IRISH SEA ENERGY LIMITED

RELINQUISHMENT REPORT

LICENCE P.1155

(Blocks 113/21a and 113/22a)

March 2009

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

CONTENTS

1. LICENCE INFORMATION 3

2. WORK PROGRAMME SUMMARY 3

3. SYNOPSIS 3

4. EXPLORATION ACTIVITIES 5

4. PROSPECTIVITY ANALYSIS 6

5. RESERVES SUMMARY 8

6. CLEARANCE 8

LIST OF FIGURES

Figure 1: Location Map of Blocks 113/21a and 13/22a.

Figure 2: CPI Log Plot of Exploration Well 113/22-1Z

Figure 3: Pressure Data from 113/22-1z

Figure 4: Seismic Cross Section showing location of 113/22-1 (& 1z)

Figure 5: Sherwood SST Depth Map of Kelly Prospect

LIST OF TABLES

Table 1: Reserves Summary

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

1. Licence Information

Licence Number: P.1155

Licence Round: Out of Round Award

Licence Date: 1/11/2003

Licence Type: Out of Round

Block Numbers: 113/21a and 113/22a

Equity Holdings: Irish Sea Energy: 100%

Conoco Phillips: 0% (remaining as operator)

2. Work Programme Summary

All work obligations on this block have been fulfilled by the drilling of an exploration
well 113/22-1(1z) on the Kelly prospect in 2005.

3. Synopsis

Irish Sea Energy Limited, a wholly owned subsidiary of the Vitol Group, holds the
beneficial rights to the whole of the Licence P.1155. The initial term of the licence
expired on 31 October 2007.

The original P.1155 licence was awarded ’out of round’ to Burlington Resources in
November 2003. Irish Sea Energy farmed into the licence in return for funding the
Kelly well, drilled in August 2005. Conoco Phillips acquired Burlington Resources in
March 2006 and subsequently passed on their interest in P.1155 to Irish Sea Energy,
but remained as the licence operator.

Following an unsuccessful farm out attempt by Irish Sea Energy, the decision was
made to relinquish both blocks 113/21a and 113/22a of licence P.1155.

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

Figure 1: Location Map of Blocks 113/21a and 13/22a.

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

 4. Exploration Activities

New seismic data in the form of a site survey for the 113/22-1 exploration well was
acquired.

Kelly Prospect: The Kelly prospect was drilled with well 113/22-1 in August 2005,
finding 10’ of gas at the top of the Triassic Sherwood sandstone. The MDT indicated
a water gradient through this interval implying the gas was residual. A sidetrack,
113/22-1z, was drilled updip but mechanical constraints limited the step out and the
well intersected the top reservoir only 16’ updip. This sidetrack found 26 vertical feet
of residual gas. The MDT pressures in both the original well and the sidetrack
showed the reservoir to be under pressured, a phenomena seen in all other wells in
the Keys Basin. The well was plugged and abandoned with out testing.

The 113/22-1 well was spudded on 29th July 2005 and TD’d at 3455ft MD (3317ft
TVDSS) on 12th August 2005. The 113/22-1z sidetrack TD’d at 3472ft MD (3226ft
TVDSS) on 21st August 2005.

Well 113/22-1Z 1/500

SWT
1 V/V 0
DEPTH

BS hdra RXOZ badhole SWT VOL

FEET

0 IN 10 -0.4 G/C3 0.1 0.02 OHMM 200 0 LOGICAL 10 1 V/V 0 0.3

hcOIL WATER 0

HCAL RHOZ DT4S RM PHIE SWE VSH

0 IN 10 1.95 G/CC 2.95 500 US/M 100 0.02 OHMM 200 0.3 V/V 0 1 V/V 0 0 V/V 1

GR TNPH DT4P RT fbup PHIT SWE nsNET PHIE

0 GAPI 150 0.45 B/E -0.15 500 US/M 100 0.02 OHMM 200 480 PSIA 510 0.3 V/V 0 1 V/V 0 FEET
0 1 FEET
1 0 0.3 V/V 0
3171.0

3180

3190

3200
3210

3220

3230

3240

3250

3260

ORMSKIRK
3270

3280

3290

3300
3310

3320

3330

3340

3350

3361.5

Figure 2: CPI Log Plot of Exploration Well 113/22-1Z

The well results demonstrate the presence of good quality reservoir, the successful
migration of gas from further south in the basin, the presence of residual gas, and the
presence of a competent reservoir seal.

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

4. Prospectivity Analysis

Well 113/22-1 (& 1z) proved the presence of good quality reservoir rocks in the
Sherwood Sandstone. No movable hydrocarbon was encountered in the well, but the
presence of residual gas was proven. The presence of source rock, migration
fairway, and competent seal was confirmed by the results of the wells.

MDT Pressure measurements taken in the Sherwood Sandstone reservoir in 113/22-

1z showed the sands to be under pressured by 70psi. Figure 3 shows that most
wells in the East Irish Sea are normally pressured, the exception are those in the
Keys Basin, to the North of the South Morecambe field. These are all under
pressured, as is the 113/22-1(1z) well. The presence of residual gas in 113/22-1(1z)
well is also analogous to seven other commercial gas fields in the East Irish Sea
which contain movable gas columns underlain by zones of residual gas. The
presence of the residual gas layer in the East Irish Sea fields has been attributed to
paleo structures from which gas escaped following structural tilting.

Normal Pressure
(Most wells in EIS)

Under Pressure
(Keys Basin)

Figure 3: Pressure Data from Kelly and other East Irish Sea Wells

The 113/22-1(1z) exploration well was drilled on the flanks (300ft down-dip of the
crest) of the mapped Kelly prospect (Figures 4 & 5) in order to reduce well control
risks associated with a possible large gas discovery. The area up-dip of the 113/22-
1(1z) well in the Kelly Prospect has hence not been tested and remains as a valid
prospect.

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

Figure 4: Seismic Cross Section showing location of 113/22-1 (& 1z) in relation
to Kelly Prospect Structural Crest

Figure 5: Sherwood SST Depth Map of Kelly Prospect showing remaining

potential up-dip of wells 113/22-1 & 1z

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a

The total thickness of the residual gas layer in Kelly is estimated (using local field
analogue data) as about 50ft which would place the start of the movable gas at
-2,950’ TVDSS.

The biggest remaining risks on the Kelly Structure are the structure definition given
by relatively poor quality 2D seismic data, and the possibility that the whole structure
is filled with residual gas.

5. Reserves Summary

As discussed above there remains potential for a significant gas volume in the Kelly
Prospect up-dip from the 113/22-1(1z) exploration well.

The most likely estimate of gas reserves up-dip from 113/22-1(1z) is about 100 bcf
(assuming the top of the residual gas layer is at 2950ft TVDSS);

GRV NTG Por Sw GIIP RF Reserves

Up-Dip of 113/22-1(1z) bcf dec dec dec bcf bcf bcf
10.4 0.85 0.14 0.15 126 0.85 102

Table 1: Remaining In Place and Recoverable Gas Reserves

6. Clearance

Irish Sea Energy Limited confirms that DTI is free to publish and that all the 3 rd party
ownership rights (on any contained data and /or publications) have been considered
and appropriately cleared for publication purposes.

Relinquishment Report Licence P. 1155. Blocks 113/21a &113/22a