Value Creation through Oil & Gas projects in India

Presentation by Dr Mike WattsCo-Founder and CEO of Magna Energy

India Discovered Small Field Bidding Round : 2016

Houston and Calgary Roadshows, July 14th - 19th 2016

Disclaimer

By continuing with the Presentation, each recipient agrees to be bound by the limitations set out below.

This presentation and any accompanying discussion or correspondence relating to this presentation (the Presentation) is provided on a strictly confidential basis and for high level guidanceonly, as a basis for further discussions at the Houston and Calgary roadshows supporting and promoting the Indian Discovered Small Field Bid Round launched in 2016.

No reliance may be placed by any person on any information in the Presentation or in any accompanying discussion or correspondence relating to the Presentation. The provision of thePresentation does not constitute, nor is it intended to constitute an invitation or inducement to engage in any transaction or investment activity or to enter into any legal obligation, contract,agreement or arrangement in any jurisdiction, whether in the United Kingdom, Canada, India or elsewhere.

The information in the Presentation is not, and does not purport to be comprehensive. It has been prepared by Dr Michael John Watts and expresses his personal views as an individual and notas an authorised delegate or representative of Magna Energy Limited (the Company). The content of the Presentation has not been independently verified and no representation, warranty,assurance or undertaking (express or implied) is or will be made, and no responsibility or liability is or will be accepted by the Company or by its officers, employees or agents in relation to theadequacy, accuracy, completeness or reasonableness of the Presentation or any other information (whether written or oral), notice or document supplied or otherwise made available to anyrecipient. All and any such responsibility and liability is expressly disclaimed.

The preparation and issue of the Presentation shall not be deemed to be any form of commitment on the part of the Company to proceed with any bid, contract, agreement or transaction,whether on any indicative terms described in the Presentation, any accompanying discussion or otherwise. The Company gives no undertaking to provide additional information to update thePresentation, or to correct any inaccuracies that may become apparent in the Presentation or in any related discussion or correspondence.

Elements for E&P Success in India

Industry Passion and belief in Indian geology and its potential Technological expertise Capital Relationships

Government of India Positive Policy Changes

Revenue Sharing DSFR Contracts – avoids cost recovery disputes Free market gas pricing

Fiscal stability

Magna Energy Limited (Magna) is a start-up company founded by Jann Brown and Dr Mike Watts, initially backed by two seed investors.

Private Equity funding commitment in June 2015 from Carlyle International Energy Partners (CIEP) to invest in Indian E&P Opportunities

Sundeep Bhandari joins Magna as part of the core Management Team

Key growth target:India Discovered Small Field Bidding RoundBids to be submitted October 2016; awards December 2016

Magna Energy

SanguLargest offshore gas field HSS / Cairn

Bangladesh (1991 – 2007)

YetagunSecond largest offshore gas field Premier

Myanmar (1988 - 1990)

Songkhla andBua Ban DiscoveriesPremier

Thailand (1986 – 1990)

Premier, SOCO International - TGT

Vietnam (1988, 1996, 2008/16)

Mongolia (1994 – 1995)

Tamstag BasinSOCO International

INDIARajasthan (1996 – 2011)

>27 Oil and Gas Discoveries >7 billion boe in place180,000 bopd (240,000 bopd potential) Cairn

4 Oil & Gas Discoveries & developmentsHSS / Command / Cairn

INDIA Gujarat (1992 – 2011)

Ravva Oilfield Developed >300 mmbblsBurmah / HSS / Command / Cairn

INDIAKG Basin (1986 – 2011)

HSS / Command / Cairn /SOCO

Yemen (1994 – 1997)

QadirpurSecond largest gas field in PakistanBurmah / Premier

Pakistan (1986 – 1990)

INDIAKG Basin (1999 – 2011)

6 Deep Water DiscoveriesCairn

A Conventional Career Close association with value creative projects across South Asia

Cairn Operator (JV ONGC, Videocon & Marubeni) 8 platforms installed in record time Onshore processing terminal in record time First matching price gas contract in India Oil sold at Brent price Reserves taken from 90 mmboe to >300 mmboe Peak production 70,000 boepd > 50,000 bopd plateau for > 9 years Direct operating cost/bbl amongst lowest in world > 300 million barrels produced to date 20 years of continuous operations completed

Ravva(India’s Flagship Offshore Project under PSC)

Appraisal, Development and Production

ProcessingPlant Ravva

SPMOil Sales Point

Ravva – a UK / India success story

KG Basin

Cairn Energy (2001)Lakshmi deep >10,000 bopd

Cairn developments and discoveries block 98/2

Reliance BP Niko

GSPC

KG Basin Deep Water Discoveries

Cairn 5 deep water discoveries in Block 98/2 98/2 sold to ONGC Reliance discovers and develops Dhirubhai in Block 98/3 Reliance sells 30% interest in 98/3 to BP for > $7 billion ONGC expected to invest $5 billion in 98/2 developments

Cambay Basin

Cairn discovers and develops Lakshmi and Gauri

Cambay + KG Deep water - UK / India success stories

Mercator discovery 2015

Source: Wood Mackenzie

Source: Wood Mackenzie

Aishwariya

Mangala

OilGas

Raageshwari

Mangala Processing Terminal

Bhagyam

GUDA

RAAGESHWARI GAS

RAAGESHWARI OIL

KAMESHWARI

SARASWATI

GS-V-1

GR-A-B

W-A-A

GUDA-C

WT-B

WT-A

N-F-EAST

N-K-1

N-X-AN-L-B

N-Y-B

N-W-B

N-T-A

N-V-H

N-M-A

AISHWARIYAN-A-3N-A-4

N-A-5MANGALA-3, 6

MANGALA-1ST

MANGALA-5

BHAGYAMN-V-F

N-V-BN-V-C

N-V-E

N-V-J

N-V-K

N-C-3

N-V-I N-C-I

N-C-J

N-C-L

N-C-D

N-V-G

N-C-H

N-C-G

N-C-FN-H-1

N-C-E

N-C-2MANGALA-2

MANGALA-4N-D-1NC WEST OIL

NC WEST GAS

VIJAYA & VANDANA

N-R-B N-R-4

N-P

N-F-1

N-I-NORTH

SHAKTI

BHAGYAMSOUTH

KAMESHWARI WEST

MANGALA

Rajasthan (Cairn Flagship Onshore Project)Exploration Vision to Production Reality

Exploration & Appraisal

Development & Production

Rajasthan - a UK / India success story

Mangala – the largest onshore find in India in 25 years > 27 discoveries to date, > 800 wells drilled Discovered resource > 7 billion boe Rajasthan development one of the largest oil and gas projects in India Current ~ 180,000 boepd, target potential 240,000 boepd

ViramgamGujarat

Rajasthan

Koyali

Potential Tankers toCoastal Refineries

Jamnagar / Salaya

Kandla

Bhogat

~670km Cairn Pipeline

Pipeline accesses > 75% of India’s refining capacity

Value Creationof a world class business focussed on India

Invested >$1 billion of risk capital Invested > $5 billion development capital >40 discoveries, built and installed 12 offshore platforms,

developed 4 major processing terminals, laid >1,000 km pipelines and drilled >800 wells

Appropriate timely deals with Major industry players to share risk and capital and maintain pace of development

Jobs created, social programmes delivered Rajasthan alone provides more than 30% of India’s crude

oil production and is set to generate > $75 billion of revenues for India

Cairn helped improve India’s energy security Ravva

Cairn Energy PLC – a UK / India success story (1996 - 2011)

DSFR fields undeveloped because previously considered too small, too complex or too costly

Tight unconventional oil & gas plays Deep High pressure high temperature plays Enhanced Oil Recovery Deep water New concepts Technology

Unleashing Opportunities

Why India? Established Hydrocarbon Basins Recent world class discoveries Existing Infrastructure World Oil Prices Improving Gas Price Policies

Discovered Small Field Round (DSFR)Funding and Technology may unlock value

Why DSFR? Transparent and efficient

Contract award process Simplified administration and

regulation of MRSCs through MOPNG & DGH

Source: Wood Mackenzie

(McKinsey 2014)

India

Factors contributing to the US Energy Revolution India Europe1 Local populations that support energy companies – recognising

jobs and wealth creation 2 Combining horizontal drilling technology (invested in 1980s) and

hydraulic fraccing (invented in the 1950s) with very low permeability oil/gas shales, to produce oil/gas at economic rates

CambayTest

Failures

3 Land owners that benefit from revenues in oil-gas producing areas State 4 Low density of population 5 Large land mass 6 Geology – large areas of rich tight / shale oil and gas ? ?7 Access to high numbers of quality oil drilling rigs, pumping

equipment, oil service companiesMedium

costHighcost

8 Access to capital Yes but...

9 Access to markets for easy sale of oil and gas in low commercial risk environment

10 Small foot print Yes but...

11 Flat lands Built up

12 Good exiting pipelines and energy infrastructure 13 Technical expert eager workforce, well trained + locally sourced Unpopular

14 Low cost of operations 15 Access to water for fraccing Problematic

16 Relatively low intensity of anti-energy company NGO activity NGO Activity

17 US population that has lived with onshore oil & gas production for 100 years and used to benefits, risks and impact both +ve and –ve Unaccustomed

18 Political leaders that encourage oil and gas production –development – both Democrats and Republicans

19 Beneficial fiscal climate stimulating activity Royalty / Tax Mixed

International Competition for Capital – India potentially better positioned than Europe for application of US unconventional technology

India Shale Gas Potential - Best guess is 63 to 96Tcf (EIA)

Recoverable Shale Gas Resources (Tcf) based

on EIA Study (48 Basins in 32 countries)

India like most countries outside of North America has not yet started a shale or tight gas revolution

GAIL has an 8 well

programme underway in

Cambay, targeting shale

Indian Tight Gas / Oil Potential Upside?Geology needs de-risking

CIL has operated successful “Tight Reservoir” pilot wells in Rajasthan - full factory mode production has not yet commenced.

Attempts at “Proof of Concept” wells in Cambay Basin to date have failed to establish commercial flow rates in tight reservoirs.

Operational and technology issues together with funding difficulties for some early adopters mean the potential of Cambay geology is still unproven and the “jury is still out”.

Technical issues remain in India

US Geology FavourableOlder shalesQuartz or carbonate rich

Brittle ShalesMultiple fracture swarmsupon fraccing

Water based fraccs

gels prevalent

Indian Geology Untested Young Tertiary rocksClay rich, few carbonates

Ductile shales?Swelling clays (smectite)Single planar fractures ?

Energised Fracc fluids?

Nitrogen or CO2

Tight Oil & Gas Potential

Magna Quicklook DSFR Checklist

Magna Core Team has been involved with south Asia and India since 1986

Magna has been formed specifically to invest in Indian E & P opportunities

India is the fastest growing major global economy with ever growing energy demands

1. Is it meaningful/special?

2. Do we have an edge?

3. Is it in our core business area?

4. Does it provide us with what we want?

5. Funding?

6. Do we have time to do it properly?

7. Are we sure of the facts?

8. Is it straightforward?

9. Scale of investment?

10. Why the DSFR now?

Yes - the DSFR is a rare opportunity to acquire potential production in India

Yes, an entrée position will provide cash flow from which to grow

June to October open period allows 5 months for evaluation

Up to $500 million of PE capital committed to Magna by Carlyle International Energy Partners (CIEP)

DGH data dockets provide the received wisdom

Applications on-line and awards before year end – a laudable & straightforward process!

Magna is ambitious in seeking multiple investment opportunities

Thank You

1985 Just prior to the second oil crisis MW leaves Shell International and joins Burmah Oil (Burmah)1986 Burmah collapses during the second oil crisis while celebrating its centennial as Europe's oldest oil company

Indian KG Basin review report salvaged in Burmah collapse Identified the exploration potential on the south bank of the Indus after evaluating a Khankot well drilled

by PPL (67% subsidiary of Burmah) in May Burmah Oil bought by Premier Oil (Premier) mid-1986

1988 At Premier MW secures offshore acreage in Myanmar during the onshore bidding round1991 Amsterdam listed Holland Sea Search (HSS – MW MD/CEO) enters Bangladesh 1992 HSS evaluation of Ravva and Gujarat acreage for Command Petroleum (Command), its major shareholder1993/94 HSS farmed-out 60% of Bangladesh to Cairn Energy PLC (Cairn)

SOCO International (SOCO) becomes the major shareholder of Command 1994 Ravva awarded to Command (“Small Fields Round”)1995 Cairn acquired HSS in a recommended Public Offer so acquiring 100% of Bangladesh block

Rajasthan block awarded to Shell 100%1996 Cairn acquired Command (Ravva) and entered India to build a business (until IPO of CIL in 2007 and sale of control

in 2011)Cairn discovered gas at Sangu in Bangladesh, HBR farms-in to Sangu

Appendix IKey Building Blocks

of Value Creation

Appendix IIKey Building Blocks

of Value Creation

1996/7 Cairn / Shell Strategic Alliance in Bangladesh with frontier exploration in Rajasthan as a make-weight• Transaction creates 50/50 alliance across all upstream and midstream activities in Bangladesh • Shell pays cash to earn a 37.5% stake in Sangu• Shell funds Cairn’s Sangu development costs• Cairn has staged farm-in rights in Rajasthan – initial 10% with option to increase to 40% by carrying Shell

1998 First exploration well in Rajasthan was dry (Shell 90%, Cairn 10%)Rajasthan farmin re-negotiated - Cairn increases its stake to 50% by drilling a second well (2,000 bopd oil discovery)Cairn discovery of gas and oil in Gujarat (Lakshmi, Gauri and Ambe)

1998/9 Third Oil crisis - India holds NELP I, Cairn awarded deep water block 98/2 (100%)1999 Cairn makes 5 KG deep water oil & gas discoveries (deepest water wells in India at the time)2000/1 Gujarat discoveries developed2001 In May Cairn increased its stake in Rajasthan to 100% by acquiring Shell’s 50% interest for $7.25 million

The GoI granted a 3 year extension of the exploration term in Rajasthan2002/4 Cairn drilled 120 exploration and appraisal wells in Rajasthan making 27 discoveries 2004/6 Appraisal of the Mangala, Bhagyam and Aishwariya discoveries (MBA fields) confirms the status of the Rajasthan

basin as a major new oil province

2007 Cairn Energy PLC (Cairn) floats Cairn India (CIL) on the National and Bombay stock exchanges

Cairn reduces shareholding from 100% to ~69% in the biggest ever IPO in India at the time $1 billion of capital raised used to finance Rajasthan Development $500 million returned to Cairn shareholders as a special dividend

2009 “First Oil” trucked in Rajasthan

2011 “First Oil” piped in Rajasthan

Cairn sale of 10% CIL to Vedanta Resources (July)

Cairn sale of 30% CIL to Vedanta in December, brings a “change of control” of CIL as Cairn goes below 50% ownership (December)

2012 Cairn retains a ~10% holding in CIL and

Cairn returns an additional $4 billion to shareholders (February)

2014 Just prior to the fourth oil crisis

Cairn receives a tax demand from the Inland Revenue based on “Retrospective Legislation” (February)

After initiating Senegal entry, Mike Watts & Jann Brown stand down from the Cairn Board (May)

Mike Watts & Jann Brown resign from Cairn as “good-leavers” (October) and launch Magna.

Appendix IIIValue Realisation

Legacy of an Indian Owned Business