence outline following 50% surrender in 2013

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3 Work Programme Summary

Carrizo Oil & Gas Inc & Nexen Petroleum U.K. Ltd have fully completed the agreed Work Programme, as detailed below: Reprocess 200 km2 of 3D seismic data.

Drill-or-drop commitment.

Seismic: The 3D seismic reprocessing project was undertaken by Carrizo Oil & Gas Inc during their operatorship of P.1659. Prior to the farm-out, the JV licenced the Fugro Terracube PSTM. Following the farm-out, Nexen Petroleum UK Ltd utilised a previously reprocessed 440 km2 of seismic data over the Blackbird Field area (re-processed in 2009-2010) to evaluate the P.1659 licence. The Nexen reprocessed seismic data volumes included a PSTM volume to aid in fault definition (2009) and a PSDM volume to better define depth and GRV (2010). Wells: Well 20/07-7 was drilled on the P.1659 licence in October 2012, targeting the Bardolph prospect. This well was drilled by Nexen Petroleum UK Ltd. on behalf of the P.1659 licence partnership.

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4 Database

The well database and seismic coverage used in the evaluation of Licence P.1659 is shown in Fig. 4.1. Nexen Petroleum UK Ltd evaluation of UKCS Block 20/07 utilised the proprietary 2009 reprocessed PSTM seismic (PSTM q20b8_bb (2003)). The key wells integrated into the work programme were 20/07-2, 20/02a-8, 20/02a-9 (Blackbird), 20/07-1, 20/07a-3, 20/07a-4 and 20/07b-5. Fig. 4.3 and Fig. 4.4 show a SW-N oriented seismic line, demonstrating the quality of the Nexen-reprocessed seismic volume which was utilised for all prospect evaluation and well planning. The orientation of the seismic line through the Bardolph prospect is shown on Fig. 4.2, with the Base Cretaceous Unconformity time surface and fault polygons illustrated.

Fig. 4.1 P.1659 Seismic & Well Database. Nexen evaluation of P.1659 utilised proprietary 2010 PSDM seismic (PSDM q20b8_bb (2003)) & regional knowledge. Base map is BCU Depth (ft TVDSS)

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Fig. 4.2 A map showing the orientation of the seismic section (Figs. 4.3 & 4.4) superimposed on the Base Cretaceous Unconformity Time Surface (2010). The Bardolph prospect outline is shown in pink. The BCU surface is shown in 5 m/s contour intervals.

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Fig.

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5 Prospectivity Update

Block 20/07 is located in the Outer Moray Firth Basin approximately 110 km north-east of Aberdeen. The block lies to the east of the Grampian Arch, with an average water depth of ~370 ft. Block 20/07 is divided into two main structural elements by a major north throwing, NE-SW oriented normal fault, which separates the Ettrick Graben to the north and the Peterhead Graben to the south (Fig. 5.1). Nexen Petroleum U.K. Ltd recognise two possible play types within the P.1659 licence area; these play types are 1) Early Cretaceous & 2) Late Jurassic in age.

Lower Cretaceous Play (Secondary) Upper Jurassic Play (Primary)

Reservoir Punt Member ( Late Ryazanian-EarlyValanginian)

Ettrick Sandstone (Mid-Volgian)

Source Kimmeridge Clay Formation Kimmeridge Clay Formation

Seal Lower Cretaceous shales & marls Kimmeridge Clay Formation

Trap Stratigraphic Stratigraphic/Structural combination

Risking &remainingprospectivity

High risk on sand presence/quality Moderate risk on containment; uncertainty onstratigraphic limits

Table 5.1: Interpreted prospectivity

The Bardolph prospect, which was identified as the well target and drilled by well 20/07-7 in 2012, is a combined-stratigraphic-structural trap requiring fault seal & structural dip closure to the north, and stratigraphic pinch-out to the east, south and west for containment, as seen in Fig. 5.2. Fig. 5.3 shows a schematic geoseismic diagram of the Bardolph prospect, highlighting the trapping mechanisms and identifying the key play elements for source, containment and reservoir. The Bardolph well (20/07-7) was targeting the Ettrick Sandstone Member (Fig. 5.4).

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Fig. 5.1 Inner Moray Firth Semi-Regional Structure Map. Highlighting the large NE-SW oriented fault which separates the Ettrick Graben to the north and the Peterhead Graben to the south

Fig. 5.2 Top Ettrick Member Depth Structure Map (ft TVDSS)

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Fig. 5.3 A geoseismic line illustrating the main play elements & trapping mechanisms for the Bardolph prospect

Fig. 5.4 Stratigraphic Column highlighting the position of the Ettrick Sandstone Member within the Upper Jurassic stratigraphy

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5.1 Ettrick Reservoir

The primary reservoir in the Bardolph prospect is the Upper Jurassic Ettrick Member, which occurs at depths between -8125 ft and -9200 ft TVDSS in the Bardolph prospect area. The Ettrick Sandstone Member consists of turbidite sands of Middle Volgian age (biostratigraphic sequence J66B-J73B MFSs). Sand presence is generally quite reliable in the P.1659 licence area, with the majority of the offset wells penetrating Ettrick-age sands. The Bardolph prospect is also located ~10 km to the south of the Ettrick Field and ~5 km south of the Blackbird Field, both of which produced primarily from the Ettrick Sandstone Member. The Blackbird discovery and appraisal wells, 20/02a-8 & 9, drilled by Nexen in 2008 and 2010 encountered 258 and 288 ft of Ettrick net sand respectively. However, unlike Blackbird, the 20/07-7 Bardolph well tested these sands in an updip and more proximal location. Fig. 5.5 shows the proposed sand fairway and depositional model for the Ettrick sands in the Bardolph prospect area. It is proposed that the Ettrick turbidite sandstone was sourced from south of the P.1659 licence area, travelling and depositing over the Bardolph prospect area and continuing to the north, accumulating in the Blackbird and Ettrick field areas. Fig. 5.6 shows the CPI interpretation for 20/07-7, the commitment well drilled as part of the P.1659 licence. The well found 744 ft of gross Ettrick-aged formation, with 128 ft of net sandstone. Reservoir presence and quality were both above the minimum expectations, but the sands were 100% water-bearing with no hydrocarbon shows.

Fig. 5.5 Sand fairway and distribution model for the Bardolph prospect area.. The sand fairway is thought to have been sourced from the south, traversing over the Bardolph prospect area and accumulating in the Blackbird and Ettrick field areas.

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It is proposed that containment was the main failure mechanism for the Bardolph prospect. The top and lateral seals were assumed to be provided by Ettrick-aged siltstones, Kimmeridge Clay Formation basinal muds and Lower Cretaceous marl deposits. The Heather Formation mudstones provide the base seal. The prospect was also reliant on fault seal along its western edge for the P10 volumetric case. It is thought that the top and base seals were present and effective. The most likely containment failure mechanism is that the southern depositional edge, shown in Fig. 5.5, continued further updip to the south-west, providing a potential thief zone for hydrocarbons to migrate along and away from the prospect area. A secondary failure mechanism that should be considered is the lack of hydrocarbon charge into the prospect area. The interpreted CPI indicated that the Ettrick sands were 100% water-wet, with no evidence of hydrocarbon shows. However, revised basin modelling work, carried out post-well, indicates that the Bardolph prospect can receive adequate charge from the mature Kimmeridge Clay Formation source rock to the south.

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Fig. 5.6 Bardolph 20/07-7 well CPI.

5.2 Additional Reservoir Analysis

Additional plays that have been mapped as part of the block evaluation are the Punt and Buzzard-age sands, neither of which have been penetrated by wells in the licence area (Fig. 5.7). The Punt Hotspur lead was modelled as a Lower Cretaceous turbidite feature, identified on seismic attribute maps as having a channelized geometry similar to that seen in the producing Golden Eagle asset, located in Block 20/01. However, further offset well analysis and regional studies strongly suggest that the channel feature will likely be shale-filled.

Fig. 5.7 Stratigraphic column highlighting additional play types in the P.1659 licence area

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6 Additional Technical Work Undertaken

Additional studies undertaken as part of the licence evaluation: Seismic Inversion Project: A seismic inversion project delivered by Ikon was undertaken in 2013, to aid in the technical assessments of the remaining leads in the partially relinquished P.1659 licence. The inversion data did not highlight any further prospectivity in the area.

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7 Resource and Risking Summary

Pre- and post-drill volumes and risk factors for the Bardolph prospect are outlined in Fig. 7.1. The 20/07-7 well location was positioned low on structure, aiming to prove-up the P10 volumes. As such, there is potential remaining volume in the footwall. However, this accumulation was deemed uneconomic and, as such, is not seemed worthy of future appraisal by the P.1659 partnership.

Fig. 7.1 Pre- and Post-Drill Volumes for the Bardolph Prospect

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8 Conclusions

Nexen Petroleum U.K. Limited is relinquishing the P.1659 licence halfway through the second term because no further commercial prospectivity was identified within the remaining 50% of Block 20/07.

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9 Clearance

Nexen Petroleum U.K. Limited, as the Operator of P.1659, has obtained approval from participating Co-Venturers for this relinquishment report to be published by the OGA.

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