P2078, P2079, P2186, P2187 Licences …...Queensland Curtis LNG project Europe E&P P2078, P2079, P2186, P2187 Relinquishment Report August 2016 2 of 27 DOCUMENT INFORMATION SHEET Title:

P2078, P2079, P2186, P2187 Licences Relinquishment Report

(23/16e, 23/16d, 23/16h, 23/16i)

BG Group, Europe Exploration & Production Asset

August 2016

Queensland Curtis LNG project

Europe E&P P2078, P2079, P2186, P2187 Relinquishment Report

August 2016

2 of 27

DOCUMENT INFORMATION SHEET

Title: P2078, P2079, P2186, P2187 Relinquishment Report

Purpose:

Subsurface technical review of Licences P2078, P2079, P2186, P2187 supporting relinquishment

DOCUMENT VERIFICATION

Responsible:

Signature: Position: Geophysicist, EE&P

Name: Tim Pointer Date: 12th August 2016

Accountable:

Signature: Position: Team Leader, Core Licences EE&P

Name: Andrew Hall Date: 12th August 2016

Consulted:

Tim Pointer Geophysicist

Julie Roden Commercial

William Nicholson Reservoir Engineer

Mike Millar Petrophysicist

Dave Dickson Subsurface Assurance Team

Nick Percival Subsurface Assurance Team

Informed:

Endorsed:

Signature: Position: (Acting) Exploration Manager, EE&P

Name: Andrew Hall Date: 12th August 2016

Signature: Position:

Name: Date:


August 2016

3 of 27

RACIE TERMS

R Responsible: The person who actually produces the document

A Accountable: The person who has to answer for the success or failure of the quality and timeliness of the document

C Consulted: Those who must be consulted before the document is published

I Informed: Those who must be informed after the document is published

E Endorsed: The person who must approve the document before publication


August 2016

4 of 27

DISCLAIMER

No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information in this Relinquishment Report and no responsibility or liability is or will be accepted by BG International Limited ("BGI") or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it. Any liability in respect of the foregoing is hereby expressly disclaimed.

This Relinquishment Report contains forward-looking statements (statements that are not historical facts and relate to future performance or prospects) concerning, among other things the prospects of certain properties, areas or formations for production. Although BGI believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. No representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by BGI or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) that any projections, forecasts, or opinions should or will be achieved. BGI undertakes no obligation to update any forward-looking statements or to provide the recipient with access to any additional information.


August 2016

5 of 27

TABLE OF CONTENTS

DISCLAIMER 4

1.0 LICENCE SUMMARY & BACKGROUND 8

FIGURE 1. P2078, P2079, P2186, AND P2187 LICENCES LOMOND TERRACE, EAST CENTRAL GRABEN, UKCS. CINNAMON PROSPECT OUTLINE IS SHOWN. 9

2.0 WORK PROGRAMME SUMMARY 11

3.0 SEISMIC OVERVIEW 12

FIGURE 2. MAP SHOWING OUTLINE CGG Q22 PH7 3D BROADBAND/BROADSOURCE SURVEY. 13

4.0 WELL ANALYSIS – DISCOVERIES & DRY HOLES 14

FIGURE 3. DRY HOLES AND DISCOVERIES ON THE LOMOND TERRACE: TRIASSIC PENETRATIONS (ORANGE CIRCLES), POST-TRIASSIC PENETRATIONS (BLACK CIRCLES). 15

FIGURE 4. C29 STERANE ISOMERISATION PLOT 23/16D-6 RFT SAMPLES SHOWS THAT HYDROCARBONS FROM FULMAR FORMATION ARE MAIN MID MATURITY OIL WINDOW. 16

17

FIGURE 5. MORTIMER DEPTH STRUCTURE. 17

FIGURE 6. MORTIMER WEST-EAST SEISMIC LINE. 18

FIGURE 7. MORTIMER 23/16D-6 CPI LOG. 19

5.0 REMAINING PROSPECTIVITY 19

FIGURE 8. TOP TRIASSIC DEPTH MAP SHOWING CINNAMON STRUCTURE. 20

FIGURE 9. SEISMIC XLINE 31180 (TOP) THROUGH CINNAMON AND INTERPRETATION (BOTTOM). 21

FIGURE 10. SEISMIC INLINE 1320 (ABOVE) THROUGH CINNAMON AND INTERPRETATION (BELOW). 22

FIGURE 11. CINNAMON POROSITY ANALYSIS FOR JUDY INTERVAL 23

ELEMENT 26

PROBABILITY 26

COMMENTS 26

RESERVOIR PRESENCE: RP 26

0.9 26

SKAGERRAK PENETRATIONS ACROSS LOMOND TERRACE, INCLUDING LACEWING DISCOVERY FURTHER SOUTH 26

SLIGHTLY STRONGER REFLECTIVITY SEEN AT CINNAMON 26

BASE CASE IS JUDY RESERVOIR INTERVAL ONLY 26

RESERVOIR EFFECTIVENESS: RE 26


August 2016

6 of 27

0.45 26

23/21A-8 (BEAR), 23/16A-2, 23/16D-6 (MORTIMER) ARE POOR QUALITY – WOULD REQUIRE A SIGNIFICANT FACIES CHANGE OVER A SHORT DISTANCE 26

JUDY RESERVOIR ANALOGUE: RECENT OFFSET DATA TAKEN INTO CONSIDERATION 26

SOURCE PRESENCE: SP 26

1.0 26

REGIONAL PETROLEUM SYSTEMS MODEL COMPLETED 2015. MATURE SOURCE INTERVALS (JURASSIC) MAPPED/INFERRED ACROSS THE PROSPECT FETCH AREA, 26

SOURCE EFFECTIVENESS: SE 26

0.5 26

SMITH BANK MIGHT PROVIDE A MIGRATION BARRIER (SEAL) 26

PETROLEUM GEOCHEMISTRY AND TRINITY BASIN MODEL SUGGESTS MORTIMER HYDROCARBONS LOCALLY SOURCED 26

TRAP PRESENCE: TP 26

0.85 26

CINNAMON STRUCTURE IS CLEARLY DEFINED ON THE SEISMIC. 26

TRAP EFFECTIVENESS: TE 26

0.75 26

STRUCTURAL CONFIGURATION AT CINNAMON WELL DEFINED WITH FAULTS MAPPED ACROSS THE STRUCTURE 26

ML COLUMN HEIGHT USED FOR VOLUMES ARE ABOVE CRESTAL SPILL POINT ON EASTERN FLANK OF CINNAMON 26

FULMAR MAPPING ACROSS BLOCK TAKEN INTO CONSIDERATION 26

COS 26

13% 26

6.0 FURTHER TECHNICAL WORK UNDERTAKEN 26


August 2016

7 of 27

LIST OF FIGURES

FIGURE 1. P2078, P2079, P2186, AND P2187 LICENCES LOMOND TERRACE, EAST CENTRAL GRABEN, UKCS.

CINNAMON PROSPECT OUTLINE IS SHOWN. ................................................................................................. 9

FIGURE 2. MAP SHOWING OUTLINE CGG Q22 PH7 3D BROADBAND/BROADSOURCE SURVEY. ......................... 13

FIGURE 3. DRY HOLES AND DISCOVERIES ON THE LOMOND TERRACE: TRIASSIC PENETRATIONS (ORANGE

CIRCLES), POST-TRIASSIC PENETRATIONS (BLACK CIRCLES). ........................................................................ 15

FIGURE 4. C29 STERANE ISOMERISATION PLOT 23/16D-6 RFT SAMPLES SHOWS THAT HYDROCARBONS FROM

FULMAR FORMATION ARE MAIN MID MATURITY OIL WINDOW. ................................................................ 16

17

FIGURE 5. MORTIMER DEPTH STRUCTURE. .......................................................................................................... 17

FIGURE 6. MORTIMER WEST-EAST SEISMIC LINE. ............................................................................................... 18

FIGURE 7. MORTIMER 23/16D-6 CPI LOG. ............................................................................................................ 19

FIGURE 8. TOP TRIASSIC DEPTH MAP SHOWING CINNAMON STRUCTURE. ....................................................... 20

FIGURE 9. SEISMIC XLINE 31180 (TOP) THROUGH CINNAMON AND INTERPRETATION (BOTTOM). ................... 21

FIGURE 10. SEISMIC INLINE 1320 (ABOVE) THROUGH CINNAMON AND INTERPRETATION (BELOW). ................ 22

FIGURE 11. CINNAMON POROSITY ANALYSIS FOR JUDY INTERVAL ..................................................................... 23


August 2016

8 of 27

1.0 LICENCE SUMMARY & BACKGROUND

Licences P2078, P2079, P2186, and P2187, are located on the Lomond Terrace, East Central Graben, UK Central North Sea (Figure 1). A summary of these licences and associated blocks, award dates, initial terms and partnerships is provided below in Table 1.

BG updated the technical evaluation of the prospectivity of these licences following Bear 23/21a-8 dry-hole. This well spudded June 2015 in licence P0101 block 23/21a F, and deviated northeast 960m to intersect the target zone in licence P2187 block 23/16i. Post-well evaluation of Bear has led to a downgraded view of Triassic prospectivity across Lomond Terrace. The single remaining prospect, Cinnamon, is considered high risk with Chance of Success (CoS) 13%. Cinnamon total recoverable resources are estimated to have P10-P90 range 14-61mmboe with a mean of 38mmboe.

Licence Block Licence Round

Award date Initial term

Partnership

P2078 23/16e 27th 01/01/2013 6 years BG 50% (Operator),

ConocoPhillips 50%

P2079 23/16d 27th 01/01/2013 4 years BG 50% (Operator),

ConocoPhillips 50%

P2186 23/16h 28th 11/12/2014 4 years BG 50% (Operator),

ConocoPhillips 50%

P2187 23/16i 28th 01/12/2014 4 years BG 83.3% (Operator),

SSE 16.7%


August 2016

9 of 27

Table 1. Licence terms and partnerships.

FIGURE 1. P2078, P2079, P2186, AND P2187 LICENCES LOMOND TERRACE, EAST CENTRAL GRABEN, UKCS. CINNAMON PROSPECT OUTLINE IS SHOWN.

23/16d All – P2079 BG ( Op) – 50% ConocoPhillips 50%

23/16e All – P2078 BG (Op) – 50% ConocoPhillips 50%

23/16h – P2186 28 th Round BG (Op) – 50% ConocoPhillips 50%

23/16i – P2187 28 th Round BG (Op) – 83.33% SSE 16.67%

23/21a-8 (Bear)


August 2016

10 of 27


August 2016

11 of 27

2.0 WORK PROGRAMME SUMMARY

Commitments accompanying licences P2078, P2079, P2186 and P2187 are summarised below (Table 2).

Licence Firm Commitments Other provisions

P2078 - obtain 15km2 3D seismic

- reprocess 49km2 seismic to

PreSDM

- geotech and fluid inclusion studies, basin modelling, structural restoration

Drill or Drop

P2079 - obtain 45km2 3D seismic

- reprocess 81km2 seismic to

PreSDM

- geotech and fluid inclusion studies, basin modelling, structural restoration

Contingent well

P2186 - reprocess 464km2 seismic to

PreSDM

Drill or Drop

P2187 - reprocess 464km2 3D seismic to

PreSDM

- drill well to 3900m within Skagerrak Formation, on the Bear prospect

Table 2. Summary licence commitments.

All firm licence commitments have been met. OGA agreed to waive the contingent well commitment pertaining to P2079 on 18

th July 2016.


August 2016

12 of 27

3.0 SEISMIC OVERVIEW

Seismic imaging below BCU along Lomond Terrace is highly challenging. Main issues identified are

Short period internal multiples set up by Top Chalk, Base Chalk, Black Band, and BCU.

Short period water layer multiples (period ~120ms).

Complex salt structure and difficulty of mapping Top Salt. Lack of strong impedance contrasts within Triassic making it difficult to map internal

stratigraphy.

Lack of strong impedance contrasts across internal Triassic faults making it difficult to delineate the individual fault blocks.

Laterally highly variable geology between different Triassic pods and inter-pods.

Scattering of energy by East Central Graben fault.

The 2013 CGG Veritas Cornerstone 3D seismic survey processed to PreSDM exists across the licences (and greater regional area), and was used for defining the Bear prospect and planning the exploration well 23/21a-8. CGG reprocessed these Cornerstone data with targeted internal multiple removal and multi-layer tomography velocity model building. BG licensed 911km

2 TomoML data in

late 2014, and re-mapped the entire Lomond Terrace including the Cinnamon prospect. TomoML PreSDM data show a moderate improvement in definition of the Top Zechstein and faulting in the area. The main improvement is a result of the removal of internal multiple energy within Triassic. Resulting data show a much more opaque Triassic section over Cinnamon (and Bear).

During 2014-15 CGG acquired a new 3D Broadband/Broadsource dataset shot in the N-S direction (Figure 2). BG licenced 926km

2 of these new data, which were combined with E-W Cornerstone

TomoML data to generate a Dual Azimuth PreSDM. An updated velocity model below BCU was derived over a 224km

2 sub-area that covers Cinnamon and Bear. The processed data were delivered

3rd

Feb 2016 and re-interpreted Feb-Mar 2016.

Resulting seismic data are cleaner and again show a reduction in seismic events and amplitude within Triassic due to effective internal multiple removal. Fundamentally there is a lack of seismic reflectivity within Triassic section at Cinnamon, and similarly Bear. This is in contrast to Culzean Triassic discovery well 22/25a-9z that intersected a “complete” Triassic section including Joanne and Judy sands, where the seismic reveals a much brighter reflective package. The higher seismic amplitudes at Culzean are likely caused by presence of higher quality (low impedance) sands.


August 2016

13 of 27

FIGURE 2. MAP SHOWING OUTLINE CGG Q22 PH7 3D BROADBAND/BROADSOURCE SURVEY.

Licensed TomoML area full

fold 911 km2

Q22 Ph7 Priority Area

224km2

Cinnamon

Q22 Ph7 Licensed Area Full fold

926km2

Q22 Ph7 Gathers Area

544km2


August 2016

14 of 27

4.0 WELL ANALYSIS – DISCOVERIES & DRY HOLES

The BCU depth map in Figure 3 shows discoveries and dry holes across Lomond Terrace. Hydrocarbons were discovered on the Lomond structure with well 23/21-1 in 1970. Gas condensate was encountered in the Palaeocene Forties Sands above the Lomond Salt Dome. Well 23/22-1 failed to prove the extension of the Lomond Gas field in the adjacent block. Toad 23/21-5 was drilled in 2008 by BG Group, targeting Forties channel sands which ran along the western flank of the Lomond complex towards Medan and Pierce salt diapirs to the south. The well found a small, uneconomic volume, and was plugged and abandoned.

Jurassic sands were identified in 23/21-2 (1974), however it was not until well 23/22b-4 was drilled in 1992 that hydrocarbons were proved in this interval. Moth (23/21-6z) is situated 4km south of the Lomond field platform and was drilled by Oilexco in 2008. Primary target was Jurassic Fulmar sands that pinch out onto the diaper to the north. Moth encountered a small amount of hydrocarbons within the Fulmar and Pentland sandstones.

Triassic sections have been penetrated in wells 23/16d-6 (Mortimer), 23/16a-2 (“Bear flank”), 23/21-1, 23/21-6z (Moth), 23/22-1, 23/22b-4 and 23/22b-6z (Lacewing), and most recently 23/21a-8 (Bear). Lacewing was drilled by ConocoPhillips (with partner BG) in 2013, and encountered 113ft (net) gas condensate column within moderate quality (porosity 18%) Judy sands, and is the only Triassic discovery to date on Lomond Terrace. Lacewing is uneconomic (5mmboe recoverable gross).

Bear is located ~9km south of Cinnamon. The BG operated Bear well 23/21a-8 spudded in block 23/21a (P101) and deviated northeast to intersect the target Skagerrak section in 23/16i (P2187). Bear encountered a very poor Judy section (porosity 13%) that was dry with no hydrocarbon shows. The Smith Bank was intersected some ~1300ft shallower than prognosed. The likely reason for failure is absence of a hydrocarbon migration route from East Central Graben kitchen upwards to Bear structure. The Bear Triassic pod grounded early and the strata largely comprise a thick sequence Smith Bank lacustrine mudstones overlain by a thin section of poor quality Judy and undifferentiated Skagerrak. Judy in this area is a silt rich splay and poor quality. Any Joanne section deposited was likely eroded due to exposure at the rift arm.

Well 23/16a-2 was drilled on what can now be considered northern flank of Bear structure and encountered oil shows in poor quality (porosity 16%) Judy sands. This oil probably results from local charging by overlying or juxtaposed KCF.

Identification of Triassic Skagerrak reservoir sands and determining which formation they belong to (e.g. Joanne or Judy) is challenging because the high feldspar content means that it is difficult to identify sands using only Gamma Ray. Also absence of fossils in Triassic red beds means that there is no biostratigraphic control.

Mortimer is a dip and fault closed Fulmar interpod structure located on the Lomond Terrace immediately east of Cinnamon. 23/16d-6 Mortimer discovery well was drilled in 1994 by Amerada Hess, encountering 306ft Upper Jurassic Ula/Fulmar Formation sandstone, of which approximately 45ft were hydrocarbon bearing and with an OWC interpreted at 13,282ft ss on the basis of wireline, core and limited pressure data (Figures 5-7). No DST was undertaken. Amerada Hess appraised Mortimer discovery in 1997 with the 23/16d-7Z well in, what on current seismic is shown to be, in a separate fault block. The Fulmar section in this well was shown to be water wet with shows confined to the top of the reservoir, indicating a probable hydrocarbon migration route through these sandstones.

BG geochemical analysis of RFT samples recovered from 23/16d-6 reveals vitrinite reflectance 0.81– 0.90% which is main mid-maturity oil window (Figure 4). This suggests the Fulmar hydrocarbons are likely sourced on structure via downward charge from overlying Kimmeridge Clay source rocks, or charged from a local back basin.


August 2016

15 of 27

FIGURE 3. DRY HOLES AND DISCOVERIES ON THE LOMOND TERRACE: TRIASSIC PENETRATIONS (ORANGE CIRCLES), POST-TRIASSIC PENETRATIONS (BLACK CIRCLES).

23/16d-6 (Mortimer)

Oil discovery in the

Jurassic Ula Fm. Water

wet in the Triassic

23/16d-7z (Mortimer)

Water wet Jurassic

reservoir – did not

penetrate Triassic

23/16b-9 (Phyllis / Arran)

Appraisal well to 23/16b-1S1.

Forties Sandstone appraisal –

160 ft HC column encountered.

TD was just below Maureen Fm.

23/16a-2

Triassic penetration.

FIS showed

indications of 37o API

oil in the basal part of

the well. Reservoir

facies is degraded at

this location

23/21-1 (Lomond)

Triassic penetration up

on Lomond high. FIS

showed sporadic

inclusions in Triassic

23/21-2 (Lomond)

Jurassic TD – 1.3 ft

pay in reservoir

22/25a-9z (Culzean)

Triassic gas discovery

with ca. 618 ft of pay in

Joanne SST

23/21-6z (Moth)

HC’s in the Jurassic

(Pentland). TD in

Triassic Jonathan

mudstone

23/22b-4 (Bat)

HC’s at base of Kimm Clay Fm.

TD in undifferentiated Triassic.

Skaggerak was water bearing

N

23/21-5 (Toad)

TD in Ekofisk Fm.

Forties Sandstone

discovery

23/22b-6z (Lacewing)

Skaggerak gas

condensate discovery

(>100ft HC column)

Triassic penetrations

Post-Triassic penetrations

Top BCU (depth)

HC found in well

No HC found in well

Legend23/21a-8 (Bear)

Triassic penetration.

Poor quality Judy

porosity 13%


August 2016

16 of 27

FIGURE 4. C29 STERANE ISOMERISATION PLOT 23/16D-6 RFT SAMPLES SHOWS THAT HYDROCARBONS FROM FULMAR FORMATION ARE MAIN MID MATURITY OIL WINDOW.

Seismic mapping suggests that Mortimer discovery well was drilled in a relative down dip location towards the east of the trap and close to the hydrocarbon water contact (Figure 5). The crest is mapped 1.5km to the west at an elevation of 12,959ft ss (3,950 m), 305ft up dip of the discovery well. To the north, the trap is delineated by an east-west fault system and is dip closed to the south. The northerly bounding fault comprises a number of linked faults with a relatively small degree of throw in the range of 80-150 ft. This fault system separates the Mortimer discovery from the dry 23/16d-7z appraisal well, which was drilled to the north of this fault. To the west, the Mortimer trap likely seals against the main bounding fault of the Cinnamon Prospect, whilst to the east closure is against an easterly throwing fault.

0 10 20 30 40 50 60 70 80

%abb

0

10

20

30

40

50

60

70

80

%20S

oils

oilMost

maturity

High

Immature source rock

Low maturity oil

Main

oil

maturity


August 2016

17 of 27

FIGURE 5. MORTIMER DEPTH STRUCTURE.

Parameters Min Ml Max

N:G 0.4 0.65 0.85

Porosity 0.1 0.19 0.28

So 0.45 0.6 0.75

Table 3. Mortimer reservoir parameters.

23/16d-7,7z Mortimer

Appraisal. dry

23/16f-6 Mortimer (on block)

Jurassic Fulmar

Oil discovery. OWC 4048 m

Mortimer

Cinnamon


August 2016

18 of 27

FIGURE 6. MORTIMER WEST-EAST SEISMIC LINE.

Reservoir parameters employed to model Mortimer discovery volumes are based upon wells 23/16d-6 and 23/16d-7z and provided in Table 3. The mean recoverable volume is estimated at 10 mmboe, with a P10-P50-P90 range of 7-10-14 mmboe (Table 4). These resources lie entirely within block 23/16d.

Mortimer Mode Mean F90 F50 F10

In-Place

Oil (mmb) 31 33 22 32 44

Gas (bcf) 76 82 56 80 110

Total Resources (mmboe) 43 46 32 45 62

Recoverable

Oil (mmb) 5 7 4 6 9

Gas (bcf) 17 20 13 20 29

Total Resources (mmboe) 10 10 7 10 14

Table 4. Mortimer in-place and recoverable reserves estimates.

continuity of reflectors to crest of structure –

discovery well was 83 m downdip

Mortimer

Base Chalk

BCU

Top Fulmar

Top Triassic

Top Zechstein

Top Rotliegend

Base Chalk

BCU

Top Fulmar

Top Triassic

Top Zechstein

Top Rotliegend

E

Top Fulmar Depth (m) W


August 2016

19 of 27

FIGURE 7. MORTIMER 23/16D-6 CPI LOG.

5.0 REMAINING PROSPECTIVITY

A technical evaluation of prospectivity in licences P2078, P2079, P2186, P2187 has been completed. The key remaining prospect is Cinnamon which is Triassic age, and has a mean recoverable resource of 38 mmboe. The Cinnamon volume and risk analysis has been updated based upon the recent 23/21a-8 Bear and 23/22b-6z Lacewing offset wells, and seismic re-mapping of the CGG TomoML and CGG Broadband/Broadsource 2015 seismic datasets.

Cinnamon reservoir is considered to be Judy sands within Skagerrak formation. Cinnamon trap is defined by a complex system of faults and dip-closure (Figure 8). Likely source rock is Upper Jurassic Kimmeridge Clay in the syn-rift sequence deeper in the graben to the west. Migration would occur via carrier beds through a series of toppled Triassic fault blocks. This is the charge model for the Lacewing Triassic discovery south of the Lomond diapir. The Kimmeridge Clay source rock interval is younger than the Judy reservoir and therefore migration requires down-faulting to juxtapose source rocks against reservoir.

560ft undiff Skagerrak

270ft Ula


August 2016

20 of 27

Seismic imaging of the trap geometry and configuration of Cinnamon is challenging. Figures 9-10 show the prospect on the CGG Tomo-ML dataset. Trapping relies on the presence of faults which are difficult to interpret on the available datasets. It is challenging to map offsets on faults that were only active during the Triassic as it is difficult to map internal reflections within the Triassic, and also Top Triassic and Base Cretaceous are unconformities.

FIGURE 8. TOP TRIASSIC DEPTH MAP SHOWING CINNAMON STRUCTURE.

N bounding fault

min 12260ft (120ft column)

max 13486ft (1346ft column)

ML 13363ft (1223ft column)

C.I. 200ft

crest 12140ft

INLINE 13120

XLINE 31180

S bounding fault


August 2016

21 of 27

FIGURE 9. SEISMIC XLINE 31180 (TOP) THROUGH CINNAMON AND INTERPRETATION (BOTTOM).

W E

boundin

boundin

m

M

m

W E

max

bounding fault

ML

min

low Smithbank

high Smithbank

Crestal faulting mapped across Cinnamon block Faulting associated with slide plane of Zechstein salt underneath Cinnamon Smith Bank section nominally interpreted across pod

Triassic

Zechstein

Rotliegendes

Lwr Cretaceous

Chalk

Palaeocene

KCF

bounding fault


August 2016

22 of 27

FIGURE 10. SEISMIC INLINE 1320 (ABOVE) THROUGH CINNAMON AND INTERPRETATION (BELOW).

S bounding fault

m

ML

m

N bounding fault

N S

max ML

min

low Smithbank

high Smithbank

Triassic

Zechstein

Rotliegendes

Chalk

S bounding fault

N bounding fault

Palaeocene


August 2016

23 of 27

A key challenge associated with the Cinnamon lead is the uncertainty associated with the salt interpretation in the area. There are several possible picks for the Top Salt. This has implications for available volume space for the Smith Bank and the Skagerrak intervals and also in terms of working out the salt movement and inferring what may have filled the mini-basin during the Triassic. Volumes are calculated for Cinnamon assuming presence of Judy reservoir only (Table 7, Figure 11). Hydrocarbon column estimation is driven primarily by seal capacity of the faults and identification of a Fulmar thief zone to the east of the main bounding fault. Minimum contact is smallest 4-way dip closure that does not include faults (120ft column). Most Likely contact is based upon shallowest intersection of Fulmar alongside eastern bounding fault (1223ft column). Maximum contact is based on fault seal Capillary Entry Pressure (CEP) calculations (1326ft column).

Cinnamon volumetric input parameters and gross in-place and recoverable reserves are summarised below (Tables 5-7). Chance of Success (CoS) for Cinnamon is 13%. Critical risks are considered to be Reservoir Effectiveness and Source Effectiveness. This is based upon observations at offset wells and interpretation of 3D seismic data.

In summary Cinnamon probably contains only a thin section of Judy formation that comprise silt rich splays (as encountered at 23/16a-2 and 23/21a-8). It would be difficult to charge these poor quality rocks from the East Central Graben. Any hydrocarbons columns would be limited in height due to the presence of high quality Fulmar (Ula) sands, as intersected by 23/16d-6 and 23/16d-7, acting as a thief zone on the downthrown side of the eastern bounding faults.

FIGURE 11. CINNAMON POROSITY ANALYSIS FOR JUDY INTERVAL

8000.00

10000.00

12000.00

14000.00

16000.00

18000.00

20000.00

0.05 0.08 0.10 0.13 0.15 0.18 0.20 0.23 0.25

DEP

TH

Porosity

Judy SST Petrophysical Averages Por vs Depth

Calloway

Series2

Series3

Series4

Series5

Series6

Series7

Series8

Peking Duck

BEAR

Bear reservoir interval

Cinnamon


August 2016

24 of 27

Table 5. Cinnamon Judy Reservoir parameters used for volumetrics.

Fluid Parameters Distribution Min Mode Max

Wet gas shrinkage factor StrBeta 0.88 0.93 0.98

Expansion factor gas (1/Bg) [scf/cf]

StrBeta 275 315 355

Condensate yield [STB/1e6 scf]

StrBeta 35 118 200

Recovery Factor Non Assoc Gas

StrBeta 0.43 0.55 0.65

Recovery Factor Condensate

StrBeta 0.15 0.35 0.45

Table 6. Fluid parameters estimated based upon data from J-block, Kessog and Marnock fields, used in the volumetric evaluation of Cinnamon Prospect.

Reservoir Parameters

Distribution Min Mode Max

HC contact (ft) StrBeta 12260

(120 ft column)

13363

(1223 ft column)

13486

(1346 ft column)

Spill point (ft) Constant 13685

N/G StrBeta 0.21 0.5 0.65

Porosity StrBeta 0.12 0.15 0.18

Gas Saturation StrBeta 0.569 0.651 0.719


August 2016

25 of 27

Cinnamon Mean P90 P50 P10

In-Place

Gas (bcf) 295 112 300 466

Condensate (mmb) 35 12 33 60

Total Resources (mmboe) 84 31 85 135

Recoverable

Gas (bcf) 161 61 163 256

Condensate (mmb) 11 4 11 20

Recoverable resources (mmboe)

38 14 38 61

Table 7. Cinnamon prospect estimated volumes (gross)

Cinnamon risking (Table 8) has taking into consideration the greater Lomond terrace geology and also seismic observations across the Triassic in the area. Key risks identified for the prospects include:

Source Effectiveness: Dry holes in offset Triassic penetrations, and small offset accumulations in the pre-Cretaceous. Critically, one of the prominent Triassic prospects to the north (drilled by the 23/21a-8 well) did not encounter any shows, and fluid inclusion studies strongly suggested that no hydrocarbons migrated into the structure. Trap configuration and geometry are hard to map in detail with confidence. Furthermore it is not possible to identify the critical juxtaposition of source rock against reservoir, which is key for de-risking the play along the Lomond Terrace.

Reservor Effectiveness: The Judy at this location is thought likely to comprise silt rich splays and be poor quality as at 23/16a-2 and 23/21a-8, and certainly poorer than at Lacewing.

Trap Effectiveness: Poor seismic imaging results in considerable uncertainty on mapping of individual segments, sealing faults and reservoir stratigraphy.


August 2016

26 of 27

ELEMENT PROBABILITY COMMENTS

Reservoir Presence: Rp 0.9

Skagerrak penetrations across Lomond terrace, including Lacewing discovery further south

Slightly stronger reflectivity seen at Cinnamon

Base case is Judy reservoir interval only

Reservoir Effectiveness: Re 0.45

23/21a-8 (Bear), 23/16a-2, 23/16d-6 (Mortimer) are poor quality – would require a significant facies change over a short distance

Judy reservoir analogue: Recent Offset data taken into consideration

Source Presence: Sp 1.0 Regional Petroleum Systems model completed 2015. Mature source intervals (Jurassic) mapped/inferred across the prospect fetch area,

Source Effectiveness: Se 0.5

Smith Bank might provide a migration barrier (seal)

Petroleum geochemistry and Trinity basin model suggests Mortimer hydrocarbons locally sourced

Trap Presence: Tp 0.85 Cinnamon structure is clearly defined on the seismic.

Trap Effectiveness: Te 0.75

Structural configuration at Cinnamon well defined with faults mapped across the structure

ML Column height used for volumes are above crestal spill point on eastern flank of Cinnamon

Fulmar mapping across block taken into consideration

CoS 13%

Table 8. Cinnamon risking.

Other leads have been mapped in the Upper Jurassic Fulmar Sands (Boar and Bjorn), Palaeocene Forties sands (Honey), Danian Ekofisk Formation (Kermode) and in Lower Cretaceous sands (Ursus). Volumetrics and risking were estimated for Palaeocene lead Honey (mean total recoverable 1.1 mmboe, CoS 14%), and Upper Jurassic lead Boar (mean total recoverable 7.4 mmboe, CoS 17%). These leads are high risk and small volume.

6.0 FURTHER TECHNICAL WORK UNDERTAKEN

Following Bear well 23/21a-8 drilled to the south, the following technical work has been undertaken to de-risk the prospectivity in these licences, and also understand the key risks associated with Triassic prospectivity in the area:

Regional well-tie and rock physics analysis of 13 offset wells including 23/21a-8 to try and understand


August 2016

27 of 27

o variability in Top Triassic seismic response o internal Triassic reflectivity o Top Smithbank reflector.

This study takes into account effects of multiple contamination by full waveform modelling to

generate well synthetic ties, analysing pre-stack gathers, and processing of VSP data. It encompasses a seismic review of the structures across the area to consider the timing of salt movement and preservation of Skagerrak sandstone intervals and the effect of hydrocarbon migration:

Review of regional Skagerrak sand distribution

Review of x-ray fluorescence (XRF) and elemental analysis of Skagerrak reservoirs in the Lomond sub-regional area

Fluid inclusion analysis across wells in the area to better de-risk migration and understand the working petroleum system within the Triassic

Documents

P2078, P2079, P2186, P2187 Licences …...Queensland Curtis LNG project Europe E&P P2078, P2079, P2186, P2187 Relinquishment Report August 2016 2 of 27 DOCUMENT INFORMATION SHEET Title: