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1. Licence Information

Licence Number: P1741

Licence Round: 26th Round

Licence Type: Traditional

Block Numbers: 42/13b, 42/17 & 42/18

All permissions to publish have been obtained (see Section 9)

2. Licence Synopsis

P1741 was a Traditional 26th Round licence, awarded to RWE Dea UK SNS Limited

(70%) and Sterling Resources (UK) Limited (30%), with a start date of 10/01/2011

(Figure 1). RWE Dea UK was subsequently acquired by L1 Energy (12/03/2015),

becoming DEA UK before being sold on to Ineos in December 2015.

The firm work programme required the acquisition of 450 km2 of 3D seismic,

processed through to PreSDM. There was also a contingent well commitment.

The primary lead (Lochran), identified at the time of application, was a fault

segmented, potentially dip closed structure at Base Permian Unconformity (BPU)

level (Figure 1). There was no 3D coverage over this licence at the time of

application. Consequently, the evaluation was based on a broad grid of 2D seismic.

However, the overburden is complex and depth conversion resulted in a significant

displacement of the Lochran structure westwards, compared with the TWT mapping.

The position and presence of a valid structural closure at BPU level was therefore

questionable. A new proprietary 3D seismic survey was acquired in 2012 and

processed to Pre-SDM (2013) to address this issue.

Interpretation of the new dataset failed to confirm the presence of a significant

closure at BPU level. Consequently, the criteria for drilling were not met and a waiver

of the contingent commitment was sought and obtained from the DECC (26/11/2014)

and the obligation reduced to a drill-or-drop.

A dip and fault closed Intra-Carboniferous lead (Lochran Deep) was, however,

identified within the licence but drilling was not considered to be warranted (Figure 2).

A small BPU feature (named SW Breagh) was also identified in the northern part of

the licence, adjacent to the Breagh field (Figure 2). The structure extended off-block

to the NW into open acreage (42/12), and closure in this direction could not be

confirmed on the available seismic data. A partial relinquishment of the licence was

made effective on 01/01/2015 and a one year extension to the Initial Term of the

licence was granted by the DECC to undertake further evaluation of this lead. A

further 3 month extension was then granted following the sale of DEA UK to Ineos.

However, given the absence of any significant remaining prospectivity, the licence

was subsequently surrendered, effective 15/02/2016.

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3. Work Programme Summary

Firm: shoot 450 km2 of 3D seismic and process to PreSDM.

650 km2 of proprietary 3D seismic was acquired by PGS in 2012, using the vessel

Atlantic Explorer. The processing was also undertaken by PGS and the PreSDM

volume was delivered in mid-2013.

Contingent: drill a well to 2225m or Top Visean Great Limestone Unit, whichever

was the shallower. Drilling was contingent upon the 3D seismic dataset:

Enabling clear definition of the Great Limestone unit beneath the Base Permian

Unconformity (BPU) over the northern flank of the Lochran lead.

Providing a significant improvement in confidence as to the presence of the

mapped structure at the BPU.

The new 3D dataset demonstrated the absence of any significant structural closure

at the BPU over the area of the Lochran lead. A waiver of the contingent well

commitment was therefore sought and obtained from the DECC, with the obligation

being reduced to drill-or-drop.

Figure 3 shows the 2D dip line LJ 91-19, running WSW – ENE across Lochran, with

the interpretation as at the time of the licence application. Figures 4a-d provide a

comparison of 2D line LJ 91-19 with a series of outputs from an identically-positioned

arbitrary line extracted from the 2013 3D dataset. Figures 4a & 4b show the 2D line

LJ 91-19 and the time-stretched PreSDM version. Whilst all of the major features are

evident on the 2D line, the 3D data shows a significant improvement in the imaging,

especially at depth. Figures 4c and Figure 4d compare the PreSDM image in TWT

and Depth; note the flatness of the Base Zechstein event (at points A and B) on the

depth section compared with the equivalent time converted section. This comparison

provides significant confidence in the depth conversion presented by the PreSDM

processing, which was subsequently directly used in depth mapping.

Figure 5 shows the 2D strike line LJ 91-02 running S-N across Lochran with the

interpretation as at the time of the licence application. Figures 6a & 6b provide a

comparison of 2D line LJ 91-02 with an equivalent arbitrary line from the 2013 3D

dataset. The 3D data shows a significant improvement in the imaging, especially

within the pre-BPU interval. Again, the flatness of the Base Zechstein event at points

C and D on the depth section (Figure 6d) is clear compared to the equivalent time

converted section (Figure 6c) from the PreSDM dataset.

4. Database

Figure 7 shows the seismic coverage available over P1741 and the wells used to

constrain the seismic velocities for the Pre-SDM during processing (42/18-2 and

42/23-1), and which were also used to identify the key seismic reflectors. The

majority of the 2D is WesternGeco 1992 vintage data; the quality of which is

generally poor below the BPU. The well control is sparse, less than one well per

block.

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The proprietary Lochran 3D was acquired for RWE Dea UK by PGS in 2012. The

processing to PreSDM was undertaken by PGS, starting in July 2012 and finishing in

May 2013. Survey area was 650 km2.

5. Prospectivity Update

Lochran Lead: at the time of application this was perceived as a fault segmented,

potentially dip closed structure at BPU level (Figure 1). 3D seismic data was not

available at this time and the mapping was based on a broad grid of vintage 2D

lines. The overburden is complex and depth conversion resulted in a significant

displacement of the Lochran structure westwards, compared with the TWT mapping.

The position and presence of a valid structural closure at BPU level was therefore

questionable. A new proprietary 3D seismic survey was acquired in 2012 and

processed to Pre-SDM (2013) to address this issue.

Interpretation of the new dataset failed to confirm the presence of a significant

closure at BPU level. Consequently, drilling was not warranted and a waiver of the

contingent well commitment was sought and obtained from the DECC (26/11/2014).

However, interpretation of the 3D PreSDM dataset identified two other leads within

the original P1741 licence area:

SW Breagh: This feature was revealed by the 3D data, and straddles the boundary

between blocks 42/12b and 42/18a (Figures 2 & 8). On the available data it is an

elongate NW – SE structure, with a combination top seal comprising Base Namurian

shale on the southern flank and Base Zechstein over the remainder of the trap

(Figures 8 & 9). Given its location, the reservoir interval is expected to comprise

Breagh Zone 1A & 1B sandstones. The principle concerns are trap presence as

mapped and the effectiveness of the proposed but unproven Base Namurian top

seal. An additional non-exclusive PreSTM 3D dataset was purchased in 2015 over blocks 42/12 and 42/13 for the remapping of the Breagh field. Preliminary interpretation of this dataset indicated that SW Breagh is fault bounded to the NW and is therefore relatively small. Consequently, drilling is not considered to be warranted.

Lochran Deep: this feature was revealed by the 3D data and is an intra-

Carboniferous lead that relies on an, as yet, un-proven Base Namurian shale top

seal, with reverse fault closure to the North (Figures 10 & 11). Owing to appreciable

palaeo-burial and subsequent uplift / erosion, reservoir quality is a significant risk,

along with possible cross-fault leakage. Given the risk / resources combination,

drilling of Lochran Deep lacked economic / commercial support.

6. Further Technical Work

The following additional technical work was also undertaken for the evaluation of this

licence:

Duncan McLean undertook a review of the biostratigraphic data to aid the

stratigraphic interpretation and well correlations

An internal review of wells in Quadrants 41 & 42 was completed to assess the

potential for intra-formational seals within the Carboniferous.

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Palaeogeographic reconstructions were made for the Brigantian interval to aid

the understanding of reservoir distribution.

Bunter Shale velocities from wells in Quadrants 41 & 42 were analysed and

used to determine the likely maximum depth of palaeo-burial and the potential

impact of this on reservoir quality, as the licence lies within the zone affected

by inversion.

7. Resources and Risk Summary

Resource & Risk Summary

Lead

P

L

D

Stratigraphic

Level

Unrisked Recoverable

Resources Geological

COS %

Risked

P50

MMboe Gas BCF

P90 P50 P10

Lochran

Deep

L Early Carboniferous 43 80 123 15* 2.15

SW

Breagh

L Early Carboniferous 39 52 68 20 1.9

* In this case equates to the probability of achieving a sustainable, commercial flow

rate in an inclined multi-fracced well.

8. Conclusions

There are no significant untested structural closures at the BPU level

Consequently the contingent well obligation was waived

However, two Intra-Carboniferous leads (Lochran Deep and SW Breagh) were

identified using the proprietary (2012/13) 3D dataset. Unfortunately, given the

modest recoverable resources and associated COS, commercial / economic

support for drilling was lacking.

Consequently, the licence was surrendered effective 15/02/2016

9. Clearance

Ineos UK SNS Limited confirms that the OGA has clearance to publish this report

and that all third party ownership rights (on any contained data and/or interpretations)

have been considered and appropriately cleared for publication purposes.

10. Maps and Figures

Please see Following Pages

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Figure 1 - Location map showing licence P1741 and the Lochran lead at the time of award

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Figure 2 - Map showing licence P1741 post partial relinquishment, effective 09/01/2015 and the

locations of the Lochran Deep and SW Breagh leads.

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.

Figure 3 - 2D seismic line LJ 91-19 running WSW – ENE across P1741 showing the interpretation

and the Base Namurian TWT high (Lochran lead) identified at the time of the licence

application. Seismic events tie to well 42/18-2. (Released proprietary ENI seismic data).

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Figure 4 Comparison of the vintage 2D line running WSW – ENE seismic with an equivalent arbitrary

line from the 2013 3D Pre-SDM.

4a) 2D seismic line LI-91-19 (TWT), released proprietary ENI seismic data.

4b) Equivalent time converted arbitrary line from proprietary 2013 seismic survey. Refer to

Figure 4 for seismic picks.

WSW ENE

WSW ENE

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4c) Time converted arbitrary line from proprietary 2013 seismic survey, as shown in 4b.

4d) Equivalent depth section from PreSDM. Note the flatness of the Base Zechstein (green); moved

up at location A and down at location B.

WSW ENE

WSW ENE

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Figure 5- 2D seismic line LJ 91-02 running S – N across P1741 showing the seismic interpretation at

the time of the licence application. Seismic events tie to well 42/18-2. (Released proprietary

ENI seismic data).

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Figure 6 Comparison of the vintage 2D S – N seismic line with an equivalent arbitrary line from the

2013 3D Pre-SDM.

6a) 2D seismic line LI-91-02 (TWT), released proprietary ENI seismic data.

6b) Equivalent time converted arbitrary line from proprietary 2013 seismic survey. Refer to Figure 5

for seismic picks.

S N

S N

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6c) Time converted arbitrary line from proprietary 2013 seismic survey, as shown in 6b.

6d) Equivalent depth section from PreSDM. Note the flatness of the Base Zechstein (green); moved

up at location C and down at location D.

S

N S

N

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Figure 7 Seismic database used for the evaluation of licence P1741

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Figure 8 Combined Base Namurian / Base Zechstein depth map showing the SW Breagh Lead

Figure 9 SW – NE seismic and geoseismic sections through the SW Breagh lead showing the trap

style and combination top seal.

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Figure 10 Base Namurian depth map, based on the new PreSDM, showing the Lochran Deep lead

Figure 11 Geological cross section through Lochran Deep, illustrating the form of the trap.

Figure 10 shows the location of the section.