Prospects & Properties

Friday, September 4, 2009 • Volume 20, No. 30 MARKET ALERT PROSPECTS & PROPERTIES Serving the Oil & Gas Industry with Opportunities, News & Insight

Big, deep find Behind every deep well is a BP finds 3 billion barrels 35,055 feet below the sea bigger bet on leases- Earlier this week, London-based BP announced a giant oil discovery at its Tiber Even before the news of the Tiber well, Prospect in the deepwater Gulf of Mexico. Located 250 miles south southeast of BP was planning to expand its efforts in the Houston in Keathley Canyon Block 102, the find is deep in water (4,132 feet); deep in Gulf. The company was the high bidder depth (~35,055 feet); deep in cash ($200-$250 MM commitment) and even ($28.1 million and $5.1 million, respectively) deeper in myth. According to BP, in August during a government auction of QuickLook the discovery well is the deepest leases on a pair of blocks in Keathley 1. BP follows Kaskida with Tiber oil well ever drilled, bypassing Chevron’s Canyon, the same area that includes Tiber, 2. Big find for Gulf’s biggest player Knotty Head prospect drilled to 34,189 ft. according to the MMS. back in 2005 (currently suspended). North Central Keathley 3. Lower Tertiary play offering Canyon has generated quite a majors, major opportunities tiber appears to be as big as Kaskida bit of buzz in recent lease sales. BP 4. Find, explains recent offshore (3.0 BB) and is just one of dozens of offered the highest bid in Western Gulf lease sale results discoveries in the Gulf, once pronounced Lease Sale 210 last month of $28.1 million 5. Even at $70 oil, Tiber could yield the “Dead sea.” for Keathley Canyon Block 96, about 18 $70 billion in revenue miles west of Tiber. Interestingly, Chevron 6. The deal is deep and large,but so As for BP, Tiber is the major’s made a bid for the same block of $14 mil- is the task to produce it second discovery in three years (follow- lion, and ConocoPhillips’ threw 7. Development still fraught with risk ing Kaskida) in the Gulf’s Lower Tertiary in $7.3 million. 8. Good news for Devon w/ their L.T. Trend and the 18th overall discovery to date It seems obvious now that assets on the block where technology, drive and ambition are BP’s ideas for Tiber were a big part of its stimulating major oil company interest. BP’s interest in various blocks. BP also shelled Lower Tertiary effort follows Chevron’s 2006 out $5 million for Keathley Canyon Block efforts that discovered Jack; Shell’s work at Perdido (Great White, Silvertip, 180, a few miles from where Petrobras Tobago) and Anadarko’s recent announcements at Shenandoah. offered $9 million for Keathley Canyon 223. Read any map markings in the Lower Tertiary and the finds read like “ski runs” The buzz behind the Keathley including Buckskin, Jack, Cascade, Chinook, Stones, St. Malo and Trident—and with more to Canyon and the “Four Corners” region is come as the majors balance the Gulf of Mexico potential against fickle foreign opportunities. not new among producers. At last Work & time— year’s Lease Sale 207 major oil compa- It’s clear BP recognizes there is much work left to do to further define Tiber’s Lower nies competed for several properties in Tertiary potential, including natural concerns over reservoir

July 15, 2009 • Volume 20, No. 6 all those areas. BP claimed Keathley –e&p quality, oil grade and reserve recovery rates, (5-35% recovery?). PROSPECTS& PROPERTIES A current compilation of prospects, properties, overrid PLS, Inc., P.O. Box 4987 es for sale andpromotional insight. Houston, TX 77210 Canyon 102 in the August 2003 Western

PLS discusses Pyrenees & Winter discoveries With New

take “time”. One company press release noted that

Petrobras in 2008 while ConocoPhillips

This E&P Alert is in support

Kaskida and Tiber’s “material discoveries” and BP’s “indus-

joined the group in 2009.

of PLS’ glossy newspaper

. .

try leading acreage position” (200 leases) should support

Prospects & Properties

a growth plan in the Deepwater Gulf of Mexico into the

published on a regular

second half of the next decade (like using the word basis. For a copy of PLS’

Helping you transform

full P&P report go to

“decade” wasn’t enough to put the development time

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frame in perspective). Continues on page 2 tax liability into

Below the line: working cash flow. BP’s announcement of the Tiber find is worthy of pause. On the technical front, it is the industry’s deepest oil well ever drilled – 35,055 feet and an extension/continuation of the prolific Lower Tertiary trend in the deep Gulf of Mexico. The TD is a stunning number! For those of curious minds, the deepest “hole” ever drilled is in Russia, the Kola Accruit, LLC Superdeep Borehole SG3 (halted in 1994), which TD’d at 40,226 feet – a stratigraphic/ scientific effort which drilled a 9” hole and took 24 years! The Tiber find is a strong 866.397.1031 testament to the payoff to be made by the combination of the right rocks, the right www.accruit.com people and the right technology. Transocean deserves credit for the drilling of the [email protected] deepest oil well – via its 5th Generation, dynamically positioned semi “Deepwater The TOTAL 1031 Exchange Solution Horizon”. [email protected] www.plsx.com PROSPECTS & PROPERTIES Friday, September 4, 2009 2

Big, deep find ContinueD from page 1 But forget “time”- most analysts seem optimistic, pointing out that BP’s Tiber, (named for Italy’s third largest river) is actually halfway between Perdido (150 mi West of Brownsville, TX) and Shenandoah (300 miles South Baton Rouge) and way WNW of Buckskin, Cascade & Jack. By location alone the Tiber extends the play’s geography and geology and should perk more press, more promotion and more interest by tiber represents the best of what the locals and internationals including the industry's does by overcoming seismic & Brazilians, Norwegians and French who drilling obstacles, water depth, deep are already surfing around. drilling, high pressures, hot temperatures and low oil viscosity. As for other new news— Other pundits picked up that there could be more area-wide information com- Don’t Fumble This Date‒ ing down the pipe with Shell’s Perdido’s and Petrobras’s Chinook coming online. On the M&A front, Devon is also running data rooms to sell part or all of its interest in 12/02/2009 Jack, St Malo, and Cascade which is, @ Hilton Americas Downtown, Houston, TX the Gulf offers a home to u.s. companies under PetroBras’s operatorship, currently locked out of some of the world's most drilling the Keathley Canyon #1 which It’s that time again, Playmakers Symposium prolific opportunities. should touch down in September. and E&P Summit is kicking-off another Devon’s justification to market its L.T. action-packed event. On Tuesday, assets is telling because the company obviously doesn’t feel like it can keep up in October 20, 2009 E&P executives will today’s capital markets as the Lower Tertiary hits another gear. congregate at the Hilton Americas, to discuss opportunities and Even the MMS is excited, projecting that the Lower Tertiary could help increase Houston, TX future objectives. By attending this event the Gulf's production to 1.88 MMBOED up from last year's 1.14 MMBOED and 25% you will hear from our who's who of more than the Gulf’s peak volumes (1.56 MMBOED) in 2003. Certainly the Gulf con- faculty including: tinues to reinvent itself and has come a long way since Kerr McGee drilled the first well “out of sight” back in the 1940s. Participating Speakers So is Tiber a reason to celebrate? On one hand, the announcement is a great example of what new technology can yield even in trying economic times. It’s also • Bobby Tudor‒ Chairman & CEO, Tudor Pickering Holt & Co. LLC obviously good news for BP and a return on investment. So far BP produces 400,000 • Michael J. Rosinski‒ EVP, CFO & Treasurer, BOEPD in the Gulf but could hit 650,000 BOEPD if all goes well out there; but then Rosetta Resources Inc. again, BP needs these types of results, what with a current capital commitment of $6 • Nikolai Lyngo‒ Head of International billion budgeted for the U.S. Business Development North, StatoilHydro Clearly the majors see the Gulf as a footprint for further exploration and exploitation. USA E&P Just a few months ago, Exxon returned to the Shelf plopping down cash for some bids • John Weinzierl‒ Managing Director & and paid ~$8.6 million for rights to explore 17 blocks in the latest auction. But Exxon is also Head, Houston Office, Natural Gas Partners ‒ President, leaning on heavier exploration in places like Qatar. Continues on page 4 • Frank A. Lodzinski GeoResources, Inc. • Lynn A. Peterson‒ President & CEO, Gulf of Mexico Paleogene- Major Industry Discoveries to Date Kodiak Oil & Gas Corp. • Danny Weingeist‒ Co-Managing Partner, Kayne Anderson Energy Funds • Scott Schaeffer‒ Senior Tax Manager, E&P, BP • Adam Dalmy‒ VP, Corp. Trust & Escrow Services, Wells Fargo • Brent Abrahm‒ President & CEO, Accruit • Jeffrey Scofield‒ Director, Lime Rock Partners Tiber This is an event you don’t want to fumble! Sign Up Now! Contact Samara Silverman at [email protected] or call (713) 650-1212.

GULF OF MEXICO GULF OF MEXICO GULF OF MEXICO GALVESTON BAY OVERRIDE TEXAS STATE WATERS PROSPECTS GULF OF MEXICO SHELF PROPERTY TRINITY BAY & POINT BOLIVAR 600-Acres. Shallow State Waters. 10-Gas Wells. 1-ShutIn. FISHERS REEF, RED FISH REEF FIELDS OFFSHORE CALHOUN CO. MAIN PASS & MOBILE AREAS Stacked Miocene & Frio Production. Targeting Miocene & Frio Sands. MIOCENE All Of Seller’s OCS Leases Are HBP. Total Depth: 8,000 - 13,000 ft. Leased, Mapped & Ready To Apply FRIO Varying Working Interests. 3-D Seismically Defined. ORRI —-For Permit To Drill. OPERATED & NonOperated WI. ~2.75 5.00%-8.00% ORRI For Sale. Est Reserves: 8.8 MMBO & 228 BCF Net Production: ~2.75 MMCFD MMCFD Gross Production: 22 BOPD & 90 MCFD DV 1205 Q1 Cumm’d Production: 185.33 MMCF Pre Hurricane Cash Flow: $55,000/Mn May 1, 2009 Effective Date. Operator— Completed Recent Workovers GOM PROSPECT OFFERING AGENT HAS MORE INFORMATION RR 4239 1-Prospect. 5,760-Acres. PP 2997 Targeting Siph D. 9,550-10,110 Ft. TEXAS STATE WATERS GAS FIELD Analogs Cumm’d 25 MBO & 4.0 BCF. GOM GULF OF MEXICO PROSPECT 1-Offshore Field. 3-Shut-In Wells. 2,160-Net Acres. Estimated Reserves: 13.3 BCFE SHELF WEST CAMERON AREA GALVESTON 307-L FIELD DHC: $5,100,000 Multiple Objectives: Chris I - Rob L. Shut-Ins Awaiting Platform/Pipeline. CONTACT SELLER FOR MORE INFO Block 146: 11,087 Ft. Block 147: 12,985 Ft. Multiple Rob C & Rob L Targets. DV 6343 50% Working Interest; 41% NRI. MULTIPAY Also Targeting Lower Cris 54. Rob L Only - Est Reserves: 53 BCF. 87.5% OPERATED WI; 77.5%-80% NRI GULF OF MEXICO ASSET SALE Completion: ~$18,600,000/Block Wells Flowed: 2.5 - 3.2 MMCFD STATE 56,900-Net Acres. CONTACT FOR INFORMATION ——PLUS ~5-13 BCPD & 32 BWPD WATERS Significant Upside Potential Remaining. DV 5675 Total Proved Reserves: 27 BCF Behing Pipe Recompletion Opportunities. Net PV10 Value: $73,000,000 Additional Exploration Prospects. PP 2528SI 75-100% OPERATED WI 16.0 Net Production: 16 MMCFD MMCFD NGP Capital Net Cash Flow: $3,400,000/Mn Resources Company Total Proved Reserves: 29.9 BCF www.ngpcrc.com AGENT WANTS OFFERS SEPT 24 www.englehartenergy.com PP 3757DV

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As for other new news— ContinueD from page 2 GULF OF MEXICO BP even has big deepwater plans in Egypt and Libya which draws a correlation that the Gulf’s technology and experience is transportable. In other words, Tiber OFFSHORE LOUISIANA PROSPECT shows that the Gulf is one of the world's most promising exploration regions. But the LOWER MIOCENE OPERC TREND potential of the play also underscores the technology and commitment it will take to Tex W, Cris I, & Cib Op Zones. Depth: 17,000-19,000 Ft. OFFSHORE LA get the oil out of the ground. It’s also important to keep in perspective how much oil 50% OPERATED WI Available. BP can get. Estimates range from only 10-30% of the estimated 3.0 billion barrels so Prolific Operc Structure Produced 746 BCFE. that leaves 300 MMBOE to 1,000 MMBOE possible. Luckily at $70 oil that’s $30-$70 Total Est Reserves: 200 BCFE billion in revenue and a reasonable rate of return! Right? DV 5960 But what does it all mean for the rest of us?— OFFSHORE LOUISIANA PROSPECT For that we turn to Keith Johnson’s blog at the Wall Street Journal; he noted all of BP’s 5,000-Acres. EAST CAMERON 25 big results might ironically be termed, "only treading water". He gets there by contrasting Marg A Sands (5-7,10-11) the world's “thirst for oil” with the "rapid decline of most GOM fields” (including Pemex's Proposed Depth: 16,800 Ft. Cantarell Field). Johnson then concludes- all good news aside- "that new discoveries like 100% OPERATED WI; 83.3% NRI OFFSHORE Tiber might only serve to brake the decline, rather than fatten the world's oil supplies." Analogs Produce 14-68 BCFE. Est Reserves: 699 MBO & 90.8 BCF Footnotes: CALL LANDMAN FOR UPDATED AFE • BP's partners include Petrobras (20%) and ConocoPhillips (18%) DV 5710 • Chevron has Block 147 to the south and east and Block 100 to the West in Keathley Canyon TEXAS GULF COAST PROSPECT • Shell, Anadarko & Murphy are also in the area GULF OF MEXICO - SHELF • Chevron's Knotty Head prospect was previously drilled to 34,189 feet back in 2005. Shelf Edge. 15,000 Ft. Chevron suspended activities in Knotty Head in 2008. SubSurface, GeoChemistry, GeoPhysics SHELF & Hydrocarbon Microseepage Surveying EDGE • BP used Transocean rig “Deepwater Horizon” capable of drilling in water up to 10,000 ft. deep 100% OPERATED WI FOR SALE • Chevron has a Transocean rig that is capable of drilling in 12,000 ft of water and to DV 2301 depths of 40,000 feet. c • BP is the largest producer in Gulf of Mexico with net production of over 400,000 BOEPD. • BP is ushering nine Gulf of Mexico projects including: Atlantis Phase 2, Tubular Bells, Kodiak, Freedom, Kaskida, Isabela, Santa Cruz, Mad Dog tiebacks and Great White. • BP deepwater finds: Pompano, 1994; Marlin, 2000; Horn Mountain, 2002; Na Kika, 2003; Holstein, 2004; Mad Dog, 2005, Atlantis, 2007, Thunder Horse 2008. PROSPECTS & PROPERTIES • Kaskida, located at KC 292 about 50 miles southeast of Tiber, encountered a substantial 800 net feet of hydrocarbon-bearing sands. PLS, Inc. • BP (and BHP) is planning a second floating production platform at Mad Dog field after P.O. Box 4987, Houston, TX 77210 hitting more pay. BP hit 280 ft of pay in Mad Dog South 826-5 appraisal well. (5,100 ft Phone: (713) 650-1212 water). Mad Dog has encountered a layer of tar over the field Fax: (713) 658-1922 Website: www.plsx.com To obtain additional information on properties Gulf of Mexico Production Revival for sale in this Prospects & Properties MarketAlert, please contact our listing dept: (713) 650-1212 or 2000 Undiscovered Resources by fax: (713) 658-1922 with the property number. Industry Announced Discoveries Please note that only clients are able to receive 1800 MMS Deepw ater Projection additional information. Full Potential Industry Deepw ater Projection 1600 Scenario MarketAlerts are published through fax and email Deepw ater (historical) and are sister products to PLS’ Prospects & Properties 1400 MMS Shallow -w ater Projection newspaper, A&D Transactions, CapitalMarkets & Shallow -w ater (historical) MidstreamNews. All registered trade products of PLS. 1200 PLS has been in business since 1987. In addition PLS’ rr els/Day 1000 (fee and retainer based) marketing arm has handled over 700 projects worth ~$2.0 billion. You may direct 800 inquires to Richard Martin [email protected] or Committed access www.plsx.com for more information. Scenario

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