P.1655 Licence Relinquishment Report

P.1655 Licence Relinquishment Report P.1655 Effective Date: 15 th September 2015

1. Licence Information Licence Number: P.1655 Licence Round: 25 th Licence Type: Traditional Block Number(s): 15/21g Operator: MOL (28%) Partners: Cairn 21%, Serica Energy 21%, Atlantic Petroleum 3.24% Faroe Petroleum 8.4%, Maersk 5.74%, Parkmead 12.62% Date Award: 12 th February 2009 Expiry Date: 11 th February 2017 MOL has obtained all permission required for this report to be published. 2. Licence Synopsis P.1655 was awarded to Encore, Serica and Nautical on 12 th February 2009 in the 25 th Round as a traditional licence. The group farmed in to the adjacent P.218 Gamma licence earning a 70% interest through the drilling of the 15/21a-60 well. The P.218 Gamma partners Atlantic, Faroe, Parkmead and Maersk held the remaining 30% and also as part of the farm-in earned an aggregate 30% interest in P.1655, bringing an equalised equity position across both licences as listed above. Note that Encore s interests were subsequently acquired by Premier, and Nautical s by Cairn. Premier subsequently divested their operated interest to MOL. The P.1655 location is shown in Figure 1. P.1655 P.218 Gamma Figure 1. P.1655 Block 15/21g location

P.1655 work obligations comprised obtaining 125km 2 and reprocessing 200km 2 of 3D seismic data, followed by a drill-or-drop commitment to 3500m or to the Kimmeridge Clay Formation whichever was shallower. 15/21g is located in the southern part of the Moray Firth, immediately north of the Halibut Horst, in the North Halibut Graben. The key target at the time of application comprised a large stratigraphic trap at Middle Volgian Upper Claymore Sandstone level, termed the Spaniards Lead. This was interpreted to be a downdip extension of the 15/21a-38z Spaniards discovery (Figure 2), and the Lead was also penetrated by 15/21-2 which encountered a thin, untested sand interpreted to be oilbearing on logs (Figures 3). Note that the Upper Claymore is considered to be equivalent to the Galley sand for the purposes of this report. Further evidence for the existence of a large accumulation was inferred from formation pressure data in the Upper Claymore, but this required extrapolation over ca. 2,000 TVD (Figure 4). Pressure data from water-wet Upper Claymore sands seen in wells 15/21a-38z and 14/25a-3 show the system is normally pressured with a gradient of 0.445 psi/ft. This is unlike the deeper Main Claymore sands, all of which are approximately 400 psi above normal. A 0.35psi/ft gradient (equating to 25 oil) extrapolated from 15/21a-38z gave an inferred OWC at 12,200 ft, approximately 200 ft below the mapped maximum closing contour for the lead. On seismic data, the Spaniards Lead reservoir was interpreted to thicken down dip, consistent with deposition of turbidites into the North Halibut Graben to the north. Seismic lines and an associated geoseismic section from the licence application are shown in Figures 5, 6 and 7. Figure 5 Figure 6 15/21g Spaniards Lead Outline 15/21-2 Monsanto 1975 Piper test. Oil in Upper Claymore sands 15/21a-60 15/21a-38(z) Amerada 1988 Piper/Claymore test. Tested oil from Upper Claymore sands Upper Claymore Sandstone Depth Structure (ft) Figure 2. Spaniards Lead map, bid application with the addition of 15/21a-60 location.

Depth (ft) TVDSS 15/21a-38z, 10105 127, 21 net oil bearing sst., 27% porosity, 82% hc saturation, DST 25 API oil 2660bopd 15/21-2, 10470 493, 6 net oil bearing sst., 12% porosity, 60% hc saturation, Not tested Figure 3. 15/21a-38z and 15/21-2 wireline log extract with interpretation. Formation Pressure PSI 4000 4500 5000 5500 6000 6500 9500 10000 15/21a-38z Upper Claymore Oil Sst 10500 11000 15/21a-38z Upper Claymore Water Sst Normally Pressured Main Claymore Sst ~400psi above normal 15/21a-38z oil 15/21a-38z Water 0.35 oil gradient 15/21a-46 Dolphin main claymore 15/21-2 Spaniards 15/21b-47 Perth 11500 15/21b-47Y water 15/21a-7 oil 14/25a-3 Perth NE 12000 12500 13000 15/21a-38z Upper Claymore sst calculated OWC at 12230 ft 0.445psi/ft grad through 15/21b-47z Perth Discovery, Main Claymore Water leg Linear (0.35 oil gradient) Linear (15/21b-47Y water) Linear (15/21b-47) Linear (14/25a-3) 13500 Figure 4. Formation pressures versus depth for wells in and around Spaniards.

Spaniards N 15/21b-47 15/21a-38z S Chalk Valhall BCU BUJ Main Claymore Base Upper Claymore 15/21a-38 Figure 5. Representative North-South line from Scott and Perth 3D seismic volumes. NW 14/25a-5 15/21-2 Spaniards SE Valhall BCU Base Upper Claymore BUJ Main Claymore 15/21-2 Figure 6. Representative West-East line from Scott and Perth 3D seismic volumes.

Spaniards NW 14/25a-5 15/21-2 SE Chalk Valhall Kimmeridge Clay Main Claymore 15/21-2 Piper Figure 7. West-East geoseismic section based on Figure 6.

3. Work Programme Summary With respect to the seismic commitment, 25 th Round pre-bidding analysis was based on the Scott 1996 and Perth 2000 3D seismic surveys. A seismic base map is shown in Figure 8. Pre-stack time migration reprocessing was proposed to address multiple contamination, high noise levels and poor fault definition, in particular in the Scott survey. The P.1655 partnership subsequently obtained a PSDM reprocessing of the underlying datasets ( Nexen Perth PSDM ), upon which the subsequent evaluation was based. Example seismic lines are shown in Figures 9, 10, 11, and the line location in Figure 8. Whilst the interval is better imaged on the PSDM in the region around and downdip of 15/21-2, the imaging updip in the vicinity of the main Halibut Horst and the -38z well remains poor, perhaps affected by the southern boundaries of the input surveys and the presence of the Halibut Horst bounding fault. Imaging is improved on the later TGS long-offset survey which has a more extensive acquisition, and is available to some of the partnership, although resolution of the thin Upper Claymore sands remains challenging. A post-stack inversion of the PSDM seismic to P-impedance was undertaken by SIP on behalf of the licence group, utilising the 14/25a-5, 15/21-2, 15/21a-38 and 15/21a-55 wells. However given the quality of the input seismic data no conclusive results were obtained, with a poor match obtained at the -38z discovery well (Figure 12). Following the farm-in to P.218 Gamma, the drill-or-drop commitment was satisfied by a joint appraisal of the 15/21a-38z Spaniards discovery. 15/21a-60 was drilled to appraise the eastern extension of Spaniards and encountered water-bearing Volgian sands ascribed to the Upper Claymore sands.

Seismic line location Figure 8. Seismic basemap. Figure 9. Representative seismic line from the Perth 3D survey.

Figure 10. Representative seismic line from the Scott 3D survey. Figure 11. Representative seismic line from the Nexen Perth PSDM survey.

Figure 12. Acoustic impedance seismic inversion.

4. Database The primary seismic dataset for the evaluation of Blocks 15/21g was the Nexen Perth PSDM, which was processed in 2005 by WesternGeco based on a merge of the Perth and Scott 3Ds (Figure 8). A summary of the key wells used in the evaluation is given in Section 5. 5. Prospectivity Update At the time of the application, the Spaniards Lead was mapped as a structural/stratigraphic trap within Upper Claymore sands, as a downdip extension of the 15/21-2 and 15/21a-38z discovery wells. Within the North Halibut Graben the Claymore Sands can be sub-divided into three separate stratigraphic packages; Early Volgian age Lower Claymore sands are of limited distribution confined to the northern margin of the Halibut Horst and are seen in Well 15/21a-38. No hydrocarbons have been encountered within this interval. Early Volgian Main Claymore sands are widely distributed to the north and south of the Halibut Horst. The sands can be over 1000ft thick and form the reservoir in the Perth field and 15/21-46 Dolphin discovery. Both these oil accumulations are trapped by a combination of downthrown fault and stratigraphic closure. The Middle Volgian to Ryazanian age Upper Claymore sandstones are less widely distributed than the Main Claymore sands and are concentrated in the heart of the basin. They form the reservoir in the 15/21a-38z Spaniards discovery and in 15/21-2. The distribution of these sands is controlled mainly by the dominant east-west structural grain and are absent from the Tartan Ridge to the north. However, a more subtle NE-SW fault orientation has also controlled their distribution with the sands being absent over the Scott field to the east. Younger Ryazanian age Dirk sands were encountered downdip in 14/25-5 and the updip pinchout of this package constitutes an untested trapping geometry in the area. The Upper Claymore sands are interpreted to be deep-water submarine fan sands eroded from the Halibut Horst, fed into the North Halibut Graben via discrete nick points. At the time of application, a potential key feeder was interpreted in association with the NNE-SSW trending Theta Graben faultsystem that cuts the eastern end of the Horst, feeding channel sands along the NNE-SSW isopach thick to the east of the 15/21a-38 well. This isopach thick was subsequently targeted by the 15/21a- 60 well (see Figure 2 for the well location), which encountered an allochthonous Middle Jurassic section interpreted to be a slide derived from the Halibut Horst footwall. Key wells in and around the licence are; Well 15/21-2 drilled by Monsanto in 1975 targeting Piper Sands on a large structural nose at the Base Jurassic. The well encountered water-wet Piper and a thick Main Claymore Sandstone containing an interpreted palaeo-oil column. The Upper Claymore sequence contained thin sandstone stringers with good fluorescent shows. This interval had no pressure points taken across it. However a CPI over the section (Figure 3) shows the presence of a 6 ft sand interval with up to 60% hydrocarbon saturation.

Well 15/21a-38 and its side-track 38z was drilled by Amerada Hess in 1988 to target Piper and Claymore sands up-dip from the 15/21-2 well. 15/21a-38 encountered wet Claymore sands, whilst the Piper was absent. The well was then side-tracked down dip and encountered a poorly-developed wet Piper target. However a 20 -thick oil-bearing Upper Claymore sand was penetrated which on DST flowed dry 25 API waxy oil at a rate of 2660 BOPD and a GOR of 187 scf/bbl. The oil has an unusually low API for the area at a depth of over 9000ft. Associated gas contained maximum levels of 26mol% CO 2 and 2ppm H 2 S. Well 14/25a-3 was drilled by Shell in 1991/92 targeting a Lower Cretaceous Scapa Sand stratigraphic trap. The well encountered water-bearing Scapa sands and TDd in Upper Volgian to Lower Ryazanian sands within the Kimmeridge Clay Formation. These sands preserved good porosities of 21% at ca. -10,750 TVDSS. Well 14/25a-5 was drilled by Amerada Hess in 1995 in an Upper Jurassic thick down-dip and to the west of 15/21a-38. The well encountered a thick Volgian to Ryazanian age section containing tight Claymore and Dirk sands with thin, isolated oil-bearing stringers based on log analysis. Well 15/21a-60 was drilled in 2012 as part of the P.1655 work programme, targeting an eastern extension of the Spaniards discovery. The well encountered two water-bearing Middle Volgian sandstones interpreted to represent the Upper Claymore. Biostratigraphic work suggested that the lowermost sand was of Main Claymore age, however Chemostratigraphy and provenance work suggests that the well did not reach the Main Claymore sands. The well TDd just below the lower 50 sand, and there remains the possibility that the Main Claymore lies below TD. An interval of Middle Jurassic Sgiath and Rattray Volcanics was encountered towards the top of the Kimmeridge Clay Formation, interpreted to be a slump associated with the major Halibut Horst fault system immediately to the south. A CPI log is shown in Figure 13.

Figure 13. 15/21a-60 CPI log Following the drilling of 15/21a-60, post-well studies were undertaken to understand the remaining potential of the 15/21-2 and 15/21a-38z discoveries, together with the surrounding prospectivity. Seismic in the 15/21a-60 area was re-interpreted as a series of slides or slumps, separating the wet sands from the Spaniards discovery to the west (Figure 14). Structure maps were updated and the extent of remaining targets re-assessed (Figure 15). New biostratigraphic and chemostratigraphic data was used to attempt a detailed correlation of the thin Upper Claymore sands. The oil-bearing 15/21-2 and 15/21a-38z sands are interpreted to be different ages based on Chemostratigraphy, possibly being J71 and J72 ages respectively, rather than having the potential to form a continuous accumulation (Figure 16). Source rock analysis of the Kimmeridge Clay in 15/21a-38/38z showed nearly half the section to be thermally mature for hydrocarbon generation and expulsion (Source: Petroleum Geochemical Evaluation of KCF & Pre-KCF in 15/21a-38/38z (January 2000) - A Robertson Report). Taken together with the presence of wet sands in the updip 15/21a-38 well, it seems likely that thin upper Claymore sands are locally developed and disconnected from one another, with local oil sourcing of hydrocarbons in associated stratigraphic traps.

Figure 14. Re-interpretation of seismic in the 15/21a-60 area. Figure 15. Revised J71 mapping post 15/21a-60.

Figure 16. Revised correlation and cross-section through the Spaniards are wells. Updated volumetric and risk estimates were made for the 15/21a-38z, 15/21-2 discoveries, and down-dip Ryazanian J74-76 Dirk Sands Spaniards West structures. The Spaniards West trap is illustrated in Figure 17, and a simplified map of prospect extents in Figure 18. Spaniards West is constrained by a spill point to the west, whilst the discoveries are constrained by wet sands in adjacent well penetrations, and in the case of 15/21-2 J71 by a spill point to the east.

Figure 17. Spaniards West trap. Discovery 15/21-2 Figure 17. Simplified map showing the maximum extent of remaining structures.

6. Further Technical Work Undertaken Provenance studies were carried out in order to provide a more confident and consistent characterisation and correlation of the Jurassic section in 15/21a-60, 15/21a-38 and 15/21a-38z. Biostratigraphy assigned the upper sand in 15/21a-60 to J73-71 and the lower sand to J66-63, whilst chemostrat assigned both to the J73-71 interval. The provenance studies supported the latter interpretation, and therefore the interpretation that 15/21a-60 did not penetrate the Main Claymore sands. 7. Resource and Risk Summary A summary table of recoverable resources associated with the remaining undrilled prospects and Leads is given below. The main risk on Spaniards West is the presence of an effective reservoir, due to the presence of cemented sands down-dip in 14/25-5. Despite being described as a discovery, the 15/21-2 volumes are also associated with appraisal risk of reservoir development. Resource and Risk summary Prospect Lead P Stratigraphic level Unrisked recoverable resources Geological Risked Discovery Name L Oil MMbbls Gas BCF @ 200scf/bbl Chance of P50 D Low Central High Low Central High Success % Mmboe Spaniards West L J74-76 Dirk 2.2 5.0 10.1 0.4 1.0 2.0 20% 1.0 15/21-2 discovery D J71 U Claymore 2.9 6.6 13.4 0.6 1.3 2.7 100% 6.8 15/21a-38z discovery D J72 U Claymore 2.0 3.3 5.2 0.4 0.7 1.0 100% 3.4 8. Conclusions In light of the small remaining volumes, the partnership concluded that the licence should be relinquished. In addition to the discoveries and leads described, there remains potential at the deeper Main Claymore level associated with the Dolphin discovery, and perhaps extending beneath the 15/21a-60 well. 9. Clearance The operator, MOL Energy UK Ltd. and its P.1655 partners confirm that DECC is free to publish information documented in this report and that all 3rd party ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes.