Relinquishment Report for Licence P1301 (Block 12/17b) Licence Information Licence Number Licence Round Licence Type Block Number (s) Operator Partners Work Programme / Status P1301 23rd Round Traditional Production Licence 12/17b Lundin Heather Ltd (30%) Revus Energy UK Ltd (35%) Britcana Energy Limited (35%) 12/17b-1 was drilled to 5678’ MDRTE (2385 m MDRTE); fulfilling the Drill or Drop commitment depth of 2135m / P&A. Fig 1: Block 12/17b Relinquishment Area Map Block 12/17b is bounded by straight lines joining the following coordinates: 1) 2) 3) 4) 5) 58° 25’ 00.000” N 58° 25’ 00.000” N 58° 20’ 00.000” N 58° 20’ 00.000” N 58° 25’ 00.000” N 2° 44’ 00.000” W 2° 36’ 00.000” W 2° 36’ 00.000” W 2° 44’ 00.000” W 2° 44’ 00.000” W These coordinates are specified using the “European Datum 1950”. Licence Work Programme Summary P1301 was awarded for a 4 year term, from 22 December 2005, with a 2+2 year drill or drop option. Having committed to drill a well and subsequently drilled dry well 12/17b-1, the P1301 partnership has elected to relinquish the block early. Exploration Activity Two superimposed objectives, collectively termed “Ridgewood”, were selected for drilling by the P1301 partnership. The exploration programme was designed to test a tilted fault structure and the primary target was Jurassic sands of Volgian age. A secondary, deeper objective was the deeper Middle Jurassic Beatrice sands of Callovian age. The Ridgewood prospect is located in the Caithness Basin in the Inner Moray Firth, some 15 miles east of Wick (See fig 1). Beatrice is the closest producing field, which produces from the Callovian Beatrice sandstone (shallow marine facies). In addition there are several smaller discoveries and wells with oil shows in the area. The closest offset wells are 12/16-1, 12/16-2, 12/18-1 and 12/22-3. These wells were plugged and abandoned as dry holes, although the 12/18-1 well encountered massive water bearing sandstones. Note: The 12/18-1 well was deviated up to 50 deg. Ridgewood is interpreted as a four way dip fault related roll over structure (See fig 2) with the maximum closure, at Volgian level in Upper Jurassic, measured as 1236 acres. The Volgian sandstone was deposited as turbidites from a provenance area to the north and potential reservoir sand is related to strong amplitudes. The prospect has a bounding fault dipping to the south-west and a vertical well was designed to cross this fault at a depth of 2046’ MD BRT (-1896ft TVDss). Analysis of the digital data from the site survey interpreted that no drilling hazard is related to this fault. Fig 2: Ridgewood Volgian Structure Map The structure is related to a post depositional inversion of an Upper Jurassic EW oriented basin (See fig 3). The structure reduces in size towards the base of the Upper Jurassic sequence and at the Beatrice level it depends on up dip fault seal. The Beatrice Sandstone is a shallow marine to deltaic facies and the source rock is assumed to be Devonian formation(s). Fig 3: Block 12/17b Location on Regional Structure Map Seismic Interpretation The prospect was depth converted (See Fig 4) using stacking velocities and well 12/22-3 for correlation. There are large lateral velocity changes in the Lower Cretaceous overburden that introduce uncertainties in the depth prognosis. The structure is however defined on good quality 2D seismic data and the coverage was sufficient to define a drillable structure and position a well. Fig 4: 2D Seismic line over the Ridgewood Prospect Drilling Summary Operations on 12/17b-1 with the GlobalSanta Fe Galaxy 2 jack up rig commenced 18 December 2007. The definitive final location was Latitude: Longitude: RTE-MSL RTE-seabed 58° 23’ 51.609” N 02° 38’ 15.811” W 153ft, Water depth 356ft, Leg Penetrations 6 473 190.27m 521 176.84m 203ft, 6ft The well was spudded at 03.00 hours 21 December 2007. 36” x 26” hole was drilled to 602ft (246ft bml) and the 30" conductor was set and cemented at 597ft (241ft bml). 17.1/2" hole section was drilled near vertically to 2478 ft MD and 133/8" casing was run and set at 2459 ft MD. 12-1/4" hole was drilled near vertically to 5,678 ft MDRTE reaching TD with an average ROP of 17.4ft/hr on 04 January 2008. P&A of the well commenced at was completed at 14.30 hrs 07 January 2008. G&G Results The Ridgewood structure was dry; the reason for failure is interpreted to be the absence of a sealing mechanism. Water Saturations within the 1600ft objective interval were reported at 94% with a net to gross of 43% and 18.5% porosity. Prospectivity & lead Remaining hydrocarbon potential has been identified in the deeper Callovian prospect. This prospect was considered uneconomic unless the shallower Volgian sand proved to be hydrocarbon bearing. In the absence of a Volgian hydrocarbon column the well was plugged and abandoned as a dry hole, without drilling to the Callovian secondary objective. Clearance P1301 partners give approval to BERR to publish material contained within this report.