PROSPEX

UKCS Exploration & Appraisal Status

Gunther Newcombe

Director Operations December 2016

OGA became a GOVCO on 1st October 2016 with additional powers and sanctions

OGA

Progressive Regulation

Balanced application of new regulatory framework

Role of the OGA

Investment

and action

Encouraging

collaboration

Effective

stewardship

OGA Approach

Sanctions Rewards Sanctions Information & Samples

Dispute resolution Meetings

MER UK Strategy – binding obligations & safeguards

Striking the right balance

UKCS Summary

Production (boepd)

2014 1.4 million

2015 1.6 million

2016 1.65 million

Production efficiency

2012 60%

2015 71%

2016 80% target

Infrastructure

12,000+ wells 250+ subsea systems

3,000+ pipelines 250 fixed installations

Exploration & appraisal

2014 wells 32

2015 wells 26

2016 wells 20

Costs

Unit costs down by nearly 30%

Source – OGA

Source – OGA and Oil & Gas UK

Development

6.3bn boe in production

or under

development

Source – OGA

Source – OGA Source – OGA and Oil & Gas UK

Resources

Source – OGA

Remaining potential Produced

43bn

10bn 20bn

Improving & adapting to new conditions

Supply chain

c.£30bn turnover

Source –Oil & Gas UK and EY

80% of UK oil and gas jobs

40% through exports

Jobs

330,000 jobs in the UK

Source – Oil & Gas UK

Delivered through or supported by

upstream oil and gas activity Average unit operating costs have fallen from £18 per

barrel in 2014 to an estimate of £13 per barrel in 2016

OGA Corporate Plan

OGA on track to delivering exploration priorities

Share dry-hole review with industry

Licensing strategy for frontier & mature acreage

Work with HMT & Industry to enhance exploration

Provide high quality geophysical data Rockall & MNSH

Undertake rigorous pre & post-drill evaluation

High-grade operator prospect inventory to stimulate drilling

Manage release of geophysical & well data

Produce high quality geological maps

2015

2015

2015

1Q 2016

2016

2016

2016

2018

Provide industry with regional prospectivity & YTF 2018

UKCS highly competitive fiscal regime with government working closely with OGA & Industry

Fiscal Regime

Strong commitment &

listening from government

Recent budgets provided

£2.3bn relief to industry

OGA provide expertise

and evidence to HMT

Mature Yet-to-Find

UKCS has 6bnboe YTF best estimate in mature areas

c

NNS

WOS

SNS

CNS

NNS

WOS

SNS

NNS

CNS

WOS

SNS

Source: OGA Number of Wells

Exploration and Appraisal

Commercial discovery rate better than 1 in 2 with 350mmboe at $3.50 finding cost

Source: OGA

mm

bo

e

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Reserve Adds

Sanctioned Reserves

Oil

Gas

Loanan

Lincoln

Lancaster

Storr W/E

Belinda

Eagle

Laverda/Slough

Finlaggan Bagpuss

Winchelsea

Skipper

E&A Well Activity

OGA working with operators to ensure well activity is undertaken

Exploration Well Appraisal Well Firm Well Contingent Well Other well

Exploration Activity

Templewood accelerated to 2016 and well spudded in October

• Late Jurassic turbidite sands • Hanging wall structural trap, HPHT • 3D seismic reprocessed 2011 • Drill or drop commitment

Templewood – Central North Sea (ConocoPhillips)

Appraisal Activity

Fast track appraisal moving towards development

Fractured basement

Rona Ridge fractured basement potential Hurricane exploration & appraisal

Halifax

Discoveries

5bnboe discovered to date with 2.4bnboe in small pools & 150 small pools in open acreage

Re

serv

es/

reso

urc

es

mm

bo

e

Producing fields

Ongoing developments

Currently locked discoveries

10

1

00

Source: OGA

10

00

CNS

WoS MF

NNS

SNS

3.4bnboe

Tota

l Reco

vera

ble

Reso

urc

es

(mm

boe)

Frontier Exploration

Significant focus & investment in frontier exploration in last 2 years

2015 & 2016 Programs

£40m government

funded 80,000 km

new/reprocessed data

2016 seismic data

acquisition complete,

processing underway

Palaeozoic study issued.

SW Britain & East Shetland

Platform in progress

Competition to define potential

£500k prize money for 2015/2016 projects

New 3D visualization facility

£700k funding for Lyell Centre in Edinburgh

Supporting skills for the future

£750,000 for 3 post-doctoral appointments in geoscience & reservoir engineering

29th Round Areas

29th Offshore Licensing Round

29th Round received 29 applications from 24 companies covering 113 blocks

Supplementary Round with 14 blocks nominated

Offshore Licensing Rounds

30th Offshore Round will open in 2Q 2017 coupled with discovered small pools initiative

Strategies & Expectations

All strategies and stewardship expectations published

10 Asset Stewardship Expectations

JV Hub Strategy

E&A Work Programme

Optimum use of Subsurface Data

Licence Activity, Decision Points & Milestones

Robust Project Delivery

Production Optimisation

Information Management

Technology Plan

Collaboration

Planning for Decommissioning

E&A Stewardship Expectations

Asset Stewardship Expectations co-authored with industry & to be viewed as “good practice”

Annual E&A work program

Resource evaluations

Pre, syn & post drill

evaluations & weekly

drilling reports

OGA involvement prior to

investment decisions

Common JV data sets

Technical & cost benefit

assessment

Evaluation best available

data, technologies,

processes and skills

Focus on quality

geophysical data sets

Executed JOA 6 months

from licence award

Notify OGA one month

before drill or drop

OGA notified of farm-out or

divestment prior to activity

commencing

E&A Work Programme Subsurface Data Licence Activity

Key Messages

OGA, industry & government need to continue to work together

OGA has been a GovCo since 1 October 2016 with new powers & sanction abilities

Significant remaining mature & frontier exploration potential and discovered volumes

E&A activity had a successful year in 2016 with increasing activity seen

Asset stewardship expectations need to be followed