new world oil and gas: aim rule 26

411 North Sam Houston Parkway East, Suite 400, Houston, Texas USAT +1 281 448 6188 F +1 281 448 6189 W www.rpsgroup.com/energy

William Kelleher: Chairman and CEOGeorges Sztyk: Executive Director, FinancePeter Sztyk: Executive DirectorNew World Oil & Gas PlcOgier HouseSt. HelierJerseyJE4 9WGUK

Nominated Advisor: Beaumont CornishAttn: Roland Cornish2nd Floor, Bowman House29 Wilson StreetLondonEC2M 2SJ January 20th 2012

Re: Competent Person Report in the form of a Letter of Opinion regarding theprospectivity and exploration of Danica Resources’ 1/08 Licence,onshore/offshore southern Denmark.

Dear Sirs,

On 28th December 2011 RPS Energy (‘RPS’) was engaged by New World Oil & Gas Plc(‘New World’) to provide a Competent Persons Report (“CPR”) in the form of a formalLetter of Opinion (‘Letter’) regarding the prospectivity and future exploration program ofthe 1/08 Licence, which covers both onshore and offshore acreage in SouthernDenmark. The licence is currently operated by Danica Resources and New World hassigned a letter of intent to farm-in to the block pending successful due diligence. NewWorld is an AIM listed company and, as such, the Letter has been written in accordancewith the requirements of the AIM Guidance Note for Mining, Oil and Gas Companiesdated June 2009 (the “AIM Guidance Note”).

In accordance with your instructions to us and the requirements of the AIM GuidanceNote, we confirm that we:

1. are professionally qualified and a member in good standing of a self-regulatoryorganisation of engineers and/or geoscientists including SPE, SPEE, EI, AAPG,Geological Society and EAGE;

2. have at least five years’ relevant experience in the estimation, assessment andevaluation of oil and gas assets;

3. are independent of the Company, its directors, senior management and advisers;

4. will be remunerated by way of a time-based fee and not by way of a fee that is linkedto the Admission or value of the Company;

5. are not a sole practitioner;

6. have the relevant and appropriate qualifications, experience and technicalknowledge to appraise professionally and independently the assets, being all assets,licences, joint ventures, farmouts, or other arrangements owned by the Company

UCV02163 New World / DR

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and its subsidiary undertakings (the “Group”) or proposed to be exploited or utilisedby it (“Assets”) and liabilities, being all liabilities, royalty payments, contractualagreements and minimum funding requirements relating to the Group’s workprogramme and Assets (“Liabilities”); and

7. consider that the scope of this Letter is appropriate, given the Group’s Assets andLiabilities and includes and discloses all information required to be included thereinand was prepared to a standard expected in accordance with the AIM GuidanceNote; and,

8. Save as disclosed in this Letter, there has been no material change in the data andinformation provided herein.

Neither RPS Energy, nor any of its directors, staff or sub-consultants who contributed tothis report has any interest in the Company; or any of the advisers to the Company; orthe Assets; or the outcome of the Offer.

In compiling this Letter we have used the definitions and guidelines set out in thePetroleum Resources Management System (“PRMS”) by the SPE/WPC/AAPG/SPEE in2007 as the internationally recognised Standard required by the AIM Guidance Note asabove.

1. BACKGROUND

Danica Resources ApS is a Danish company formed for the purpose of obtaining andexploring the northern fringe of the Southern Permian Basin covered by licence 1/08 insouthern Denmark along trend to the west of proven oil and gas fields in a similargeological setting in Poland and Germany. The licence covers an area 1.586 millionacres (~6,420 km2) and Danica Resources has an 80% working interest (“WI”) with asingle partner, Danish North Sea Fund, entitled to the remaining 20%. DanicaResources is a sister company to Danica Jutland, with whom New World is alreadypartnering on the 1/09 and 2/09 licences a few miles to the north-west of licence 1/08.The farm-in terms are similar to those that were successfully negotiated and fulfilled forthe Danica Jutland licences. New World intends to acquire Danica Resource’s entire WIand immediately take over Operatorship (subject to government approval and approvalby Danish North Sea Fund) in the following stages:

x New World to complete the permitting, acquisition, processing and interpretationof a minimum of 150 km of 2D seismic over the onshore portion of the licence.This work is to be completed by 30th September 2012 to fulfil the Phase 2a workcommitments and in return for which New World will receive 12.5% WI in thelicence.

x As of 1st October 2012, Phase 2b commences and New World will complete thepermitting, acquisition, processing and interpretation of further 2D and/or 3D ifneeded to retain the hydrocarbon prospective onshore and offshore areas of thelicence, the size and design of which shall be mutually agreed between DanicaResources and New World. This work is to be completed by 30th September2013 in return for which New World will receive a further 12.5% WI in the licence.

x The Phase 3 work program (see below) requires an exploration well to be drilledby 30th September 2015 (“drill or drop” option). In accordance with the farm-inAgreement, if New World elects to drill a well on the licence, the well must bedrilled by 30th September 2014 in return for which New World shall receive theremaining 55% WI in the licence. The farm-in Agreement specifies that a furtherwell will be drilled by 30th September 2015, provided a further drillable seismic-


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based prospect can be defined.

x Once New World has assumed Danica Resources’ 80% WI, Danica Resourcesshall remain entitled to a 5% overriding royalty from any production ofhydrocarbons. In addition, a further staged cash and share payment of $500,000has been agreed between New World and Danica Resources to cover previoussunk costs. $250,000 of these costs are to be paid in cash and $250,000 are tobe paid in New World shares.

The licences were granted to Danica Resources on 31st March 2008 with a 6 yearexploration period with provisions for extension.

The minimum work program required by the Danish government is as follows:

x Years 1 & 2 (“Phase 1”) – Collate available data, conduct geochemical soil-survey and create geological model using available seismic and literaturereferences. This phase has been successfully completed albeit after an 18month extension and one prospect has been developed called the “AlsProspect”.

x Years 3 & 4 (“Phases 2a & 2b”) – Acquire 2D to better delineate certain leads(both onshore and offshore) followed by a 2D or 3D survey over selected leads.At the end of year 4 (30th September 2013 after the extension to Phase 1) a drillor drop decision must be made.

x Years 5 & 6 (“Phase 3”) – A well must be drilled on the license by the end of yearsix (30th September 2015).

A summary of the assets in question is shown as Table 2 below.

Licence Operator WorkingInterest

Status LicenceExpiry

LicenceArea

Comments

1/08 New World1 80% 2 Exploration 30th Sept.2015 3 6,420 sq km

Current commitmentsare seismic and/or thedrilling of a well on the

license

Notes 1 Subject to approval by the Danish government and partner, Danish North Sea Fund, New World will be grantedOperatorship upon the completion of the transaction between New World and Danica Resources.

2 New World plans to acquire up to 100% of Danica Resources’ working interest (80%) in the licence in accordance with astaged timetable which is established for the completion of certain work commitments required by the government. Uponcompletion of the various work commitments, New World shall have a 12.5% WI in the licence by 30th September 2012,25% WI by 30th September 2013 (at the latest) and 80% WI once the licence has been drilled.

3 Provisions for extension exist.

Table 2: Summary Table of Assets

2. DESCRIPTION OF GENERAL PROSPECTIVITY2.1. Geological Setting

The 1/08 licence is located onshore/offshore southern Denmark consisting of part ofBlocks 5410, 5411 and 5412 (see Figure 1). Figure 2 shows the licence outline in moredetail and the location of the 4 wells drilled on the licence to date.

The licence is situated on the northern flank of the Southern Permian Basin (“SPB”) justto the south of the Ringkøbing-Fyn High (“RKH”) where the early Zechstein cycles areprognosed to contain reef and shoal trends similar to those seen on the northern flank ofthe Southern Permian Basin in Poland and Germany which have proven to be effectiveand productive oil and gas reservoirs (see Figure 3).


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Throughout the SPB in Poland, Germany, Denmark, Holland and UK, the deposition ofZechstein Z1 and Z2 carbonates and evaporites formed a prograding platform whichwas subsequently covered by the thick halite deposits of the Z2 and later Zechstiencycles. The Z1 and Z2 carbonates in this progradational setting have are provenproductive oil and gas reservoirs in Poland and Germany (i.e. along trend to the east ofthe licence) and a similar play is prognosed within the licence area.

None of the four wells drilled on the licence have penetrated the Z2 carbonate althoughOrslev-1 did reach the underlying Rotliegendes interval.

Source: Danica ResourcesFigure 1: Regional Location Map

Source: Danica ResourcesFigure 2: Licence 1/08 outline showing on-block wells to-date.


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Source: Danica Resources after Ziegler 1982

Figure 3: Location of 1/08 Licence relative to Southern Permian Basin Margin

2.2. ProspectivityZechstein Potential: Danica Resources has been studying the area for some time andhas developed a geological model along with a drillable prospect (the Als Prospect) anda number of leads based on available seismic data, an extensive surface soilgeochemical survey, some well data and a number of academic papers. The currentseismic coverage is shown on Figure 4.

Source: Danica Resources

Figure 4: 1/08 licence with existing seismic database

UCV02163

The development of a prograding carbonate platform on the northern (and southern)flank of the SPB in early Zechstein times is well documented (e.g. Stemmerik andFrykman, 1989 and Strohmenger, Voigt and Zinders, 1996). The Z1 and, in particular,the Z2 carbonates, which vary with depositional setting on the platform edge from reefalbuild-ups to shoals, form productive reservoirs along the basin margin, most notably inPoland and Germany but also in the Netherlands. Likewise, a Z1 and Z2 carbonate reefand shoal trend has been mapped in outcrops and shallow wells in NE EnglandFigure 5 shows an early schematic prepared by Danica Resources which demonthe trend that places the 1/08 licence in an attractively analogous geological settingclose proximity just 20 km to thenortheastern Germany and across into Poland. Danica Resources has identifieddrillable prospect and a number of leads that could have very similar properties to thediscovered fields in Germany and Poland.

Figure 5: 1/09 and 2/09 licences and expected depositional trends (schematic)Using the available seismic, Ddeveloped a more detailed picture of the1/08 licence. This interpretation is a ‘workrequired to fill in several gaps where data are poor or nonCertain features are visible on the available seismic which might bFigure 7) but most are seen on a single line and need further seismic coverage toascertain whether the geometries of the idbuild-ups and/or carbonate shoals.If drilling is successful andthey will make excellent reservoirs. However, they can be expected to irregular(“amoeboid”) and 3D is often required to successfully map and delineate these complexstructures. Zechstein dolomites form reservoirs to the west in the northern DanishCentral Graben (many Chalk fields are underlain by Zechstein carbonate reservoirs, andalso in the British sector (Auk and Argyll fields).In the light of the above, Danica Resourceappropriate.

The development of a prograding carbonate platform on the northern (and southern)flank of the SPB in early Zechstein times is well documented (e.g. Stemmerik and

and Strohmenger, Voigt and Zinders, 1996). The Z1 and, in particular,the Z2 carbonates, which vary with depositional setting on the platform edge from reefal

ups to shoals, form productive reservoirs along the basin margin, most notably innd Germany but also in the Netherlands. Likewise, a Z1 and Z2 carbonate reef

and shoal trend has been mapped in outcrops and shallow wells in NE EnglandFigure 5 shows an early schematic prepared by Danica Resources which demon

that places the 1/08 licence in an attractively analogous geological settingjust 20 km to the west of a number of Zechstein oil and gas fields in

and across into Poland. Danica Resources has identifieda number of leads that could have very similar properties to the

discovered fields in Germany and Poland.

Source:

1/09 and 2/09 licences and expected depositional trends (schematic)Using the available seismic, Danica Resources has interpreted a Z2 marker surface anddeveloped a more detailed picture of the carbonate platform edge (Figure 6) within the1/08 licence. This interpretation is a ‘work-in-progress’ and more seismic data is

aps where data are poor or non-existent.Certain features are visible on the available seismic which might be reefal build

) but most are seen on a single line and need further seismic coverage toascertain whether the geometries of the identified leads support the hypothesis of reefal

ups and/or carbonate shoals.drilling is successful and the reefs and/or shoal facies can be proved, it is likely that

they will make excellent reservoirs. However, they can be expected to irregular(“amoeboid”) and 3D is often required to successfully map and delineate these complex

Zechstein dolomites form reservoirs to the west in the northern DanishCentral Graben (many Chalk fields are underlain by Zechstein carbonate reservoirs, andalso in the British sector (Auk and Argyll fields).

ght of the above, Danica Resource and New World’s forward plan is highly

New World / DR

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The development of a prograding carbonate platform on the northern (and southern)flank of the SPB in early Zechstein times is well documented (e.g. Stemmerik and

and Strohmenger, Voigt and Zinders, 1996). The Z1 and, in particular,the Z2 carbonates, which vary with depositional setting on the platform edge from reefal

ups to shoals, form productive reservoirs along the basin margin, most notably innd Germany but also in the Netherlands. Likewise, a Z1 and Z2 carbonate reef

and shoal trend has been mapped in outcrops and shallow wells in NE England.Figure 5 shows an early schematic prepared by Danica Resources which demonstrates

that places the 1/08 licence in an attractively analogous geological setting inoil and gas fields in

and across into Poland. Danica Resources has identified aa number of leads that could have very similar properties to the


1/09 and 2/09 licences and expected depositional trends (schematic)anica Resources has interpreted a Z2 marker surface and

carbonate platform edge (Figure 6) within theprogress’ and more seismic data is

e reefal build-ups (see) but most are seen on a single line and need further seismic coverage to

entified leads support the hypothesis of reefal

the reefs and/or shoal facies can be proved, it is likely thatthey will make excellent reservoirs. However, they can be expected to irregular in shape(“amoeboid”) and 3D is often required to successfully map and delineate these complex

Zechstein dolomites form reservoirs to the west in the northern DanishCentral Graben (many Chalk fields are underlain by Zechstein carbonate reservoirs, and

d New World’s forward plan is highly


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Figure 6: Danica Resources interpretation of Z2 showing platform edge in licence1/08


Figure 7: Seismic line (0727601) across a potential Zechstein Carbonate Build-upRotliegendes Potential: In addition to the Z2 play, Danica Resources has identified aRotliegendes play similar to that seen extensively in the Southern North Sea andeastwards across the Netherlands and Germany. The Rotliegendes reservoirs consistof a mixture of aeolian and fluvial sandstones associated with early Permian desertconditions that were variously present over the entire SPB (dune belts are prognosed tohave surrounded a playa lake that was fed by occasional flooding events). Thedeposition of aeolian sandstones in the 1/08 licence area is confirmed by the Orslev-1


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well which encountered approximately 60 m of “fine to course, white to red, rounded tosub-angular, frosted grains” – a typical aeolian grain description. Rotliegendes fields inthe rest of north-west Europe are typically tilted fault blocks within a complex horst andgraben setting which are laterally sealed by the thick halites of the overlying ZechsteinZ2 and later cycles in the adjacent hanging wall. The Rotliegendes fields are almostalways gas-bearing and are sourced from underlying Carboniferous coals (thereforeusually dry-gas). Danica Resources also prognoses that the Zechstein oil source mightbe able to charge the Rotliegendes in this particular setting if juxtaposition across faultsplaces the Z2 adjacent to the Rotliegendes at the deeper part of a tilted fault block (withmore significant fault throw placing the halites against the Rotliegendes in the highestpart of any given fault block to provide seal. This is not impossible but would be a highlyunusual Rotliegendes trap and fluid configuration. Figure 8 shows an interpretedseismic line which demonstrates a very familiar structural style at the Rotliegendes level(and overburden).


Figure 8: Seismic Line showing Rotliegendes structural style and three leadsTriassic Potential: In addition to the Zechstein potential reservoir described above, theLower Triassic Bunter Sandstone, which is a productive reservoir in various fields inEurope, and potentially the Upper Triassic Gassum Sandstone are also consideredlikely reservoirs.

The Bunter Sandstone Formation has been recorded in the four wells drilled in the 1/08license area (see Table 3 below). Regionally, the formation is typically developed asfour cycles, each comprising several sandstone units overlain by claystone sequences.The sands were deposited in a fluvial system of braided streams. However, not all ofthese cycles are recognized in all wells. Early movement of Zechstein salt triggered byTriassic sediment loading can have created local topographic features that influencedfluvial sand deposition.


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Generally, the Bunter sandstones are described as red-brown, yellow brown, and greenspotted, often fine to medium, occasionally coarse grained, locally calcareouscemented, anhydritic and micaceous.

Well Bunter S’st. Fm.IntervalThickness

(m)

Net SandThickness

(m)

Average Porosity

(%)

Ørslev-1 115 49 20

Rødby-2 70 40 N/A

Søllested-1 291 68 N/A

Kegnæs-1 232 54 25Source: Danica Resources

Table 3: Bunter sandstone properties from on-block wellsThe Upper Triassic Gassum Formation is also recognized in all four wells drilled in the1/08 license area. The Gassum sandstones formed a primary target in the Kegnæs-1well (dry well) and have very high porosities (30-35%). The high porosities seen in theGassum sands could reflect their position just beneath the erosional Mid-JurassicUnconformity where porosity enhancement might have occurred during prolonged sub-aerial exposure during the early Jurassic.The Bunter Sandstone has been interpreted on all the available lines and a number ofleads have been identified by Danica Resources (Figure 9).


Figures 9: Top Bunter Sandstone TWT Map with Danica Resources leadsOil and Gas Source: In the SPB, the Z2 basinal facies has proved to be a reasonableoil source-rock. Although chronostratigraphically equivalent to the reefal build-ups andshoals expected at the basin margin, the deep basin sedimentation is thought to havebeen a gradual build up of carbonaceous material deposited below a chemocline which,


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although generally relatively thin (a thickness of up to 180 m has been reported in theNetherlands), was deposited over a vast area of the SPB. This carbonaceouscarbonate and shale of the Z2 (referred to as the “Stinkdolomit” and “Stinkschiefer”) isthought to provide the source for most of the oil found in the platform equivalentreservoirs of Germany and Poland in the SPB.

In the SPB migration into productive reservoirs appears not to be long distance. BothGerman and Polish experts believe that migration is over a short distance and up-dip.This would seem to indicate the possibility of source rock potential further up the shelfslope rather than in the basin deep where most conventional source rocks are thought tobe accumulated in anoxic conditions. A paper by R.W. Jones (“Organic MatterCharacteristics Near the Shelf-Slope Boundary” SEPM Special publication No. 33 p.391-405; June 1983) discusses the possibility that, in the right conditions such as wereprevalent in the Permian, either transgressions of deep-basin oxygen deficient waterover the shelf-slope break, or, an Oxygen Minimum Layer (OML) can be set up suchthat oil-prone source rocks can be deposited on the shelf-slope rather than only in thebasin deep. If this is the case, the source rocks that have supplied the productiveZechstein reservoirs in Germany and Poland may not be limited to the deep basin at allbut actually much more restricted to the shelf-slope which would reduce migration risk.

Underlying Carboniferous strata might also be a source but these are generally thoughtto be gas or gas-condensate bearing. However, the presence of Namurian black shalesin the Orslev-1 well is also a positive indicator of the presence of oil prone source rocksin the area. The Northern and Southern Permian Basins came into existence after thedeposition of Carboniferous sediments - in which there are both gas and these oil pronesediments. Consequently, Namurian oil prone source rocks, as well as Westphaliancoals and deltaic deposits are widely distributed in NW Europe from the Irish Seaeastwards through the Netherlands, Germany, Denmark and Poland (see Figures 10and 11). Westphalian coal-bearing sediments with gas and condensate prone sourcerocks are widely distributed in the NPB and across the Jutland license areas, as shownon Ziegler’s paleogeographic map (Figure 10) and are generally recognized as theprimary source for the Rotliegendes gas fields of northwest Europe.Seals: Seal issues are not thought to be a major risk for any of the potential reservoirs.For the Zechstien, the trap style will be largely stratigraphic and the lateral faciesvariation is practically assured in the depositional model. Top seal is provided byoverlying Zechstein evaporates (halite and anhydrite) and Lower Triassic shale. For theTriassic leads, the juxtaposition of Triassic shales against sands across faults is themain sealing mechanism. Many of the Triassic leads, while fault bounded, also have anelement of anticlinal structure and each reservoir sand is sealed above by thick lateTriassic and Lower Jurassic shale sections. In the case of the Rotliegendes, the tiltedfault blocks are usually side-sealed by juxtaposed Zechstein halites. Zechsteinevaporites provide excellent top-seal to the Rotliegendes sandstone reservoirs.

2.3. LeadsDanica Resources has identified 7 Zechstein leads (4 onshore, 3 offshore) and oneprospect (the Als Prospect) and these are shown on Figure 12. The Als Prospect alsohas a Rotliegendes potential and Danica Resources has identified two further leads (seeFigure 8 – the Als Prospect is “R1” on the figure). In addition, Danica Resources hasidentified at least 15 leads in the Triassic Bunter Sandstone (see Figure 9). Most of theleads require further seismic work to become drillable prospects but the Als Prospect isdiscussed in more detail in Section 2.4.


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Figure 10: Westphalian Paleogeography (Ziegler, 1982).

Figure 11: Namurian paleogeography (Ziegler, 1982).


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Figure 12: Zechstein leads and prospect locationsGeneral Geological Risk for the 1/08 licenceWith the exception of the Als Prospect (which is assigned a prospect specific risk), RPSassigns a geological risk of approximately 1 in 12 to the current likelihood of discoveringa meaningfully sized oil or gas accumulation in either the Zechstein, Rotliegendes orTriassic intervals within the 1/08 licence.Otis and Schneidermann’s ‘Rule of Thumb’ for Geological Risk Assessment1 assigns arange of risk of between 1 in 8 to 1 in 16 as an appropriate level of risk for a “provenplay in an unproved area”. RPS believes that the ranges assigned to the plays areappropriate at this time for the following reasons:

x The analogue to the Southern Permian Basin carbonate build-ups further to theeast on a prograding platform edge is yet to be proved. It is the Company’sintention to prove up reefal build-ups and/or shoal deposits which are requiredfor reservoir to be present and effective in the Zechstein section.

x Trap identification at any level is not proven at this time.

x The relative distribution of Carboniferous source rocks and the over-lyingRotliegendes reservoir is currently poorly understood at this point in time.

x The relative distribution of Carboniferous source rocks and the over-lyingTriassic reservoirs is currently poorly understood at this point in time. Themigration through the overlying Zechstein halite (salt) has to be assigned ahigher risk than the migration to the Rotliegendes.

2.4. The Als ProspectThe Als Prospect is set up by a north-south horst block which could have been atopographic high extending out from the generally WNW-ESE trending carbonateplatform of the early Zechstein promoting platform type deposits (shoals and/orcarbonate build-ups). Alternatively, the faulting could have been later such that theZechstein deposits are more likely to be slope deposits which are less likely to be

1 Otis, R.M. & Schneidermann, N. 1997. “A Process for Evaluating Exploration Prospects”, AAPGBulletin 81 (7) pp.1087-1109.


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reservoir quality. However, in that case, the Rotliegendes is likely to be side-sealed bythe Z2 halite and is more likely to be a valid trap itself.

The structure is imaged on a number of seismic lines but, critically, has no lines thatdemonstrate closure conclusively to the north and north-west of the structure. TheDanica Resources interpretation is not unreasonable but relies on a sealing fault to thenorth at Rotliegendes level which is not imaged at this time. The Zechstein closure isclosely linked to the underlying high but is similarly disadvantaged by the current lineconfiguration. This means that the trap risk has to be the most siginificant. RPS’ riskanalysis is tabulated below.

Risk Factor Zechstein RotliegendesTrap 50% 50%Seal 90% 90%Reservoir 60% 50%Source (Play risk) 80% 60%Migration 60% 80%Overall GPoS 13% or 1 in 8 11% or 1 in 9

Table 4: Risk components and RPS GPoS for the Als ProspectRPS has investigated with Danica Resources the low and high side closure possibilities(Figure 13) and agreed on the areas and other reservoir parameters for input into amontecarlo volumetric analysis of the Als Prospect (Table 5).

Figure 13: Map showing min/max closure polygons used for volumetric analysis


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Variable Zechstein Rotliegendes

P90 P50 P10 P90 P50 P10

Area 10.8 km2 Not input 28.8 km2 10.8 km2 Not input 53.7 km2

Thickness 30 m 45 m 60 m 60 m 80 m 100 m

Porosity 10% 15% 20% 14% 17% 20%

Sw 35% 30% 25% 35% 30% 25%

Bo / FVF 1.2 1.1 1.2 210 240 270

OIIP/GIIP 212 MMbo 495 MMbo 928 MMbo 775 Bcf 1877 Bcf 4444 Bcf

Rec. Factor 15% 20% 25% 65% 75% 85%

RecoverableOil / Gas 40 MMbo 97 MMbo 192 MMbo 575 Bcf 1401 Bcf 3380 Bcf

Table 5: Volumetric analysis input parameters and resultsIt is worth noting that at first sight the Als Prospect appears to have an immediateproblem in that the mapped closure at Zechstien and Rotliegendes levels contains anunsuccessful well, Kognaes-1. However, the Kognaes-1 well was targeting thestratigraphically higher Triassic (Gassum) interval and was TD’d in the Z2 halite withoutever penetrating the Lower Z2 and underlying Rotliegendes which form the present-daytarget horizons.

2.4.1. Conceptual Development Plan and Indicative EconomicsMark Roach, an independent engineering consultant, has worked up a conceptualdevelopment scenario and associated indicative economics.

The key development / production assumptions are as follows:

Reservoir Case No. of prod. wells Initial rate Decline rate

Zechstein

P90 18 1,000 bopd 15.0

P50 24 1,250 bopd 12.5

P10 39 1,500 bopd 10.0

RotliegendesP90 26 10 MMcfd 15.0

P50 48 12.5 MMcfd 12.5

P10 67 15 MMcfd 10.0

Source: New World

The key fiscal assumptions are as follows:

x Oil Price – A US$8/bbl uplift (Brent vs WTI) on the Nymex price forecast (WTI)has been used with production commencing in 2015 at US$105.09/bbl thenescalated at 2.5% per year.

x Gas Price – US$10 per MMBTU in 2015 then escalated at 2.5% per year.

x Drilling and completion costs – US$15MM per well for exploration and US$11MMfor development wells.

x Facilities costs – based on peak annual production rate at US$15/bbl orUS$1.5/Mcf.

x Opex costs – US$15/bbl or US$1.5/MMBTU including well, facility, road andsurface costs.


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x G&A – US$2.50/bbl for the oil case and US$0.25/MMBTU for the gas case.

x Transportation pipeline tax – 5% of sales revenue.

x Hydrocarbon tax – 40% of sales revenue (based on Ernst & Young tax book).

The resultant indicative success case economics calculated by Mark Roach aretabulated below:

Reservoir Case ProspectiveResources Indicative NPV10 Unit Value

Zechstein

P90 40 MMbo US$419MM 10.59 US$/bo

P50 97 MMbo US$1,039MM 10.71 US$/bo

P10 192 MMbo US$2,007MM 10.46 US$/bo

Rotliegendes

P90 575 Bcf US$569MM 0.99 US$/Mcf

P50 1,401 Bcf US$1,400MM 1.00 US$/Mcf

P10 3,380 Bcf US$3,310MM 0.98 US$/Mcf

Source: New World

The effective date of the indicative valuation is 1st January 2012. RPS has reviewed theassumptions set out above and believes them to be reasonable.

3. CONCLUSIONS

New World has the option to earn up to 80% WI and become Operator in the 1/08licence, onshore/offshore southern Denmark (subject to government and partnerapproval).

The licence is located in an under-explored area and on trend to the west of the well-established northern platform edge of the Southern Permian Basin. The current licenceOperator, Danica Resources, has developed a geological model which draws on theirextensive research and experience of the SPB to explore this potential extension to theestablished play.

In our opinion, this is an interesting opportunity to access early to mid stage explorationin a well thought through but, as yet, unproven extension to a number of potential plays.As such the terms and forward commitments are reasonable, manageable andappropriately scaled to high grade the existing leads into drillable prospects should theresults prove positive.

The plan to acquire more seismic is an essential next step to identify a robust prospect(or prospects) but elements of the remaining geological risk will only be mitigated bydrilling one or more wells. Key risks are the presence of reservoir quality rocks in theZechstein and robust structural closure in the Rotliegendes and Triassic. All three playshave an element of trap, source and migration risk.

The planned acquisition of seismic and the identification of robust structures couldreduce the current geological risk to approximately 1 in 8 (or better) for the Zechsteinand Rotliegendes as has been proved for the Als Prospect.

The Als Prospect could benefit from further seismic data to prove the closure at bothZechstein and Rotliegendes intervals but, given the relative cost of seismic data versusthat of drilling a well, it may well be the case that the value of data regarding the


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reservoir quality and potential hydrocarbon content may well make the Als Prospect‘drill-ready’, particularly as both intervals can most likely be targeted from an onshorelocation.

The scoping economics run on the Als Prospect suggest that even a moderately sizeddiscovery could be highly economic under the current terms and conditions.

Qualifications

RPS Energy is an independent consultancy specialising in petroleum reservoirevaluation and economic analysis. Except for the provision of professional services ona fee basis, RPS Energy does not have a commercial arrangement with any otherperson or company involved in the interests that are the subject of this report. AndyKirchin, VP of Consulting (US) with RPS Energy’s Houston office, has evaluated theprevious reports and data available to form this opinion.

Mr Kirchin has 24 years of oil and gas experience. Other RPS Energy employeesinvolved in this work hold at least a degree in geology, geophysics, petroleumengineering or a related subject and have at least five years of relevant experience inthe practice of geology, geophysics or petroleum engineering.

ConsentRPS Energy will not unreasonably withhold consent for the use of this Letter orinformation extracted from this Letter, provided that New World and/or its advisorscomply the with extraction of information paragraph above and in accordance withClause 7 of the Letter of Engagement covering this assignment.

For the purposes of paragraph (a) of Schedule 2 of the AIM Rules, RPS Energy acceptsresponsibility for the information contained in the Letter.

This Letter relates specifically and solely to the subject assets and is conditional uponvarious assumptions that are described herein. This Letter must therefore be read in itsentirety.

Yours sincerely,

Andy Kirchin – RPS Energy


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APPENDIX A: GLOSSARY OF TECHNICAL TERMS

AAPG American Association of Petroleum GeologistsAIM Guidelines Guidance covering the preparation of documentation for

Disclosure purposes for Mining, Oil and Gas Companiesdated June 2009 (the “AIM Guidance Note”)

AVO Amplitude variation with offsetB BillionBTU British Thermal Unitbbls Barrelsbo Barrel of oilDHI Direct hydrocarbon indicatorEAGE European Association of Geoscientists and EngineersEI The Energy InstituteGPoS Geological Probability of Successkm Kilometrem metresM ThousandMM MillionMstb Thousand stock tank barrelsMMstb Million stock tank barrelsMMscf/d Millions of standard cubit feet per dayMMstb Million stock tank barrelssq km Square kilometresstb Stock tank barrelsscf Standard cubic feetSPB Southern Permian BasinSPE Society of Petroleum EngineersSPEE Society of Petroleum Evaluation EngineersTD Total DepthTVD True vertical depthTVDSS True vertical depth (sub-sea)WPC World Petroleum CouncilWTI West Texas Intermediate

new world oil and gas: aim rule 26

Documents