2010 Annual Results Presentation

Transcription

1 2010 Annual Results Presentation 24 th March 2011

2 2010 Annual Results Presentation 24th March 2011

3 Forward looking statements This presentation may contain forward-looking statements and information that both represents management's current expectations or beliefs concerning future events and are subject to known and unknown risks and uncertainties. A number of factors could cause actual results, performance or events to differ materially from those expressed or implied by these forward-looking statements. 24th March 2011 Page 2

4 Agenda Highlights and progress against strategy Simon Lockett 2010 financial results Tony Durrant Exploration update Operations update Summary Andrew Lodge Neil Hawkings Simon Lockett 24th March 2011 Page 3

5 2010 highlights On track for production of 75,000 boepd in 2012 Development portfolio building towards 100,000 boepd in out of 14 exploration and appraisal wells successful Operating cashflow up 25% to $436.0 million Record profits after tax of $129.8 million $1.1 billion of UK tax allowances - mitigating the impact of proposed tax changes Cash and undrawn bank facilities of $1.2 billion 24th March 2011 Page 4

6 Building three quality E&P businesses Strategy Grow near-term production to 75 kboepd from existing 2P reserves of 261 mmboe Deliver further growth by commercialising contingent resource base of 228 mmboe Add 200 mmboe through exploration by focusing on core geologies Make value-adding acquisitions in three core areas Maintain a conservative financing plan Creating an overall business with 400 mmboe of reserves and 100 kboepd production in the medium term 24th March 2011 Page 5

7 2010 financial results 24th March 2011 Page 6

8 Production and income statement 12 months to 31 Dec months to 31 Dec 2009 Highlights Working Interest Production (kboepd) Entitlement Interest Production (kboepd) Average Brent oil price was $79.5/bbl (2009: $61.7/bbl) Realised oil price ($/bbl) Realised gas price ($/mcf) Average gas pricing ($/mcf) Singapore $13.9 $11.0 Pakistan $3.5 $3.2 Sales and other operating revenues $m 764 $m 621 Includes impairment charges of $65.3 million (2009: $24.0 million) Cost of sales Gross profit Excess of fair value over purchase consideration Exploration/New Business General and administration costs Operating profit Financial Items Profit before taxation Taxation credit Profit after tax (531) (87) (18) 128 (27) (361) (77) (18) 170 (90) Operating costs per barrel ($/bbl) UK $28.7 $23.2 Indonesia $8.5 $10.0 Pakistan $2.0 $1.9 Group $13.9 $ includes non-cash mark to market gain on hedging of $39 million (pre-tax) Tax credit arises due to UK tax allowances acquired with Oilexco 24th March 2011 Page 7

9 Group taxation position 12 months to 31 Dec 2010 $m 12 months to 31 Dec 2009 $m UK Tax Allowance Position at 31 Dec 2010 $m Overseas Allowances remaining at 1/1/10 1,098 UK Net additions in PRT ,112 CT nil (23.4) Recognised as deferred tax asset 972 Prior period revisions (21.3) (24.6) Currently unrecognised 140 Current charge Tax allowances carried forward 1,112 Deferred tax credits (90.4) (81.3) Tax credit for the year (29.0) (33.1) Outlook UK cash corporate taxes not anticipated until at least 2016 Mitigates impact of proposed tax changes UK allowances of $140 million not yet recorded 24th March 2011 Page 8

10 Cash flow Cash flow from operations 12 months to 31 Dec 2010 $m months to 31 Dec 2009 $m 419 Estimated Capex split ($m) Development Exploration Taxation (69) (71) Operating cash flow Capital expenditure (Acquisitions)/disposals, net Finance and other charges, net 436 (514) 13 (70) 348 (303) (643) (55) Balance sheet ($m) Cash Net Debt Pre-licence expenditure (19) (20) Undrawn facilities Net cash flow (154) (673) Outlook Forecast full-year 2011 spend of $500m (development) and $200m (exploration) Peak net debt of around $800 million in 2012 using $75/barrel 24th March 2011 Page 9

11 Forward economics $79/bbl $75/bbl $100/bbl OPEX Tax Cash Margin $/boe A 2012E 2014E 2012E 2014E New projects lead to improved cash margins 24th March 2011 Page 10

12 Exploration update 24th March 2011 Page 11

13 Progress towards 200 mmboe of discoveries Exploration and Appraisal Drilling 14 wells drilled, 8 successful Discoveries at Catcher, Catcher East, Varadero, Blåbaer and West Rochelle 27 mmboe reserves and resources added Upside to 50 mmboe with appraisal Global exploration: Forecast resource additions (mmboe) Target cumulative risked additions Actual cumulative proved and probable discovered resources Actual cumulative plus possible resources New Ventures 150 Licence round awards: 19 blocks awarded in UK Farm-ins: 100 UK block 15/26c (West Rochelle) UK block 15/13b (Eagle) 50 North Red Sea Block 1 (Cherry) Under negotiation: 2 blocks in Kenya th March 2011 Page 12

14 Exploration drilling 2011 Asia Vietnam 07/03 CRD Appraisal 104/ Jackfruit Indonesia Tuna Gajah Laut Utara Belut Laut Buton Benteng Natuna Sea Block A Anoa Deep Biawak Besar Block A Aceh Matang-1 North Sea 2011 Q1 Q2 Q3 Q4 Ocean General Aquamarine Ocean General Ocean General West Callisto West Callisto > 300 mmboe unrisked resource 2011 full year exploration expenditure ~ $200 million pre-tax Norway PL406 (8/3) Gardrofa Bredford Dolphin PL378 Grosbeak Appraisal Songa Delta UK P1430 Burgman Galaxy II Carnaby P1466 Bluebell Middle East - Pakistan Pakistan Kadanwari K-25ST Weatherford 812 Firm Wells: Rig Contracted K-28 K-29 Weatherford 812 Weatherford 812 Firm Wells: Rig TBC K-27 SE-1 Bhit/Badhra Badhra-6 (Parh) Badhra Appraisal Egypt North Red Sea Cherry Stena Forth Weatherford 812 Weatherford 812 Contingent Wells All well timings are subject to revision for operational reasons 12 to 15 exploration and appraisal wells already planned in th March 2011 Page 13

15 Appraisal Vietnam Block 07/03 Cá Rồng Đỏ Cá Rồng Đỏ Premier 30% equity Gross resource estimate mmboe CRD-2X appraisal well spudded 10 February 2011 Well status TD at 3785 metres Drill stem testing hydrocarbons discovered in Oligocene sands CRD-2X CRD-1X SE NW CRV CRD-1X CRD-2X Anomalies associated with Gas Cau Sequence Top Cau Depth Map 24th March 2011 Page 14

16 Exploration Indonesia Tuna Block BelutLaut/ GajahLautUtara Reserves estimate and mmboe respectively Targeting multiple stacked Miocene and Oligocene reservoirs in fault dependent closures Belut Laut prospect is independent of Gajah Laut Utara Belut Laut is amplitude supported Belut Laut: low risk for gas, moderate risk for oil Gajah Laut Utara: moderate risk for oil and gas Back to back wells planned for Q following CRD well Gajah Laut Utara PTD 4250m MD (3550m TVD) Belut Laut PTD 4300m MD (3870m TVD) W E NW SE PRIMARY TARGET PRIMARY TARGET PTD SECONDARY TARGET PTD SECONDARY TARGET 2 Km 24th March 2011 Page 15 2 Km

17 Exploration Indonesia Natuna Biawak Besar Biawak Besar (Natuna PSC) Premier 28.67% equity Reserves estimate bcf Targeting Miocene reservoirs in a stratigraphic trap, off structure from the Iguana gas discovery Seismic attribute analysis and 3D inversion supports presence of gas Play opening well low risk for gas Planned for Q Bison Iguana Biawak Besar Iguana Discovery NW SE Biawak Besar-1 Top Arang Depth C.I.=100 metres 2000m 3D Seismic Inversion indicating gas pay PTD PRIMARY TARGET 500m 24th March 2011 Page 16

18 Exploration Vietnam Block /05 Block /05 Premier 50% equity Exploration well to test prospect with reserves range estimate of mmboe High risk for oil, moderate risk for gas Planned for Q W E Base Tertiary T300 T600 Coals T400 T500 T700 T1000 Base Tertiary 24th March 2011 Page 17

19 Exploration UK Block 28/9 Summary Block 28/9 (P1430) Combined Eocene and Palaeocene play Shallow (1350m) Amplitude supported Six penetrations drilled to date on Catcher, Varadero and Burgman Excellent reservoir quality High oil saturations (80-90%) 24 to 31 API oil, low viscosity Catcher North, thin Cromarty sands conform to low amplitudes on seismic data Exploration well campaign ongoing Burgman currently being sidetracked Carnaby well deferred Development planning on going New 3D seismic is planned on the block in 2011 Burgman Block 28/9 Catcher Eocene Tay Amplitudes Carnaby Varadero Burgman Varadero Catcher North Catcher East Catcher Main 24th March 2011 Page 18

20 Exploration UK Burgman Burgman Premier 35% equity Burgman vertical well encountered: 22 feet net hydrocarbon pay in Tay section 12 feet of gas in the Upper Tay 10 feet oil in the Lower Tay sandstones 400 feet oil column Cromarty and Jurassic sands were not hydrocarbon bearing Well being sidetracked to the South East Prospective resource estimates mmbo Varadero Burgman Catcher E Catcher Main Cromarty Depth Structure Burgman location Burgman Burgman ST Burgman NW SE S Upper Tay N Carnaby Lower Tay Cromarty Burgman Fulmar 24th March 2011 Page 19

21 Exploration Egypt North Red Sea Block 1 Cherry (North Red Sea Block-1) Premier 20% equity Hess operator - proven deep water expertise Water Depth - prospects/leads in ~700m WD Multi-billion barrel unrisked potential in two independent plays NRS-2 well present depth 4500m, estimated time to target days New Rift Plays 24th March 2011 Page 20

22 Exploration Kenya Deep water Rift plays L10A & L10B Provisional award accepted by joint venture Subject to fully termed PSA Expect award in 2Q 2011 Premier equity L10A: 20%, L10B: 25% BG operator Area >10,000 sq km Water depth m Commitments: Seismic acquisition in first term (2 years) Forward Plan: Acquire 2D and 3D seismic data (2011/2012) Blocks L10A & L10B L10A BG 40% Premier 20% Cove 25% Pancon 15% L10B BG 45% Premier 25% Cove 15% Pancon 15% W Rift Margin Plays Inverted Rift Play E MOMBASA HIGH INBOARD TERTIARY RIFT CENTRAL PLATFORM INVERTED JURASSIC RIFT New Rift Plays 24th March 2011 Page 21

23 North Sea acquisition / new ventures UK: 2010 New acreage In 2010 Premier secured interests in 19 new North Sea exploration blocks UK West Orkney Frontier acreage targeted a Devonian pre-rift system Existing data to be reprocessed in 2011 with an optional well in 2013 UK 15/9, 10, 13b, 14 and 15 Lower Cretaceous and Tertiary play fairways 3D acquired in 2010 One well planned in 2012 UK 15/23g, 14/30b, 15/26c Near field exploration Successful West Rochelle well in 2010 UK 21/7b Tertiary amplitude play Well planned for 2012 UK 22/21c, 22/26c Pre Cretaceous target 3D planned in 2011 Norway: 2011 New acreage Norway 35/12 Upside potential to Grosbeak Norway 2/6 Multiple target block secured on a drill or drop option 24th March 2011 Page 22

24 Prospective resource portfolio Unrisked prospect portfolio of 1800 mmboe 800 mmboe in prospects 1000 mmboe in leads Total Portfolio Unrisked Prospective Resource Resource under appraisal 105 mmboe Represents a 300 mmboe increase during 2010 New acreage aquired in the North Sea and Egypt Prospects 800 mmboe Total >1900 mmboe Leads 1000 mmboe Prospect maturation in the North Sea The total portfolio on a risked basis is 240 mmboe The prospect inventory is 160 mmboe The lead inventory is 80 mmboe Total Portfolio Risked Prospective Resource Resource under appraisal 105 mmboe Leads 80 mmboe On track to deliver 200 mmboe of 2P reserves by 2015 Total >340 mmboe Prospects 160 mmboe 24th March 2011 Page 23

25 Operations update 24th March 2011 Page 24

26 Operations highlights Good production performance in Indonesia and Pakistan Offset by recent downtime in the UK portfolio Material progress on Chim Sáo, Gajah Baru and Huntington On target for 75,000 boepd in 2012 Continued progress on the future development portfolio New Asia projects progressing for 2013/14 start-up MoU signed on Solan participation On track for 100,000 boepd in th March 2011 Page 25

27 Production update Production (working interest) (kboepd net) Middle East-Pakistan North Sea / W. Africa Asia E Continued growth in Pakistan production in 2011 Industry HSE related downtime in the UK in 1Q 2011 Singapore gas demand strong 2011 full year production forecast in the range kboepd Current production split 63% gas and 37% oil, but 62% of production is linked to oil price 24th March 2011 Page 26

28 Pakistan production update Successful infill drilling at Kadanwari has increased production rates Minor impact from flooding seen at Zamzama Qadirpur initial licence term was extended by five years Compression projects on schedule: Qadirpur and Bhit completed Zamzama due May 2011 Continued strong production is anticipated Kadanwari Production - Net WI (boepd) E 24th March 2011 Page 27

29 UK production update UK Production by Week (kboepd net) Balmoral Area Wytch Farm Scott and Telford Kyle and Others Industry wide issue driven by a need to improve performance and increased HSE enforcement action Wytch Farm shutdown in November to address pipeline integrity issues Balmoral shutdown in December to address fabric maintenance issues Various maintenance related production restrictions / shutdowns at Scott Consistent production from Kyle 0 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar group production expected at low end of range, no impact on th March 2011 Page 28

30 Indonesia production and development update 2010 was a record year for Block A gas sales Sold 160 bbtud vs a DCQ of 126 bbtud Opportunity to increase GSA1 DCQ at 1/1/2014 Gajah Baru builds up to a DCQ of 130 bbtud in 2012 In 2011 expect to approve: Anoa phase 4 compression expansion (2013) Pelikan and Naga field developments (2013) Total sales capacity will increase to 400 bbtud West Natuna Sales to Singapore (GSA1 Only) (bbtu/d) Natuna A th March 2011 Page 29

31 Development drilling at Anoa 24th March 2011 Page 30

32 Progress towards 75,000 boepd Gajah Baru Chim Sáo Huntington 24th March 2011 Page 31

33 Gajah Baru development update Phase 1 development drilling successfully completed Wellhead platform installed in September wells drilled and completed Significantly higher deliverability than planned Small reserves increase anticipated Central Processing Platform (CPP) progressing well Jacket was 86.9% complete at end Feb Installation planned for late May-early June Topsides were 78.9% complete at end Feb Installation planned for early July Gas Export Pipeline to be installed in June-July First gas remains on schedule for October 2011 Premier 28.67% equity 24th March 2011 Page 32

34 Gajah Baru CPP jacket to be installed in June 24th March 2011 Page 33

35 Gajah Baru CPP topsides nearing completion 24th March 2011 Page 34

36 Chim Sáo development update Very successful 2010 installation program: Wellhead platform Gas Export Pipeline Sub-sea flow-lines CS-N1P CS-N2P CS-2X CS-N4I Development drilling commenced in June 5 producers and 3 injectors will be available at first oil MDS-5 reservoir is better quality than anticipated MDS-6 reservoir is close to prediction FPSO (Lewek Emas) is 90% complete and approaching mechanical completion Commissioning is now the key project activity Development project in line with budget First oil is forecast for late July 2011 Premier % equity CS-N5I CS-N3P CS-S6P CS-S13I CS-S12I CS-S7P CS-S10P CS-S8P CS-S11P OWC CS-1X-ST1 CS-S9P CS-S14I CS-S15I 24th March 2011 Page 35

37 Chim Sáo Lewek Emas FPSO March 2010 March 2011 October th March 2011 Page 36

38 Huntington on schedule for 2012 Field development plan approved project sanctioned early November 2010 Contract awarded to Sevan for provision of Voyageur FPSO Drilling template installation late March 2011 Ensco 100 jack up rig selected, spud expected May 2011 four well initial programme Subsea installation to commence July 2011 FPSO sail-away October 2011 Target first oil is Q th March 2011 Page 37

39 Rochelle development update Western Rochelle well and sidetrack encountered gas-bearing sands DECC have determined a single field development area Phase 1 covering East area sanction in May for 4Q 2012 first gas Rochelle Phase 2 West area to be integrated later in 2011 Scott tariff arrangements parties working towards early conclusion 15/26b 15/26c 15/26b-10z 15/26b-10 Kopervik pinch-out Plan for unitised development with 15/27, equity under discussion Rochelle FDA 24th March 2011 Page 38

40 Progress towards 100,000 boepd Frøy Solan Catcher 24th March 2011 Page 39

41 Frøy development status Technical concept selection near complete Sevan 300 FPSO bridge linked to a WHP Water and gas injection to optimise reservoir development (70 mmbbl) Third party field tie-ins being prioritised Work programme for Q2 is focused on commercial arrangements FPSO contracting Third party field tie-in arrangements Gas offtake arrangements FEED studies to commence mid year Project sanction gate in Q Target first oil for late th March 2011 Page 40

42 Catcher development scenario Current exploration drilling programme on Block 28/9 is nearing completion Reserves distribution is being clarified New 3D seismic shoot planned for April/May Illustrative Catcher Development Premier keen to progress to development Most likely scenario is a standalone FPSO Sub-sea tie backs from Varadero and Burgman Reservoir modelling ongoing for Catcher and Varadero, due to complete mid year Drilling studies currently focused on wellbore stability and completion design Gas export pipeline Formal concept selection process to commence in Q2 followed by FPSO market enquiries Project sanction targeted for mid 2012 First oil targeted for mid th March 2011 Page 41

43 Solan development status Development Concept Changed to conventional jacket with Not Permanently Attended accommodation, but still with a sub-sea tank Two producers and two injectors Internal project reviews ongoing to validate reserves, costs and schedule Full project sanction expected Q First oil Q Commercial Arrangements Premier and Chrysaor signed MoU on 16 March 2011 Premier will participate in the development with a 60% equity Premier will provide Chrysaor with a bridging loan to fund their remaining project costs Chrysaor will repay the loan via a cash sweep to Premier of a share of their revenue Operatorship arrangements still to be discussed Intention is to sign a full SPA by mid April 24th March 2011 Page 42

44 A path to 100,000 boepd Production (kboepd net) Development capex ($m) Future Asia developments Future Norway developments Future UK developments Huntington Chim Sáo, Gajah Baru On production Future Asia developments Future Norway developments Future UK developments Huntington Chim Sáo, Gajah Baru On production th March 2011 Page 43

45 Summary 24th March 2011 Page 44

46 Building three quality E&P businesses Target Asia MEP North Sea 75,000 in 2012 Chim Sao and Gajah Baru Pakistan growth Huntington Commercialise potential developments Future Singapore gas Tight gas opportunity Catcher, Solan Norway Add 200 mmboe from exploration Natuna Sea / Nam Con Son North Africa rift plays UK Central North Sea and Norway Acquisitions Financially conservative Targeting core area acquisitions Debt capacity increased and maturity extended Building three quality businesses delivering 100 kboepd from 400 mmboe 24th March 2011 Page 45

47 Appendix 24th March 2011 Page 46

48 Reserves and resources Reserves and contingent resources (mmboe) C contingent resources 2P reserves Production Additions & Revisions End th March 2011 Page 47

49 Hedging Policy unchanged: secure cashflows via floors or forwards to fund investment programme even at low oil prices 2010 Impact Income statement gain of $39 million as past provisions unwind Cash cost of $8 million on maturing hedges Outlook Approximately 26% of forecast liquids production for 2011/12 capped at average of $87 Approximately 19% of forecast gas production from Indonesia for 2011/12 and 1H 2013 is capped at $500 / MT Future hedging plans will depend on development programme requirements relative to cashflow 24th March 2011 Page 48

50 End P reserves and contingent resources 2P Reserves North Sea/ W Africa Asia MEP Total On production Approved for development Justified for development Total Reserves C Contingent Resources Development pending Un-clarified or on hold Development not currently viable Total Contingent Resources Total Reserves & Contingent Resources These figures do not include prospective resources 24th March 2011 Page 49

51 Indicative field rates Indicative Net New Field Rates 2012 Equity % Net Initial Rate (boepd) UK Huntington ,000 Rochelle TBA 2, UK Solan ,200 Caledonia / Ptarmigan Area 80.00* 5,000 Norway Bream ,000 Asia Dua , UK Catcher Area ,000 Fyne ,000 Norway Froy ,000 Asia Block A Aceh ,000 Figures are Unrisked * Caledoneia 100%, Ptarmigan 60% equity 24th March 2011 Page 50

52 Progress on other developments Block A Aceh (Indonesia) PSC extension approved EPCI tender to be issued shortly Dua (Vietnam) FEED in progress Development being optimised Bream (Norway) Preferred FPSO identified Negotiations in progress Gardofa to be drilled in Q3 Caledonia and Ptarmigan (UK) Awaiting results from Bluebell exploration well Grosbeak and Blåbær (Norway) Grosbeak appraisal imminent Blabaer is a possible tie-back to Jordbaer (PDO submitted) 24th March 2011 Page 51

53 Exploration Indonesia Block A Aceh Matang (Block A Aceh) Premier 41.67% equity Medco operator Gross reserves estimate mmboe Low risk for gas Gas is the expected phase Critical factor is reservoir presence 250 bcf follow on potential in the success case Well planned for Q W Matang-1 PTD 3000m MD E Top Peutu Depth C.I.= 50 metres (structure) Carbonate Isochore (color fill) 2500m Matang-1 24th March 2011 Page m

54 Exploration Indonesia Buton Bentang (Buton PSC) Premier 30% equity Japex operator Prospect reserve estimates mmboe High risk for oil, in fold belt theme Drilling planned Q NW Benteng B SE meters 24th March 2011 Page 53

55 Exploration Indonesia Natuna Anoa Deep Anoa Deep (WL-5 extension) (Natuna PSC) Premier 28% equity Estimated reserves bcf Targeting Lama Formation reservoirs directly underlying the West Lobe platform on Anoa field. Lama Formation produces oil and gas in nearby Kakap field Moderate risk for gas Dilliing planned for Q Lowest Closing Contour Anoa Deep NW SE 1400 acre Top A WL5 Top H Top Lama Depth C.I.=50 feet 5000m Top Lama PTD PRIMARY TARGET 5 Km 24th March 2011 Page 54

56 Exploration Norway Grosbeak appraisal Grosbeak (PL378) Premier 20% equity Successful Grosbeak well completed in July 2009 Close to nearby infrastructure Oil in Middle Jurassic sandstones Estimated reserves mmboe Appraisal well scheduled for Q Discovery well Grosbeak Appraisal well S N Top Brent 24th March 2011 Page m

57 Exploration Norway Bream, Gardrofa Success at Gardrofa will lead to a new core area for Premier in Norway Bream (PL406) Premier 20% equity BG operator Brent age oil discovered 1971, close to Yme Field In 2009,17/12-4 and its sidetracks wells appraised this discovery, testing 2,516 boepd Estimated reserves mmboe Formal concept selection targeted Q /1-1 Gardrofa Prospect Well Location Gardrofa (PL407) Premier s first operated licence in Norway Premier 40% equity Untested trap flanking a Salt dome feature Estimated reserves mmboe Moderate risk for oil Well planned for Q th March 2011 Page 56

58 Exploration UK P1466 Bluebell Bluebell P1466 Bluebell Prospect (15/24c,15/25f) Premier 60% equity Palaeocene Forties reservoir Reserves estimate mmboe Partial carry by farm-in partner Well planned for Q Valuable tieback opportunity for Brenda/Balmoral Top Forties Depth SS, CI=5 m Top Forties Lambda Rho Extraction Near Offset Bluebell Bluebell Well Location Bluebell Site Survey Top Forties Lambda Rho Extraction Bluebell Lamda Rho, HC Indicator Bluebell Bluebell Well Location 24th March 2011 Page 57

59 Exploration UK Carnaby Carnaby Premier 35% equity Prospective Resource estimates: Tay reservoir: mmbo Cromarty reservoir: mmbo Expected phase oil Gas in shallower Eocene targets (Horda Fm) Risk assessment Moderate risk at Tay level - oil quality High risk at Cromarty level - reservoir presence Carnaby Varadero Catcher E Catcher Main Cromarty Depth Structure Carnaby Prospect Carnaby Eocene amplitude extraction S N Horda Varadero Tay Carnaby Catcher N & E Carnaby Cromarty Burgman 24th March 2011 Page 58

60 Exploration UK West Orkney Basin P1577: West Orkney Basin Premier 100% equity 1,700 km 2 acreage covering West Orkney Basin depo-centres Shallow water, low cost environment Frontier Rift Basin exploration opportunity Target is Pre-rift Devonian system preserved in Mesozoic rifts Petroleum system proven - exhumed oil accumulations on Orkney Key uncertainty is presence and preservation of traps Material unrisked play potential, presently high risk Work programme commensurate with risk reduction 6 year concession with a drill or drop option Purchase 6,000 km of existing 2D data Reprocess selected lines Go Forward plans Firm: Purchase, reprocess and interpret data 2011 Optional: Acquire new seismic data 2012 and Drill 2013 A Terraces with probable Devonian source and reservoirs and probable Zechstein seal Metamorphic highs; exposed at seabed Half grabens with possible Devonian source and reservoirs and proven Zechstein seal Orkney Isles A Orkney Islands; Inverted Devonian basins, with Breached oilfields West Orkney Basin Structure Top Devonian Half grabens with Pre-rift section: Potenential for Devonian source and reservoirs plus Zechstein seal 24th March 2011 Page 59

61 24 th March th 25 th March March Page 60 Page 60