Hague and London Oil Plc

Exploiting Shallow Gas Offshore Netherlands

November 2016

De-Gassing Shallow Hazards or De-Risking Shallow Gas

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Schematic evolution of the deposition of reservoir sands/seals. Sands are shown as yellow, clays as green or blue. Note the back ground subsidence, which ultimate controls the creation of accommodation space on the shelf.

The Shallow Gas Play can be Summarized as…

…Deltaic sands, ranging from deeper water delta-toe sands to shallow water delta top-sets

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The Shallow Gas Play can be Summarized as…

…deeper marine sands sealed by continuous shale deposition off the shelf, sourced by delta clays

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Shallow anomaly

Deeper anomaly

W EBlock F4

…structure developed by the rising of salt diapirscausing deformation of the overburden. The diapirismof the Permian salt may be caused by the rapid infill of the basin, and…

The Shallow Gas Play can be Summarized as…

…structuration is post deposition and contemporaneous if not earlier than the gas generation.

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Shallow Gas Opportunity

• Likely Biogenic Gas

• High Calorific Value (99% Methane)

• Tertiary Reservoirs (Pliocene or Miocene)

• High Porosity (20-35%)

• Good Permeability

• Low Pressure (30-60 bar)

• Occurence of Shallow Gas Leads have been Known since 1970’s

• Production of these had been proven by wells in the 1980’s

• Water and Sand Control caused them not to be developed

• A12-FA developed in 2007

• F02a-B-Pliocene developed in 2009

• B13-FA developed in 2011

• A-18 developed in 2015

• 1-4 TCF GIIP

• 0.5-2 TCF EUR

History

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Challenges

• Thinly Stacked Reservoirs

• Poorly Consolidated Sands

• Shallow

• Low Relief

• Low Pressure

Solutions

• Horizontal Wells

• Expandable Screens

• Hi-Res Seismic

• Compression

A12 Central Processing Platform with Compression FacilitiesExpandable Screen in Horizontal Well

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N SBlock F5

Prospect AProspect C Lead F

Legacy 2D Seismic Data Indicates Strong Amplitudes which Conform to Structure

Logs from drilling within the area would indicate that the bright

amplitudes, conforming to structure, are within the Late Miocene-

Early Pleistocene gas sands

Chaotic seismic

character and

chimneys may

indicate higher Sg

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F04-03 F04-01 F04-02 F05-02 F05-05 F05-01 F05-03 F05-04

TPS

H1

Mid Miocene Unconfrmity

Base Tertiary

500

1000

1500

0

The correlation is largely based on the correlation of the strong Top Pleistocene gas sands (TPS)

and the Horizon 1, representing the base of a regionally correlatable sand while the bars

highlight the section logged through casing, with a reduced GR response.

Tertiary Sand Well Correlations in Quad F

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Legacy 2D Seismic Data Indicates “Bright” Amplitudes Conforming to Structure

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Structural Prospects May Have Added Stratigraphic Potential

There is some seismic indication, in bright

amplitudes & phase change outside of closure,

that there is a possible down-dip, on-lap

stratigraphic component to some Prospects

The GWC, as well as saturation (Sg) and

reservoir quality (Φ), remains the biggest

variables and risks within the Shallow Gas

Prospect for both volumes and deliverability.

Sg & Φ can only be quantified in drilling but, there is a

strong possibility that the GWC could be de-risked

seismically & that this could indicate volumes in excess

of the current “maximum” in the structural spill-point.

Flat Spot

Phase Change

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Time/Depth correlation is very linear within

the zones of interest above the Mid-Miocene

Unconformity (MMU)

Time & Depth Correlations

Multiple “Shallow Gas” prospects and leads

have been identified within the Late Miocene

and/or Early Pleistocene in Quad F

The target zone is generally restricted

to1500m depth which is equivalent to 1500ms

(TWT); mostly within the Deltaic Front

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• Have irregular near offset

distribution (min 500m) and low

fold for the Shallow Objectives;

• Had a source designed for deeper

objectives;

• May be too coarse in Temporal

sampling of 4ms; and

• Have spatial sampling of 12.5x25m

bin spacing which is likely too large

for target spectrum.

• Legacy 2D seismic may be

superior for current use; and

• New seismic parameters need to

be designed for new 3D data.

Extensive 3D Seismic Coverage

However, these data….

Therefore, the….

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• Site survey vessel;

• <1x1km grid;

• <1000in3 air-gun source;

• 6.25m CMP interval;

• 2000m cable; and

• Processed at 2ms.

• Dual flip/flop are-gun sources;

• Single cable;

• 2 bin lines per sail line;

• 12.5x6.25m bins;

• 2000ms recorded;

• 2000m cable; and

• Processed at 2ms.

Future Seismic Survey Design Considerations

Possible to use dense 2D grid:

If 3D is required, then:

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Multi-Client 3D vs. Shallow Gas 3D Acquisition Parameters

<1000in3

5m

12.5m

2s

1,200-2,000m

5-7m

1-2

25m

Shallow Gas 3D Parameters

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Possible Seismic Solution: Perpendicular Acquisition

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• 50m water depth

• 700-1000m target depth

• Amplitude Anomaly

• 4-way Dip Closure

Indicative Project

• Pleistocene Deltaic Sand

• Natural Gas (likely hi-cal)

• Anomaly and Phase conform to Structure

• 120Bcf Recoverable

Summary Company

Oil reserves (mbbls) - 0

Gas reserves (Bcf) 120 120

Total reserves (mboe) 20 20

Capex 247 247

Capex/boe 12,3 12,3

Opex/boe 12,4 12,4

NPV 10% 79 79

NPV/boe 3,9 3,9

IRR 25% 25%

Breakeven, $/bbl

Govt take (%) 41% 41%

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Shallow Gas 120Bcf Development Economic Summary

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Shallow Gas Summary

• Proven Hydrocarbon Resource

• Proven Development Technology (Expandable Screens)

• Availability of Acreage

• Extensive Existing Seismic Coverage

• Amplitudes Lead and Sesimic Character Lead Exploration

• Key Risks:

• Gas Saturation

• Reservoir Quality

• New Seismic Data Would be Cost-Effective

• Improved Reservoir Characterizaton through New “Tuned” Seismic

• Stratigraphic Component Could lead to much larger Structural Leads

• Favorable Economics (i.e. Small Fields Policy)

• Access to Infrastructure (i.e. NOGAT, etc)

• “Hub and Spoke” Development Concept: CPP & Satellites

• Delays Abandonment by Years for Ageing Infratstructure

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Thank You to:

• EBN

• TNO

• Petrogas

• WGP

• Spectrum

• PGK