Exploration

The Company contracted the MV Polarcus Asima to carry out its 3D seismic programme, which commenced in January 2011 and was completed in May. 3D data was acquired over the entire area of the licence, as well as in open acreage to the north of the licence. Extending the 3D programme into open acreage to the north will provide 3D coverage of the Johnson gas discovery. It will also ensure that any prospects that might extend beyond the licence boundary have full 3D coverage, and it has provided a low cost opportunity to look for additional prospectivity in the northerly continuation of the basin.

Seismic interpretation of the 3D data is now well advanced. The Company has confirmed the six structural prospects identified from 2D data to be robust closures and has identified 22 new prospects which were not apparent prior to the 3D data being acquired. High-grading of these prospects and the selection of optimum drilling locations is currently underway. Ranking and de-risking of prospects has been aided by the results of the recent drilling undertaken in the adjoining licences

The Directors believe that the encouraging results from the drilling of Sea Lion materially de-risk the likely outcome of drilling on the Company’s licence

The North Falkland Basin

One of the principal features of the northern part of the North Falkland Basin in the vicinity of licence PL001 is the presence of a major delta system that has prograded southwards across the licence area, but does not appear to extend beyond the southern boundary of the licence. This delta is at least age-equivalent to the organic rich oil source rock, the presence of which can be mapped with improved confidence across the licence area. The 3D data quality over the delta is excellent and the Company has been able to use that data to identify new stratigraphic prospects in what is expected to be a sand-prone deltaic sequence.

A graphic representation of the delta system as it builds and extends southwards across Licence PL001 with time during the early Cretaceous post-rift period, and based upon the interpretation of the 3D seismic data, is shown in the below diagrams. Also shown is a schematic East-West cross section of the basin across the licence showing the variety of potential play types developed and the expected rich sand content of the section associated with the delta system

Prospects

A selection of prospects is presented in this section to illustrate the variety of play types at different stratigraphic levels and their relationship with the oil source rock interval. The full inventory of prospects can be reviewed in the Competent persons Report.

All prospect resource numbers and success factors are taken from the Senergy CPR, dated 11th October 2011. Resource totals are arithmetically summed and do not take account of prospect dependencies where elements of trap, reservoir or charge in one prospect impact upon the potential of other prospects. Any dependencies are discussed in more detail in the prospect description sections of the Competent Person's Report.

Johnson Gas Discovery (Contingent Resource)

The Johnson contingent gas resource, discovered by Shell in well 14/5-1 in a water depth of approximately 500m, overlaps the Company's licence together with Rockhopper's adjacent licence. In the Company's judgement, approximately 30% of the area of the Johnson structure extends into Licence PL001. RPS Energy has classified the Johnson gas discovery as a Contingent Gas Resource in a Competent Persons Report prepared for Rockhopper Exploration. This follows extensive re-interpretation by Rockhopper of well 14/5-1A and the 3D seismic collected by them in 2007.

Contingent Gas Resources (recoverable) as identified by RPS Energy within the Johnson structure are:-

The main remaining contingencies identified in the Rockhopper CPR are further delineating the physical extent of the structure and proving a higher quality reservoir.

Through a combination of the proprietary 3D seismic acquired by the Company and the trading of this data for Rockhopper’s 3D data, the Company now has 3D data coverage over the Johnson discovery. The Company plans to make its own assessment of this data and work on this will continue into 2012.