Relinquishment Report

Licence P421 Block 21/20b

Centrica North Sea Oil Ltd Shell UK Ltd

May 2013

Disclaimer No liability whatsoever is accepted and no representation, warranty or undertaking, express or implied, is or will be made by Centrica plc or any of Centrica plc's subsidiaries, or any of their respective agents, being their directors, officers, employees, advisers, representatives or other agents, for any information, projections or any of the opinions contained in this report or for any errors, omissions or misstatements in this report. Neither Centrica plc nor any of Centrica plc's subsidiaries, nor any of their respective agents makes or has authorised to be made any representations or warranties (express or implied) in relation to any of the matters described herein or as to the truth, accuracy or completeness of this report, or any other written or oral statement provided. This report shall not be deemed to be an offer to sell or invitation to invest in Centrica plc or any of its assets and no information set out in this report is intended to form the basis of any contract, investment decision or any decision to purchase or invest in any such assets. Neither Centrica plc nor any of Centrica plc's subsidiaries nor any of their respective agents undertakes any obligation to provide any recipient with access to any additional information or to update or correct any inaccuracies in or omissions from this report. This report should not be considered as a recommendation by Centrica plc or any of Centrica plc's subsidiaries or any of their respective agents to invest in any securities (including, without limitation, those issued by Centrica plc) or any other assets. Recipients should rely solely on their own judgement, review and analysis in evaluating the information set out herein.

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Table of Contents

1. Licence Information ..................................................................................................... 1

2. Synopsis ....................................................................................................................... 1

3. Exploration Activities .................................................................................................. 2

3.1 Seismic .................................................................................................................................... 2

3.2 Wells ........................................................................................................................................ 2

3.3 Studies ..................................................................................................................................... 3

4. Prospectivity Analysis ................................................................................................. 3

4.1 Christian .................................................................................................................................. 3

4.1.1 Trap type ......................................................................................................................... 3

4.1.2 Reservoir ......................................................................................................................... 3

4.1.3 Seal .................................................................................................................................. 4

4.1.4 Remaining risks/Chance of success ................................................................................. 4

4.2 Christian Deep ......................................................................................................................... 4

4.2.1 Trap type ......................................................................................................................... 4

4.2.2 Reservoir ......................................................................................................................... 4

4.2.3 Seal .................................................................................................................................. 4

4.2.4 Remaining risks/Chance of success ................................................................................. 5

5. Reserves Summary ........................................................................................................ 5

6. Maps and Figures ........................................................................................................... 6

7. Clearance ....................................................................................................................... 12

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Table of Figures

Figure 1: Location map showing Christian P421; outline of block 21/20b in red. ................... 6

Figure 2: A map showing interpreted Top Christian Sandstone in depth (TVDSS) with key

faults. Block outline of 21/20b overlain. Approximate lines of section shown. ........................ 7

Figure 3: A map showing interpreted Top Puffin Sandstone in depth (TVDSS). Block outline

of 21/20b overlain. Approximate lines of section shown. ....................................................... 8

Figure 4: An example West-East seismic section through 21/20b illustrated using the relative

acoustic impedance volume. ................................................................................................. 9

Figure 5: An example North-South seismic section through 21/20b illustrated using the

relative acoustic impedance volume. ..................................................................................... 9

Figure 6: An illustrative West-East section through 21/20b ................................................. 10

Figure 7: An illustrative North-South section through 21/20b ............................................... 10

Figure 8: A map showing Base Christian sands in TWT. Maximum amplitude surface

attribute of Relative Acoustic Impedance volume overlain to show distribution of Christian

sands (reds and yellow indicate possible sand presence, 30 ms TWT window above surface)

........................................................................................................................................... 11

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1. Licence Information Licence Number P421

Licence Type Traditional, 8th Round Single block licence awarded on 23rd Jan 1983 (6+30 year terms; expiry January 2019)

Block Number 21/20b

Licensees Centrica North Sea Oil Ltd 50% (Operator) Shell UK Ltd 50%

Licence Determined 1st April 2013 by letter from Secretary of State

2. Synopsis Licence P421 comprising block 21/20b was awarded in the 8th Round of licensing to a 50%-

50% partnership of Shell-Esso. Many changes occurred in the structure of the licence-

holding partnership, ultimately leading to Centrica and Shell each holding 50% equity in

2012.

Three wells were drilled on the licence (21/20b-3, 4Y and 6Z). At the time of relinquishment,

the licensed area included only one of these, the Christian discovery well 21/20b-4Y (drilled

in 1990). The licence was declared fallow in September 2003 and partial relinquishments

were made, reducing the licence area to its final shape which included only the Christian

discovery. Coordinates of the licence area at the time of relinquishment are provided in

Figure 1.

Christian was declared a Fallow Discovery in January 2009 and a rescue plan was agreed,

allowing the licence to be retained pending results of Bligh well 21/20d-8. It was hoped that

this well would provide insight about untested upside on the Christian structure within a

deeper Puffin Sandstone target (Christian Deep).

Following the Bligh appraisal well, the Partnership decided that insufficient information had

been gained to allow the commitment to a Christian FDP that would be required to retain

licence P421.

All work commitments on the licence having been met, the decision was taken, with approval

by partners, to relinquish the licence.

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3. Exploration Activities

3.1 Seismic

The Christian discovery is fully covered by the following datasets licenced by the operator:

• PGS Megasurvey

– Regional dataset purchased after Senergy 2008 work

• Fugro2005 PSTM 3D – regional coverage

– 2005 Greater Kittiwake 3D merge/reprocessing

– Christian covered by merge of EO1990 3D & Shell E91100 3D

– 40ms bulk shift required

– Used as the basis for an AVO inversion carried out by Fugro Jason in

2007/2008. Final products were P-Impedance, S-Impedance, Density, and

VpVs, together with bandlimited equivalents. The bandlimited P-Impedance

was used for interpretation of the Christian Sand, for insights into sand

thickness and distribution not apparent from the previous reflectivity data.

• VeritasDGC 2000 PSDM – TWT & depth volumes

– 2000 reprocessing of EO 1990 3D

– 70o phase rotation applied

– Judged to have superior resolution to the 2005 Fugro data reflectivity data

• 2003 HFI 3D

3.2 Wells

Three wells were drilled on licence P421 (21/20b-3, 4Y and 6Z). At the time of

relinquishment, the licensed area included only the Christian discovery well 21/20b-4Y,

drilled by Shell in 1990-91.

Oil was encountered in the HPHT Upper Jurassic “Christian” turbidite sandstones (137ft

gross, 46 ft net) and a test produced oil at a rate of 6,200stb/d. Reservoir pressure was

11,200 psi and temperature 320°F. The well failed to reach the deeper Puffin sandstone

owing to losing the BHA.

The suite of well logs includes sonic and density from approximately 3000 ft MD to TD (the

lowest 375 ft could not be logged owing to leaving the BHA in the hole).

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3.3 Studies

Between 2008 and 2009 Senergy performed a full re-evaluation of the Christian discovery

which included thorough re-mapping following reprocessing of the 2005 Fugro 3D

merge/PreSTM carried out over the Greater Kittiwake Area.

• Evaluation of the 21/20b-4y Christian Discovery; J06VEN01A, September 2007

• Christian Field – Geophysical Review of the Pimpedance dataset, and model rebuild;

J06VEN01A, April 2008

• Christian Field Integrated Evaluation; J06VEN01A, December 2008

4. Prospectivity Analysis Prospectivity in the area has been established in four intervals by drilling:

• Palaeocene Forties Sands (21/20a-1 – Morgan Prospect)

• Kimmeridgian Turbidites (Christian Sands, in 21/20b-4Y – Christian discovery)

• Late Jurassic Ryton Sands (Fulmar Sand equivalent, in 21/20a-2 – Cook Field, and

21/20b-4Y)

• Base Late Jurassic Puffin sands (21/20a-5 – Bligh discovery).

The drilling of the 21/20b-4Y and 21/20a-5 wells discounted the likelihood of commercial

hydrocarbon in Forties and Maureen equivalent sands; thus prospectivity in 21/20b is limited

to Late Jurassic sediments – the Kimmeridgian Christian turbidites, Fulmar/Ryton Sands and

the deeper Puffin/Pentland Sands.

4.1 Christian

The Christian oil discovery is an HPHT oil accumulation discovered by well 21/20b-4Y drilled

in 1990. The well encountered 137 ft gross of oil bearing Kimmeridgian turbiditic sands,

referred to as the Christian Sand Unit. These Kimmeridge sands are over-pressured and

tested 6,200 stb/d of 42° API oil. No oil water contact was encountered. Reservoir

conditions are estimated to be 11,220psia and 320°F at 13,475ft TVDSS. Typical shallow

marine shoreface Fulmar sands were encountered below the Christian Sand unit. The

accumulation also extends into Block 21/20d.

4.1.1 Trap type

The trapping style is a salt induced structural four-way dip closure in the base case. There

remains the potential for an upside case of off-structure stratigraphic trapping in the Christian

Sand reservoir. Significant faulting has been mapped in the northern part of the structure.

4.1.2 Reservoir

Analysis of the well logs show the Christian Sand unit to be interbedded sands and clays,

with sand beds typically less than 20 ft thick abruptly intercalated with clay beds less than 8

ft in thickness. This signature is interpreted to be the result of sedimentation by mass

transport, either debris flows or more classic turbidites. Mapping suggests that the sands

appear to have entered the system from the northwest then fanned out east and south into

the basin.

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The age of the Christian Sands is Early Kimmeridgian, between the Baylei and Eudoxus

MFS (J62). Significant sands of this age are not seen in the other block 21/20 wells.

Average reservoir properties are 34% Net:Gross and 13.1% porosity.

4.1.3 Seal

The seal is interpreted to be the overlying and underlying Kimmeridge Clays.

4.1.4 Remaining risks/Chance of success

The 21/20b-4Y well has proven and tested a modest hydrocarbon volume in Christian Sands

in a 4-way closure. The remaining risk for on-structure Christian Sands is variability in

reservoir thickness and quality.

The main risks for the Christian Sand stratigraphic upside case are trap integrity, sand

distribution and reservoir quality. Mapping based on a relative acoustic impedance seismic

volume has been used to infer the possible extent of the Christian Sands stratigraphic trap,

however this is not definitive.

There is also uncertainty in the depth of the Christian Sands oil-water contact; 21/20b-4Y

encountered an oil-down-to at 13,497 ft TVDSS.

4.2 Christian Deep

The 21/20b-4Y well was terminated due to mechanical problems before the deeper target,

the Puffin Formation sand, was reached. Hence, this reservoir remains as untested upside

potential, particularly in the light of the discovery of retrograde gas-condensate in the Puffin

sand in the 21/20a-5 Bligh well, 5 km to the southeast.

4.2.1 Trap type

The trap at Christian Deep is mapped as a four way dip closure spilling to the west.

4.2.2 Reservoir

The main reservoir potential lies in the Puffin Sands. These are shallow marine shoreface

sandstones which have a strong diagenetic overprint. The sands are Middle Oxfordian age.

In 21/20a-5 they rest discordantly on Middle Jurassic Pentland Formation.

The Puffin Sands are believed to be developed in a confined, elongate north-northwest to

south-southeast trending trough coincident with today’s West Central Graben, bounded by

the Western Platform to the west and the Forties-Montrose High to the east. The

depositional model suggests that the Puffin should thicken towards the east and south, thus

the Puffin character should be similar or slightly poorer than seen at Bligh.

The sands of the Pentland section are generally thin, low NTG deposits of fluvio-deltaic

character. The coal bearing sequences are assigned to the Middle Jurassic. Again, the

facies are considered to thicken and develop more marine influence towards the southeast.

4.2.3 Seal

The seal is inferred to be the overlying Puffin and Heather shale sequences. They are

inferred to be sealing and pressure independent of the shallower Fulmar shoreface unit

encountered within 21/20b-4Y.

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4.2.4 Remaining risks/Chance of success

The presence of Puffin Sand reservoir in Christian, deeper than the TD of 21/20b-4Y, may

be inferred by analogy with offset Bligh wells. However its presence is not proven, and

reservoir thickness and quality are uncertainties.

The key risks for the Puffin Sand prospect are seal failure due to overpressure, and the

reservoir quality and extent. The geological model predicts thinner and poorer quality

reservoir rock at Christian Deep than in Bligh.

5. Reserves Summary The Christian discovery has the following recoverable hydrocarbons figures attributed to it:

Liquids (mmbo) Associated gas (bcfg) Total (MMboe) P90 3.1 5.0 4.0 P50 3.9 6.2 5.0 P10 7.7 12.2 9.8 R:\CNNS\Assets\Q21\21_20 Christian Bligh Cook\0 Christian\01 Meetings\1.4 Other Internal\2013\1) Subsurface review and

recommendation 1Mar13\Christian Subsurface Review_1Mar13.pptx

The above table refers to volumes in the Christian Sandstone turbidites within the 4 way dip

closure only, however includes the entire prospect volume which extends from 21/20b (P421

Christian) into 21/20d (P185 Bligh). It should be noted that approximately 38% of volumes lie

within 21/20b; 62% lies in 21/20d.

Although it is acknowledged that the potential exists for an upside stratigraphic trap, this was

not carried forward for base case economics. Therefore, no recovery has been assigned to

the Christian sandstones in a potential stratigraphic trap. No volumes from the untested

Puffin interval have been assumed.

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6. Maps and Figures

Figure 1: Location map showing Christian P421; outline of block 21/20b in red.

The licence area at the time of relinquishment was defined by the following

coordinates (ED50 datum latitude/longitude):

1) 57 deg 26 min 0 sec N, 0 deg 51 min 0 sec E 2) 57 deg 24 min 0 sec N, 0 deg 51 min 0 sec E 3) 57 deg 24 min 0 sec N, 0 deg 55 min 0 sec E 4) 57 deg 26 min 0 sec N, 0 deg 55 min 0 sec E 1) 57 deg 26 min 0 sec N, 0 deg 51 min 0 sec E

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Figure 2: A map showing interpreted Top Christian Sandstone in depth (TVDSS) with

key faults. Block outline of 21/20b overlain. Approximate lines of section shown.

Outside mapped sand fairway

A A’

B

B’

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Figure 3: A map showing interpreted Top Puffin Sandstone in depth (TVDSS). Block

outline of 21/20b overlain. Approximate lines of section shown.

A A’

B

B’

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Figure 4: An example West-East seismic section through 21/20b illustrated using the

relative acoustic impedance volume.

Figure 5: An example North-South seismic section through 21/20b illustrated using

the relative acoustic impedance volume.

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Figure 6: An illustrative West-East section through 21/20b

Figure 7: An illustrative North-South section through 21/20b

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Figure 8: A map showing Base Christian sands in TWT. Maximum amplitude surface

attribute of Relative Acoustic Impedance volume overlain to show distribution of

Christian sands (reds and yellow indicate possible sand presence, 30 ms TWT window

above surface)

Outside mapped sand fairway

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7. Clearance Partners have reviewed this document and verified that DECC is free to publish it. All 3rd party ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes. Seismic figures are based on TerraCube PSTM data supplied courtesy of Robertson GeoSpec International Limited (“TerraCube” is a registered trademark of Robertson, a CGG company).