Cairn Energy : Competent Persons Report

Project Madero, Competent Person's Report

Prepared for

Cairn Energy Plc

10 June 2021

			Table of Contents
Introduction.........................................................................................................................	1
Summary	.............................................................................................................................	2
Discussion.........................................................................................................................	10
1	Matruh Basin .............................................................................................................	10
	1.1	Regional Geology ...............................................................................................................	10
	1.2	Obaiyed...............................................................................................................................	11
		1.2.1	Asset Description......................................................................................................	11
		1.2.2	HIIP...........................................................................................................................	15
		1.2.3	Asset Streams ..........................................................................................................	16
		1.2.4	Historical Field Performance ....................................................................................	17
		1.2.5	Field Development Plan ...........................................................................................	19
		1.2.6	Production Forecasts................................................................................................	23
		1.2.7	Contingent Resources ..............................................................................................	27
	1.3	North Matruh (NM) ..............................................................................................................	28
		1.3.1	Asset Description......................................................................................................	28
		1.3.2	HIIP...........................................................................................................................	31
		1.3.3	Asset Streams ..........................................................................................................	33
		1.3.4	Historical Field Performance ....................................................................................	33
		1.3.5	Field Development Plan ...........................................................................................	33
		1.3.6	Production Forecast .................................................................................................	33
		1.3.7	Contingent Resources ..............................................................................................	37
	1.4	North Umbaraka..................................................................................................................	37
		1.4.1	Asset Description......................................................................................................	37
		1.4.2	HIIP...........................................................................................................................	40
		1.4.3	Asset Streams ..........................................................................................................	40
		1.4.4	Historical Field Performance ....................................................................................	41
		1.4.5 NUMB 3 Well Test Results.......................................................................................	41
		1.4.6	Field Development Plan ...........................................................................................	42
		1.4.7	Contingent Resources ..............................................................................................	43
2	Abu Gharadig Basin .................................................................................................	44
	2.1	Regional Geology ...............................................................................................................	44
	2.2	BED 2 Cluster .....................................................................................................................	45
		2.2.1	Asset Description......................................................................................................	45
		2.2.2	HIIP...........................................................................................................................	49
		2.2.1	Asset Streams ..........................................................................................................	53
		2.2.2	Historical Field Performance ....................................................................................	54
		2.2.3	Field Development Plan ...........................................................................................	56
		2.2.4	Production Forecasts................................................................................................	58
		2.2.5	Contingent Resources ..............................................................................................	62
	2.3	BED 3 Cluster .....................................................................................................................	63
		2.3.1	Asset Description......................................................................................................	63
		2.3.2	HIIP...........................................................................................................................	66

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10 June 2021

		2.3.3	Asset Streams ..........................................................................................................	67
		2.3.4	Historical Field Performance ....................................................................................	68
		2.3.5	Field Development Plan ...........................................................................................	72
		2.3.6	Production Forecasts................................................................................................	75
		2.3.7	Contingent Resources ..............................................................................................	79
	2.4	BED 19/20 Cluster ..............................................................................................................	79
		2.4.1	Asset Description......................................................................................................	79
		2.4.2	HIIP...........................................................................................................................	81
		2.4.3	Asset Streams ..........................................................................................................	81
	2.5	Sitra.....................................................................................................................................	82
		2.5.1	Asset Description......................................................................................................	82
		2.5.2	HIIP...........................................................................................................................	84
		2.5.3	Asset Streams ..........................................................................................................	85
		2.5.4	Historical Field Performance ....................................................................................	86
		2.5.5	Field Development Plan ...........................................................................................	88
		2.5.6	Production Forecasts................................................................................................	91
		2.5.7	Contingent Resources ..............................................................................................	94
	2.6	Alam El Shawish West (AESW)..........................................................................................	94
		2.6.1	Asset Description......................................................................................................	94
		2.6.2	HIIP.........................................................................................................................	102
		2.6.3	Asset Streams ........................................................................................................	104
		2.6.4	Historical Field Performance ..................................................................................	105
		2.6.5	Field Development Plan .........................................................................................	110
		2.6.6	Production Forecasts..............................................................................................	112
		2.6.7	Contingent Resources ............................................................................................	116
	2.7	North Alam El Shawish (NAES)........................................................................................	116
		2.7.1	Asset Description....................................................................................................	116
		2.7.2	HIIP.........................................................................................................................	119
		2.7.3	Asset Streams ........................................................................................................	120
		2.7.4	Historical Field Performance ..................................................................................	121
		2.7.5	Field Development Plan .........................................................................................	121
		2.7.6	Production Forecasts..............................................................................................	121
		2.7.7	Contingent Resources ............................................................................................	123
	2.8	North East Abu Gharadig Extension and Tiba (NEAG Ext and NEAG Tiba) ...................	124
		2.8.1	Asset Description....................................................................................................	124
		2.8.2	HIIP.........................................................................................................................	131
		2.8.3	Asset Streams ........................................................................................................	133
		2.8.4	Historical Field Performance ..................................................................................	135
		2.8.5	Field Development Plan .........................................................................................	140
		2.8.6	Production Forecasts..............................................................................................	142
		2.8.7	Contingent Resources ............................................................................................	146
3	Capital Expenditure (CAPEX) and Operating Expenditure (OPEX) .....................	147
	3.1	CAPEX Program ...............................................................................................................	147
	3.2	Well and Hook-up Costs ...................................................................................................	147
	3.3	Facilities and Infrastructure Projects CAPEX ...................................................................	149
	3.4	Current Development Projects Status ..............................................................................	149
	3.5	Planned Future Development Projects .............................................................................	150

Cairn Energy Plc

10 June 2021

	3.5.1	Obaiyed Concession Area Projects	........................................................................ 150
	3.5.2	NM Concession Area Projects ...............................................................................	150
	3.5.3	BED 3 Projects .......................................................................................................	150
	3.5.4	BED 2 Projects .......................................................................................................	151
	3.5.5	AESW Projects .......................................................................................................	151
	3.5.6	NEAG Projects .......................................................................................................	151
3.6	Asset Integrity and HSSE CAPEX ....................................................................................	152
3.7	OPEX	................................................................................................................................	154
4 Economic Assessment...........................................................................................	156
4.1	Price Assumptions ............................................................................................................	156
4.2	Fiscal Assumptions ...........................................................................................................	157
4.3	Results ..............................................................................................................................	158
4.4	Sensitivity Analysis ...........................................................................................................	159

Basis of Opinion .............................................................................................................	161
Qualifications ..................................................................................................................	163

List of Figures

Figure 1: Structural Elements of Matruh Basin .....................................................................................	10
Figure 2: Matruh Basin Stratigraphy .....................................................................................................	11
Figure 3: Obaiyed Field. Top Lower Safa Formation Depth Structure (m) ...........................................	12
Figure 4: Lower Safa Formation, Representative Reservoir Section....................................................	13
Figure 5: Obaiyed Field. Lower Safa Formation Core Reservoir Area .................................................	14
Figure 6: Historical Production, Obaiyed Main......................................................................................	18
Figure 7: Historical Production, Obaiyed J14 Area ...............................................................................	18
Figure 8: Lower Safa Formation, Future Development Locations ........................................................	20
Figure 9: Upper Safa Formation, Future Development Locations ........................................................	22
Figure 10: Best Case Gas Production Forecast, Obaiyed....................................................................	25
Figure 11: Best Case Condensate Production Forecast, Obaiyed .......................................................	25
Figure 12: Gas Production Forecasts, Obaiyed....................................................................................	26
Figure 13: Condensate Production Forecasts, Obaiyed .......................................................................	27
Figure 14: NM (Teen) Discovery. Top Upper Safa Formation Depth Structure (m), showing
Proposed Development Locations .........................................................................................	29
Figure 15: NM (Teen) Discovery. Representative Reservoir Section ...................................................	30
Figure 16: NM (Teen) Discovery. Lower Safa Formation Depth Structure and Areas included in
Volume Assessment...............................................................................................................	32
Figure 17: Gas Production Forecasts, NM............................................................................................	36
Figure 18: Condensate Production Forecasts, NM...............................................................................	36
Figure 19: NUMB-1,NUMB-2: Top Khatatba Formation, Depth Structure (m) ....................................	38
Figure 20: NUMB-C,NUMB-J2ext: Top Khatatba Formation, Depth Structure (m) .............................	39
Figure 21: Historical Gas Production Rate and CGR for NUMB-2 .......................................................	41
Figure 22: NUMB Gas Production Forecasts........................................................................................	42
Figure 23: Abu Gharadig Basin Stratigraphy ........................................................................................	45
Figure 24: BED 2 Cluster Location Map ...............................................................................................	46
Figure 25: BED 2 Top Bahariya Depth Structure Map (m) and Modelled Sand Distribution Upper
Bahariya 3 Zone .....................................................................................................................	47
Figure 26: BED 2 C6 Top Abu Roash E Depth Structure Map (m).......................................................	48

Cairn Energy Plc

10 June 2021

Figure 27: BED 15 C1-1. Comparison of Core and Wireline Gamma Log, Upper Bahariya
Formation ...............................................................................................................................	51
Figure 28: BED 2-8: Bahariya Formation Reservoir Section ................................................................	52
Figure 29: Historical Gas and CGR Production Rates, BED 2 (Bahariya) ...........................................	54
Figure 30: Historical Oil Production Rate, BED 2 (C6) .........................................................................	55
Figure 31: Historical Gas and Water Production Rates, BED 16 Kharita and Bahariya Reservoirs ....	55
Figure 32: Historical Oil Production Rate, BED 16 ...............................................................................	56
Figure 33: Best Case Gas Production Forecasts, BED 2 Cluster.........................................................	60
Figure 34: Best Case Oil and Condensate Production Forecasts, BED 2 Cluster ...............................	60
Figure 35: Gas Production Forecasts, BED 2 Cluster ..........................................................................	61
Figure 36: Oil and Condensate Production Forecasts, BED 2 Cluster .................................................	61
Figure 37: BED 3 Cluster Location Map ...............................................................................................	63
Figure 38: BED 3 Kharita Formation and Abu Roash C Reservoir, Depth Structure Maps (m) ...........	64
Figure 39: Historical Gas Production Rate and CGR, BED 3 (Kharita and Bahariya)..........................	69
Figure 40: Historical Oil Production Rate and GOR, BED 3 (ARC and ARG) ......................................	69
Figure 41: Historical Gas Production Rate and CGR, BED 15 (Kharita) ..............................................	70
Figure 42: Historical Oil Production Rates and Water Cut, BED 15 (ARC) ..........................................	70
Figure 43: Historical Oil Production Rates and Water Cut, BED 18 (ARG) ..........................................	71
Figure 44: Historical Gas Production Rates BED 18 (ARG) .................................................................	71
Figure 45: BED 3 Abu Roash Drilling Locations ...................................................................................	73
Figure 46: Best Case Gas Production Forecasts, BED 3 Cluster.........................................................	77
Figure 47: Best Case Oil and Condensate Production Forecasts, BED 3 Cluster ...............................	77
Figure 48: Gas Production Forecasts, BED 3 Cluster ..........................................................................	78
Figure 49: Oil and Condensate Production Forecasts, BED 3 Cluster .................................................	78
Figure 50: BED 19/20 Cluster Location Map ........................................................................................	80
Figure 51: Sitra Fields Location Map ....................................................................................................	83
Figure 52: Historical Oil Production Rate and GOR, Sitra 8 .................................................................	87
Figure 53: Historical Oil and Gas Production Rate, Sitra North............................................................	87
Figure 54: Sitra 8: Proposed Well Locations, Abu Roash G Zone........................................................	89
Figure 55: North Sitra: Proposed Well Locations..................................................................................	90
Figure 56: Best Case Gas Production Forecast, Sitra ..........................................................................	92
Figure 57: Best Case Oil and Condensate Production Forecast, Sitra ................................................	92
Figure 58: Gas Production Forecasts, Sitra..........................................................................................	93
Figure 59: Oil and Condensate Production Forecasts, Sitra ................................................................	94
Figure 60: AESW Location Map............................................................................................................	95
Figure 61: Assil Structural Configuration - Bahariya Reservoir Level ..................................................	96
Figure 62: Al Karam Structure Map - Kharita Reservoir Level.............................................................	97
Figure 63: Bahga Main Field Location Map - Abu Roash-G Reservoir Level ......................................	98
Figure 64: Bahga SE Field Location Map - Bahariya Reservoir Level.................................................	98
Figure 65: Bahga C101 Field Location Map - Abu Roash-G Reservoir Level .....................................	99
Figure 66: Bahga C98 Field Location Map - Abu Roash-G Reservoir Level .......................................	99
Figure 67: Al Magd and Al Magd C86 Fields - Abu Roash-G Reservoir Level ..................................	100
Figure 68: Al Barq Field - Abu Roash-G Reservoir Level ..................................................................	100
Figure 69: Historical Gas Production Rate and CGR, Assil (Kharita) .................................................	106
Figure 70: Historical Oil Production Rate, Assil ..................................................................................	106
Figure 71: Historical Gas Production Rate and CGR, Al Karam.........................................................	107
Figure 72: Historical Oil Production Rates, Al Karam .........................................................................	107
Figure 73: Historical Oil Production Rates, Bahga (Main, SE and C101)...........................................	108
Figure 74: Historical Oil Production Rates and GOR, Al Magd ..........................................................	109
Figure 75: Historical Oil Production Rates and GOR, Al Barq............................................................	109
Figure 76: Best Case Gas Production Forecast, AESW.....................................................................	114
Figure 77: Best Case Oil and Condensate Production Forecast, AESW ...........................................	114
Figure 78: Gas Production Forecasts, AESW.....................................................................................	115
Figure 79: Oil and Condensate Production Forecasts, AESW ...........................................................	115
Figure 80: NAES Concession - Location Map....................................................................................	117

Cairn Energy Plc

10 June 2021