Making the Most from UKCS Exploration Simon Toole

Making the Most from UKCS Exploration Simon Toole Director – Licensing, Exploration & Development Prospex Fair 11/12 Dec 2007

• UKCS Undiscovered Resource Potential • Fallow Process Success • Promote Licence Statistics • Licensing and 25 th Round • West of Shetland Task Force • BERR 2007 Promote CD • DEAL Data Release

Creaming Curve Analysis Least Mature

Potential Undiscovered UKCS Resources Level for BERR estimate Approx 9. 4 bn boe - 3. 4 WOS/S - 0. 8 NNS - 4. 5 CNS - 0. 7 SNS

4. 5 Basin Creaming Curves vs Lead Database NNS 1. 2 CNS 0. 8 0. 2 0. 7 0. 2 SNS & EIS 3. 4 0. 3 WOS Incl leads > 5% COS Incl leads > 20% COS (bn boe)

UKCS Creaming Curve vs Lead Database ? 9 bn 2 bn Incl leads > 5% COS Incl leads > 20% COS (bn boe)

Status of 148 released blocks still under evaluation Activity is on the way – 43 subareas BR wells committed FDP in preparation BR plan in progress Relinquishment on the way – 52 subareas Relinquishments are being processed, BR Drop decision made Currently under discussion – 53 subareas Previously drilled but now fallow again or proposing rescue work plan or making rescue Drill or Drop decision

Status of other 155 Fallow Discoveries (current, but some decisions to end 2007 still changing) Discovery too small – 19 (now just part of fallow block) Class A – 72 (Pre-development feasibility studies, Well or new seismic AFE'd Significant studies, Infrastructure full or none available) Class B – 52 Under discussion (mixture of newly identified and released on website) Fallow class BR - 12 Rescued with firm plan for activity

Traditional Vs Promote Licences Observations from 21, 22 & 23 rd Rounds • • • Overall similar # licences drilled (21 Prom, 24 Trad). Anticipated drill rate (full cycle 21 st Round) – Trad 13/35 (37%), Prom 16/54 (30%). As expected, # of Promote wells build later in licence (farm out required, need to shoot seismic). Associated rig & new seismic time pressure. Quick cycling via tough Promote 2 year ‘continuation’ point – typically 40% go through based on ‘firm wells’ or ‘new seismic + contingent well’. Overall Promote potentially commercial success rates: – Exploration wells ~ 30% – Appraisal wells ~ 70%

1 Licensing Strategy 4 7 • Annual Rounds 2 • 25 th Round early 2008 5 • Cumulative Acreage 3 Incl. SEA 7 • Focussed Terms 6 Traditional Promote Frontier 8 2

WEST OF SHETLAND TASKFORCE http: //www. og. dti. gov. uk/UKpromote/wos_task. htm

West of Shetland Activity Area of high exploration activity potential Industry/Government Task. Force addressing gas infrastructure needs 30+ companies with interests in WOS Ca. 60 licences WOS

2007 Promote CD

Promote CD Opportunities Ø 44 Leads & 5 Discoveries ØMaps, Stratigraphic columns and Cross Sections ØIn Place and Reserve Estimates ØPlay summaries CD available at DTI stand

Unlicensed Opportunities West of Britain North Sea

Multiple Opportunities - 21/24 5 Leads: (Est Reserve Range) A - 33 -51 -76 mmbo B - 12 -19 -31 C - 17 -26 -37 D - 9 -14 -20 E - 10 -16 -24 1 Discovery (21/24 -4): Untested 35 ft net reservoir 17 -27 -41 mmbo

West of Britain 214/1 One of the largest undrilled UKCS structures: High Risk with Potential reserves of 1. 4 - 2. 8 billion barrels