P1628 (29/7b) Relinquishment Report - January 2011 1

P1628 (Block 29/7b)

Relinquishment Report

January 2011

P1628 (29/7b) Relinquishment Report - January 2011 2

CONTENTS

1. Licence Data ............................................................................................ 3

2. Synopsis ................................................................................................... 3

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

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

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

6. Maps and Figures ..................................................................................... 5

7. Clearance ................................................................................................. 7

P1628 (29/7b) Relinquishment Report - January 2011 3

P1628 (29/7B)

RELINQUISHMENT REPORT

1. Licence Data

Licence Number P1628

Licence Round Award effective from 20-06-2009

Licence Type Traditional

Block Number 29/7b

Operator/Partner % Premier Oil (100%)

Work Programme Summary Reprocess seismic during initial period.

Drill or Drop decision on well by June

2011

2. Synopsis

Licence P1628, Block 29/7b was acquired by Premier Oil Plc (operator)

effective from 20th June 2009. The license area contained one Palaeocene

discovery, and a Palaeocene lead. The initial term (ending 19th June

2013) requires a drill or drop decision by June 2011. The firm commitment

to reprocess seismic data during the initial period has been fulfilled (Figure

1).

3. Exploration Activities

Full seismic mapping & rock physics modelling was carried out over the

entire licence by Premier. In order to assess the Palaeocene lead, Gladius,

and determine the remaining prospectivity surrounding the Palaeocene

discovery well (29/7-1), 185 sq km of seismic data were reprocessed using

Baker-RDS:

• Offset stacks Near, Mid, Far

• Peak frequency enhancement to 55Hz

• Coloured inversion of high frequency near and mid offset stacks

P1628 (29/7b) Relinquishment Report - January 2011 4

4. Prospectivity Analysis

Discovery well 29/7-1 found oil bearing sands in the Cromarty and Odin

Members of the Sele and Balder Fm. (Scutum prospect hereafter). Oil

shows throughout the Chalk section could provide a potential upside to the

Scutum prospect.

The trap at Scutum is a four-way dip closure over a deeper Zechstein salt

swell. Both reservoir intervals are interpreted to be thin turbiditic sheet-like

sands, which were deposited between positive relief provided by the salt

swell and a resistant Maureen marl to the north/north-east. The axis of

deposition is thought to have run west-east, causing the sands to thicken to

the north, down dip of the discovery well. However, they pinch out towards

well 29/7-3, where they are not encountered. The sands are below seismic

resolution, and are not visible on reprocessed, frequency enhanced seismic

data sets. Although the discovery well noted an ODT in these sands, FIT

samples from the Cromarty Sands indicate there is mobile formation water

present close to the crest of the structure (Sw~0.49 %), and pressure

points suggest that these brines are close to, or coincident, with a regional

aquifer gradient. This limits the depth of the potential OWC to the P90

contour, which is non-economic at this time (Figure 2).

Residual oil throughout the Palaeocene Chalks could be prospective after

stimulation, as demonstrated at Curlew C (Shell) (Figure 3). However, this

structure was deemed too small to add sufficient upside to the Scutum

prospect.

The Palaeocene (Lower Maureen) Gladius lead previously identified to the

north-east, was shown to be non-prospective. Rock physics analysis

suggests the bright amplitudes observed on both near and far stacks are

indicative of lithological phenomena (marl), not hydrocarbon presence.

The decision to relinquish the licence became effective on 10th January

2011.

P1628 (29/7b) Relinquishment Report - January 2011 5

5. Reserves Summary

Scutum

P90 P50 P10

OWC (m TVDss) 2467 2530 2550

GRV (Balder - Lista) (10^6 m3) 45.9 122 324

Ave Sw (Odin & Cromarty) (%) 40.3 46.8 51.5

N:G % 13.6 15.6 18.0

Average Porosity % 24.6 27.8 31.2

RF (%) 25 25 25

WEST Lead P90 P50 P10

STOIIP (MMbl) 5.4 14.9 41.4

OIP (MMbl) 1.3 3.7 10.4

6. Maps and Figures

Figure 1 - DECC map showing Licence boundaries and Field Determination Area P1628,

Block 29/7b (blue; produced January 2011).

P1628 (29/7b) Relinquishment Report - January 2011 6

Figure 2 - Balder Depth Map (TVDss; CI = 10 m), with P90 closure (4.5 sq km) and most

likely OWC (2467 m TVDss - defined by ODT in well 29/7-1 and Cromarty FIT

sample/pressure data which indicated formation water with pressures in agreement with a

regional (Bittern Field) brine gradient).

Figure 3 - Ekofisk Depth Map (TVDss; CI = 20 m), with P10 closure (19 sq km) and potential

ODT in Ekofisk Fm., (2700 m TVDss - defined by ODT in well 29/7-1).

P1628 (29/7b) Relinquishment Report - January 2011 7

Figure 4 - Arbitrary S-N Near Stack Seismic Line through Curlew A showing Palaeocene

leads (Cromarty & Ekofisk). Polarity is European; An increase in acoustic impedance is a

negative trough. Balder Fm - Gold; Maureen marl slump - Black; Ekofisk Fm - Blue; Plenus

Marl Fm - Pink; Kimmeridge Clay Fm - Green.

7. Clearance

Premier Oil gives DTI the right to publish the relinquishment report.

S N

1 km

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Scutum