THE U'K' NORTH SEA THE NEXT THIRTY YEARS

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THE U.K. NORTH SEA THE NEXT THIRTY YEARS
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UKCS Production 1965 2005 2005 - 2035
Daily Production mmboe
Non-core
Trickle ?
production
Flow ?
exploration
production
exploration
2004
2020

• There is an assumption that production will
  almost cease around 2020
• Detailed database of 1P to 3P resource gives a
  more detailed guess at the
• 30 year look ahead
• more detailed geography
• ownership of investment

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Split of resource - ownership, geography
unrisked
prospects, discoveries production points to
41,000 mmboe unrisked Total ties in
well with DTI estimate of resource
Based on block specific detail 2683 working
interests (1089 non-core) 965 prospects 264
discoveries 519 projects
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. quantify the market potential
Risked resource
9780 mmboe
Risked
core production projects
Total risked resource c. 18500 mmboe
4800 mmboe
3800 mmboe
non-core oil gas
core discovery / exploration
Potential for 3rd party investment
Investment assured ?
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Hannon Westwood database unrisked
Oil Prospects size distribution
Gas Prospects
Oil Prospects
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.. an under-drilled resource
an uncertainty over 40 billion boe
Exploration wells to Production takes 10
years. A fair correlation of the drilling peaks
and production peaks. Is the Basin fully
examined exploited ?
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total oil gas resource
Risked Model 18500 mmboe suggests potential
for 1 million boepd _at_ 2020 And maybe 700,000
boepd from 2020 to 2030
18425 risked barrels
1 mmboepd forecast in 2020
700,000 boepd forecast in the out-years
2020
2004
Potential 1 mmboepd forecast for 2020, instead of
a trickle
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but will it attract investment ?
The core out-years in exploration and
discoveries may have a discounted zero or low
value to oil majors
Managed decline
Discounted value ? zero
drilled
undrilled
2004
2004
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It shows two worlds in parallel
.. But could give a new investor target of over 1
mm boepd by 2020 An ideal world .. All
depends on whether we can get ownership,
investment the market to function at the right
pace
2004
1 mmboepd potential by 2020
20 commercial risk applied
2004
2020
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.. So who are the owners ?
Split - 3 ways (simplistically)..there are
exceptions
A market where Financially strong companies
investing in lowest risk a cash cow (after years
of risk ) Independents investing in sustainable
business growth with mix of risk Mainly small
companies investing in longer term and risk,
although most will seek 3rd party for
wells Financing is key
Cash flow
cash cow
Managing decline (low investment cash cow)
Projects
Investing in growth Risk investment - drilling
1 mmboepd vision
Prospects
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how does it look on the ground ??

• Oil majors have established 39 core areas
• There are 50 other areas that attract
  investment potential new core areas

2004
2004
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There are 39 key core areas
39 oil major investment centres
Contains 9,700 mmboe production 16300
mmboe unrisked discovery exploration
80 of resource with BP Shell ExxonMobil Total Ch
evronTexaco ConocoPhillips BG
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It looks complex . It is complex .
50 areas but a complex roadmap
10,000 mmbbls 50 areas 200 mmbbls per area 8
x 200 1,600mm per area 50 wells per year
Schematic area of non-core investment
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if this investment takes place, then-
18,500 mmbbls conservative view of oil gas
resource 39 investment centres used by oil
majors as cash cows 50 potential
investment centres on non-core acreage
1 million boepd projection by
2020 database in place to build 50
business plans
DTI initiatives very good pace of
commercial market still seems inadequate (deals
finance) A real need to accelerate
ownership change and pace of investment
9000 mmbbls _at_ say 8 per boe,
72 billion investment

2004
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THE U.K. NORTH SEA THE NEXT THIRTY YEARS