Success of the Promote Licence

1
Success of the Promote Licence
Simon Toole Director DTI Licensing, Exploration
and Development
7/3/2006
2
UKCS Backdrop 6/8 years ago

• Low Oil Price
• Majors refocusing interest
• Mergers, Materiality
• 70s style UKCS
• - Licensing and Business Practice
• Untapped Geological Expertise
• - Service sector, Redundancies

3
Exploration Activity Levels
4
Joint Gov/Industry Initiatives

• Stimulating activity in Fallow assets
• Behaviour
• Access to Infrastructure
• Commercial Code of Practice
• Standardised agreements
• Data availability
• Mature Fields Decommissioning
• Licensing

5
1
4
Licensing Strategy
7

• Annual Rounds
• Cumulative Acreage
• Focussed Terms
• - Traditional, Promote, Frontier
  Licences
• Exploration Phase
• - 2, 4 or 6 year break pts

2
5
3
6
2
8
6
Promote Licence

• Tap into expertise and new ideas
• Split 4 year Initial Term
• First 2 years to work up prospects and attract
  resource/commitment
• Second 2 years to fulfil significant activity
• Low cost
• 10 of normal licence fee (first 2 years)

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Rise of the Promote Licence
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21st Round Promote Licences
Success

• 54 licences issued (end Sept 2003)
• 2 year breakpoint well or equivalent agreed
  substantive active
• 24 continuing
• 15 firm wells
• 7 new seismic contingent wells
• 1 proposed development

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UKCS Discoveries 19932004
Number of exploration wells drilled in year
Source UKOOA analysis of Wood Mackenzie data,
discoveries ranked by size within year includes
both commercial and technical reserves there is
no public estimate of Lochnagar (Rosebank)
reserves by the operator (Chevron)
10
1000
500
350
300
11
Unrisked Targets