UKCS Exploration and Appraisal

Peter Haile Deputy Director – Exploration, Promote, Knowledge

March 2007

Overview

Ultimate Resources & Challenges Undiscovered Resources Fallow Process Impact Exploration & Appraisal Activity Licensing Initiatives Promote Licences – Success Recent UKCS Discovery Rates 2007 Promote CD

Source UKOOA 1/1/07

Long Term Challenge – Window of Opportunity

Exploration wedge

UKCS Rig Dayrates

0

50

100

150

200

250

300

350

400

Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06

Rig

Da

yra

tes

in $

US

Th

ou

san

ds

Semi-subs

Jack-ups

Source: Platts

North Sea Rig Utilisation

40

50

60

70

80

90

100

Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07

Per

Cent

Jack-ups Semi-submersibles

Source: Platts

Short Term (?) – Tight Rig Market

Undiscovered Resources

2006 DTI estimate of YTF potential (20%COS): Approx 8 bn boe - 3.1 WOS/S - 0.7 NNS - 3.7 CNS - 0.6 SNS

Field Size Distribution Future Potential

End 2005 data

Fallow Process Helping to Drive Activity

Exploration & Appraisal wells

0102030405060708090

100

2002 2003 2004 2005 2006 2007

No. o

f wel

ls

05101520253035404550

£/bb

l

No. of Appraisal wells (including sidetracks)No. of Exploration wells (including sideracks)Brent price - average for year - £/bbl

Exploration & Appraisal Activity

Source: UKOOA

0

10

20

30

40

50

60

70

80

90

2005 2006 2007 2008

No.

of

E &

A w

ells

incl

. si

detr

acks

Irish SeaAtlantic MarginNorthern North SeaCentral North SeaSouthern Gas Basin

Source: 2006 UKOOA & DTI survey

UKCS Regional E & A Activity

Licensing Strategy

• Annual Rounds

• Cumulative Acreage

• Focussed Terms

- Traditional, Promote, Frontier Licences

• Exploration Phase

- 2, 4 or 6 year break pts

7

8

6

5

4

3

2

2

1

Increased Licence Interest

54

24

58

23

21st Round 22nd Round

2004 20062003 2005

• 15 Firm Wells

• 7 New Seismic & Contingent Wells

• 1 Proposed Development

• 13 Firm Wells

• 10 New Seismic & Contingent Wells

Continuing Promote Licences

Promote Licence Drilling Results

Dec 2006

0

10

20

30

40

50

60

70

80

90

100

2002 2003 2004 2005 2006

%

UKCS SGB CNS NNS Atlantic Margin

Source: UKOOA

Potential Commercial Success Rates

Commercial discoveries - size of accumulation

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006

No.

of d

isco

veri

es

a: x<10 b: 10<x<100 c: 100<x<500 d: x>500

Potential Commercial Discoveries

Source UKOOA

2007 Promote CD Opportunities

23 Leads & 1 Discovery

Maps, Stratigraphic columns and Cross Sections

In Place and Reserve Estimates Play summaries

CD available at DTI stand