STEAM PILOT O I L T H E THE FIRST OFFSHORE STEAM FLOOD IN EUROPE PRODUCTION COMPANY LTD. DEVEX 2015 May 20th - 21st

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1 PILOT THE FIRST OFFSHORE FLOOD IN EUROPE DEVEX 205 May 20th - 2st

2 OUTLINE Steam flooding technology Why not offshore? Pilot Field MER:UK Clair Schiehallion Buzzard Bressay Rosebank Mariner Bentley Lancaster Kraken Pilot Golden Eagle et al Cambo et al Forties ETAP Catcher et al MonArb Wytch Farm Perth et al Alba Darwin Magnus Cheviot et al Foinaven Captain Total reserves on the chart 4.2 billion bbls Remaining Reserves, mmbbls

3 ENABLED PRODUCTION Nearly 2 million bbls per day of steam enabled production around the world Chevron, Oxy and Shell are the leaders in steam flood Exxonmobil (Imperial) and PDVSA are the top companies in cyclic steam stimulation Cenovus, Suncor, CNRL, Lukoil, Devon, CNOOC (Nexen), Husky and MEG are the pioneers of SAGD Shell and Wintershall are steam flooding the Schoonebeek/Emlichheim field on the Dutch/ German border in Europe s biggest steam flood Chevron PDVSA Cenovus Exxonmobil Suncor Occidental CNRL Shell Lukoil Devon CNOOC SAGD Indies Int'l Indies Husky MEG ConocoPhilips CNPC US Indies thousand bbls/day 203 production data from Oil & Gas Journal 204 EOR review, except Canada (Alberta Energy Regulator & company data) and Middle East (project specific estimates)

4 Kern River Field, California! Steamflood! 87,000 BOPD! 230,000 BSPD! 9,000 wells! Recovery will approach 80% 60,000 Cogen Production (BOPD) 40,000 20,000 00,000 80,000 60,000 40,000 20,000 0 Field discovered Primary Primary production Bottom hole heaters Steam flood Steamflood KERN RIVER Chevron Corporation 4

5 ! Increases reserves by a factor of 2 0 times compared to primary heavy oil recovery. Mechanism Primary Steam Flood Heavy Oil Recovery 5-5% 50-80%! Production is both incremental and accelerated Pre-Steam - Post - Steam Oil Saturation Averages 55% Oil Saturation Averages 8% Typical oil saturated core in Duri Field, Indonesia RECOVERY FACTOR POTENTIAL Chevron Corporation 5

6 º API 20º API 5º API 0º API Bentley 000 Bressay Pilot, 3% Mariner (Heimdal) Kraken 00 Captain 37% Mariner (Maureen) 0 Harding, 74% Reservoir viscosity, centipoise Alba 50% OIL VISCOSITY Reservoir Temperature ºF As a function of API gravity and temperature 6 Viscosity correlation derived from the Excel Macro PVTProps.xla based upon the Petroleum Fluids Pack developed by Hewlett Packard for use in their HP-4 series programmable handheld calculators. GOR = 00 scf/bbl, Pressure = 500 psi, bubble point = 500 psi

7 º API 20º API 5º API 0º API Captain 37% 0 Bentley Bressay Mariner (Heimdal) Kraken Harding, 74% Mariner (Maureen) Alba 50% Pilot Steam Flood Potential c. 60% RF Reservoir viscosity, centipoise OIL VISCOSITY Reservoir Temperature ºF As a function of API gravity and temperature 6 Viscosity correlation derived from the Excel Macro PVTProps.xla based upon the Petroleum Fluids Pack developed by Hewlett Packard for use in their HP-4 series programmable handheld calculators. GOR = 00 scf/bbl, Pressure = 500 psi, bubble point = 500 psi

8 FLOODING IS THE PRIME WAY TO PRODUCE HEAVY OIL

9 FLOOD SCREENING From The Petroleum Engineering Handbook Pilot > º - 2º 3, > Hayes, H.J. et al Enhanced Oil Recovery. Washington, DC: National Petroleum Council, Industry and Advisory to the U.S. Department of the Interior. 9. Iyoho, A.W Selecting Enhanced Oil Recovery Processes. World Oil (November): Ali, S.M.F Current Status of Steam Injection As a Heavy Oil Recovery Method. J Can Pet Technol 3 (). PETSOC Venkatesh, E.S., Venkatesh, V.E., and Menzie, D.E PDS Data Base Aids Selection of EOR Method. Oil & Gas J. 82 (23): Chu, C State-of-the-Art Review of Steamflood Field Projects. J Pet Technol 37 (0): SPE-733-PA. 23. Donaldson, A.B. and Donaldson, J.E Dimensional Analysis of the Criteria for Steam Injection. Presented at the SPE Western Regional Meeting, Long Beach, California, June 997. SPE MS.

10 WHY DEPTH MATTERS? 9

11 DEEPER FLOODS IMPLY HIGHER TEMPERATURES 400 Superheated Steam at 2,500 KJ/kg Steam Temperature ºC Pressure, bar AND LESS LATENT HEAT 00ºC 200ºC 300ºC 400ºC,000 Supercritical Steam 00 0 Water 20% 40% 60% 80% Steam ºC 200ºC 300ºC 400ºC,000 2,000 3,000 4,000 Enthalpy, KJ/Kg 0 0,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Reservoir Depth, feet

12 OUTLINE Steam flooding technology Why not offshore? Pilot Field MER:UK

13 OFFSHORE We did not investigate steamflooding because North Sea reservoirs are too deep and above the pressure limits for successful application. Department of Petroleum and Geosystems Engineering, University of Texas at Austin; EOR Field Data Literature Search, Prepared for: Danish Energy Agency & Mærsk Olie og Gas AS, 2008 No, too much heat loss in riser to ocean water, National Petroleum Council, Global Oil & Gas Study, Topic Paper #22 Heavy Oil; Table IV.4b. page 3, 2007 Potential for heated injection fluid processes are limited in cold or deep water by heat losses in transit. Even with equipment advances such as vacuum-insulated tubulars, heat losses above the mudline could be unacceptably large. Technical Challenges for Offshore Heavy Oil Field Developments, OTC 528, 2003 The problems of providing reasonable steam quality at the Pilot reservoir depth and pressure are significant. The offshore environment and potential for wet trees make the problem nearly insurmountable. [Unnamed consultancy] advise not to consider steam injection., Previous Pilot EOR screening study, Unnamed consultancy, 2003

14 WELLBORE HEAT LOSS Steam Quality 80% 60% 40% 20% 500 bcwe/day,000 bcwe/day 0,000 bcwe/day 0%,000,500 2,000 2,500 3,000 3,500 4,000 Depth feet Initial steam quality of 80% At 500 bpd cwe steam quality is reduced to 23.3% at 4,000 At,000 bpd cwe steam quality is reduced to 5.5% at 4,000 Steam condensed is 285 bpd in each case So, at 0,000 bpd cwe steam quality would reduce by about 3% Data for 500, and,000 bcwe/day cases, New Advances and a Historical Review of Insulated Steam Injection Tubing - SPE-398, 4,000 data point calculated by extrapolation

15 WHAT S THE REAL PROBLEM? Few candidates Limited number of candidates that meet the screening criteria Pilot is one of only a few in the North Sea Well densities Onshore projects have typically been at 2.5 to 0 acre spacings Long (,000m plus) horizontal wells at 00m to 50m spacings have solved this problem

16 OUTLINE Steam flooding technology Why not offshore? Pilot Field MER:UK

17 WELL & SEISMIC DATABASE The reservoir description is well understood and all the well and seismic data needed has been gathered The block is fully covered by the Western Geco Quad 2 3D survey which was reprocessed in 2009 and a new survey by Fugro which completed processing in 203 WELL FIELD AREA TEST RATE (BOPD) FLUID COLUMNS 2/27-A Harbour 920 Gas 20 ft Oil 29ft Water 2/27-2 Pilot Main 0 Oil 62ft Water API GRAVITY OIL VISCOSITY (CP) /27-3 Pilot Main - Oil 7ft - - 3º API 600 -,870 cp 5.5º API 420 cp 3 k 2600 Pilot Main 5X 6 M 230 MMBBLS Z M º API º API 59 cp M º API 98 cp 2950 " MMBBLS 3000 Harbour A /27-4 Pilot South - Oil ft Water - - 2/27a-5/5X Pilot Main 2,000 Gas 9 ft horiz. well Oil 29ft Water 2/27a-6 Pilot Main Pilot South 33 MMBBLS

18 POTENTIAL WELL PATTERN Pilot Main Hydrocarbon Pore Volume 0,000 meters 2,000 Producers Injectors Target the area with greater than 30 of net pay Alternating producers and injectors, 00m apart (potential to increase spacing) Wells between 000m to 800m long Inflow control devices to achieve conformance control 42 alternating producers and injectors

19 Top Tay OIL THE INITIAL SECTOR MODELLING P RO D U C T I O N C O M PA N Y LT D Hydrocarbon Pore Volume 870 cp 870 cp 420 cp 59 cp

20 INITIAL SECTOR MODELLING 20,000 8,000 6,000 4,000 Well #5 870 cp 66% RF ,000 8,000 6,000 4,000 Well #5x 870 cp 52% RF , ,000 6 bbls/day 0,000 5 bbls/day 0, , , , , , , ,000 2, Year Year 0 20,000 8,000 6,000 4,000 Well #6 420 cp 64% RF ,000 8,000 6,000 4,000 Well #2 59 cp 7% RF , ,000 6 bbls/day 0,000 5 bbls/day 0, , , , , , , ,000 2, Year Year 0 Oil Water Steam Cumulative SOR Transient SOR

21 CONFORMANCE CONTROL Horizontal slice of sector model located at 5x well location Injector Producer

22 CONFORMANCE CONTROL Autonomous Inflow Control Valves (AICV ) Valve has two flow pathways, one always open (%-5% of combined flow) one open or closed (95%-99%) Status of main flow pathway depends on pressure drop in pilot flow pathway Valve can shut off low viscosity fluids (e.g. steam, gas or water) Installed in each joint of sand screen with swellable packers at every fifth joint or so Illustrated valve is available in a high temperature version from Inflow Control of Norway

23 PILOT MAIN PRODUCTION 60,000 40,000 20,000 Water Oil Steam 50,000 45,000 40,000 35,000 30,000 25,000 20,000 Oil Rate by well 00,000 5,000 0,000 5,000 80,000 - Q Q 2020 Q 202 3Q 202 Q Q 2022 Q Q 2023 Q Q 2024 Q Q 2025 Q Q 2026 Q Q 2027 Q Q 2028 Q Q 2029 Q Q 2030 Q 203 3Q ,000 40,000 20,000 Steam Rate by well 40,000 00,000 80,000 20,000 60,000 40,000 - Q Q 2020 Q 202 3Q 202 Q Q 2022 Q Q 2023 Q Q 2024 Q Q 2025 Q Q 2026 Q Q 2027 Q Q 2028 Q Q 2029 Q Q 2030 Q 203 3Q ,000 - Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q Q 3Q

24 PILOT RESOURCES 5X Z Field STOOIP mmbbls RF Recoverable mmbbls Pilot Main % k Pilot Main M M 2 M " Harbour A Pilot South 33 30% 0 Harbour 9 ~ ~ Total Pilot South * Recovery factors based upon sector modelling of Pilot Main steam flood. Pilot South and Harbour based upon an assumed recovery factor for water flood

25 OUTLINE Steam flooding technology Why not offshore? Pilot Field MER:UK

26 MER-UK: HEAVY OIL POTENTIAL Depth, feet 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 Reservoir Viscosity, cp 0 00,000 0,000 Producing Developments Discoveries Pilot Steam known to be effective Deep Steam Potential The steam prize: ~ 2 billion bbls 7,000 Area of bubble is proportional to oil in place, not a complete inventory of all UKCS heavy oilfields

27 THE BIGGER PRIZE The Pilot project can prove offshore steam and be a test bed for new equipment and technologies Extending the applicable depth for steam flood could unlock almost 2 billion bbls of recoverable reserves in the UKCS Feugh M 6 Dandy Steam C 2/27a 5X 5Z Pilot Main 6 5 Re 3kM M 2 A Harbour " Gill M 4 7 ls Pilot South W Pilot Southeast 28/2a Enquest Bot Elke Narwhal MB M 2 The Operator at the forefront of deep steam offshore will have a real competitive advantage both in the UKCS and internationally

28 CONTACTS telephone: +44 (0) website: address: 70 Claremont Road Surbiton Surrey KT6 4RH