PRESENTATIONFEBRUARY20111

Agenda1. REGIONALREVIEW

2. WELLRESULTS

3. EASTFLANKPLAYFAIRWAY

4. PROSPECTSandLEADS

5. 3DSEISMICSURVEY

6. NINKYPROSPECT

7. FUNDING

8. ECONOMICS

9. CONCLUSIONS

SubsurfacetechnicalconsultancyisprovidedtoDesirePetroleumplcbySenergy(GB)Limited

2

3

GeneralisedStratigraphyandWellTargets

4

5km

TheLizFanislocatedatthebaseofthesourcerockintervalandthesandisderivedfromthewest.Lizencounteredgasandcondensateinthedeepersyn‐riftsequence.TheRachelFansareinter‐beddedwiththesourcerockandoccuratmultiplelevels.TheRachelFansarepartoftheEastFlankPlayfairwayandaresourcedfromtheeast.

Ninky HighF1 Sequence

F2 Sequence

F3 Sequence

Barremian Oil Source Interval

Goodqualitysands

Thinner,poorqualitysands

Poorqualitysands/volcanics

Syn-Rift Sands/Shales

SW NE

3000m -

2500m -

2000m -

NorthFalklandBasinPlays

Rachel Fans

Top Oil Window (2400m)

Wet Gas

Dry gas

14/19‐1(Liz)14/15‐1,1Z(Rachel)

14/15‐2(RachelNorth)Ninky

Liz Fan

5

1km

14/15‐2 14/15‐1,1z

F1 Sequence

F3 Sequence

F2 Sequence

14/15‐1targetedsandsintheupperpartoftheBarremiansourcerocksequence(F1andF2).Allsandswerewater‐wet.14/15‐1ztargetedsandsdown‐dipinF3andencounteredoilshows,whichcouldnotbeloggedduetoboreholeinstability.14/15‐2targetedthesamesandsas14/15‐1zandencounteredwater‐wetsandsinF1/F2withoilshowsandtightsandswithoilshowsinF3.GoodqualitysandswerefoundintheF1andF2intervals.SandswerealsofoundwithinF3buttheseprovedofpoorquality.FailureoftheRachelwellsismostlikelyduetoissuesoftrapdefinition,updipsealandhydrocarboncharge(fortheshallowersands).

UF2

LF2

LF1

F3c

F3a

F3f

F3e

UF1

LF1MF1

UF2

2500m -

2000m -

Rachelwells

Top Oil Window (2400m)

Goodqualitysands

Thinner,poorqualitysands

Oilshows

6

LizGasDiscoveries

TheprimaryLiztargetwasencounteredwithoilshows,buttightreservoirs.Deepersecondarytargetsinthesyn‐riftsequencewerefoundtobehydrocarbonbearing(gasandwetgas)butreservoirqualitywasalsopoor.Inaddition,bothdiscoveriesareincomplexstratigraphictrapswiththeresultinglargeuncertaintyonpotentialvolumes.Wearecurrentlyreprocessing3DseismicdataovertheLizarea,andwewillalsobeacquiringnew3DdataadjacenttoLiz,whichwillhelptodefinethevolumetrics.

14/19‐1(Liz)14/19-1

Depth(mTVDss)

400

500

600

700

800

900

1000

1 100

1200

1300

1400

1500

1600

1700

1800

1900

2000

2100

2200

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

3300

3400

3500

3600

Formation Tops(Actual)

Seabed

B1C1D1

D2D3D4D5D6D7

D8

D9

E1

E2

E3

F1

F2

F3

G1

G4H1H2

Lithology(Actual)

HydrocarbonShow s

Shows

Shows

Shows

Shows

Series

Ter

tiary

Upp

erC

reta

ceou

sLo

wer

Cre

tace

ous

Wet Gas

Dry Gas 7

25/05‐1(Dawn/Jacinta)

25/05-1Depth

(mTVDss)

200

300

400

500

600

700

800

900

1000

1 100

1200

1300

1400

1500

1600

1700

Formation Tops(Actual)

Seabed

B1

C1

D1

D4

D9

E2

F1

H1

I1T D

Lithology(Actual)

HydrocarbonShow s

Gas Shows

Series

Ter

tiary

Upp

er C

reta

ceou

sLo

wer

Cre

tace

ous

Pre-Rift

Dawn/Jacinta

The25/5‐1wellshowedsignificantsanddevelopmentattheJacintalevelbutnoshows.TheJacintaprospectislikelytohavefailedduetolackofchargeorpoortopseal.Significant,goodqualitysandswerealsoencounteredinthesyn‐riftsequencewithgasshows(Dawntargets).Failurewouldagainseemduetolackofcharge.

8

Sand EntryPoints

14/15‐1,1z

14/15‐2

Ninky

10km

EastFlankPlayFairway

14/10‐2

14/19‐1

OilShows

OilandGasShows

Plannedwell

OilDiscovery

Dryhole

Gas&CondensateDiscovery

F1Fairway

F3Fairway

F2Fairway

9

BasementFaults

14/9‐1

14/10‐3

14/10‐1

14/9‐2

14/13‐1

14/19‐1

14/24‐1

Elaine

Anna

Ninky

Ann/OrcaSouth

Helen

Pam

Liz

10km

ProspectsandLeads

14/15‐2

Ninky

14/10‐2

14/9‐1

OilShows

OilandGasShows

Plannedwell

OilDiscovery

Dryhole

Gas&CondensateDiscovery

Gas/Condensate

Leads

Prospects

MultipleFLeads

14/15‐1,1z

10

BasementFaults

14/10‐3

14/10‐1

14/9‐2

14/13‐1

14/19‐1

14/24‐1

20073D(RKH)

20113D(RKH)

20113D(DES)PlannedFeb/Mar

20113D(DES)Complete

20113D(ARG)

20113D(DES)PlannedFeb/Mar

3DSeismicCoverage

3Dseismic

20043D(DES)

14/15‐1,1z

14/15‐2

Ninky

OilShows

OilandGasShows

Plannedwell

OilDiscovery

Dryhole

Gas&CondensateDiscovery

Gas/Condensate

Leads

Prospects

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Ninky 14/15‐2

5km ‐3000m

‐2500m

Goodqualitysands

Thinner,poorqualitysands

PrimaryTargets

SecondaryTargets

F1 Sequence

F3 Sequence

UF2

LF2

MF2

F3b

F3a

F3f

F3e

F3gF3c

LF1

NinkyProspect–Cross‐Section

Top Oil Window (2400m)F2 Sequence

TheNinkyprospectisacombinedstructuraldipandstratigraphicpinch‐outtrapwithmultiplereservoirhorizonswithintheBarremianF2andF3zones.Themaintargetshavebeenmappedusingseismicreservoircharacterisationtechniquesandarecorrelatedtotherecentlydrilled14/15‐1,1Zand14/15‐2wells.Thesandsareexpectedtobeupto20mthickandaredepositedwithinarich,oil‐pronesourceinterval.Preliminarygeochemicalsamplingfromthe14/15‐1Zwellsuggestthatthetopoftheoilgenerationwindowisaround2400m.Thisallowsdirectcommunicationbetweenthehydrocarbonkitchenandthereservoirsandsinthedeepestpartofthebasin.Hydrocarbonswouldmigrateup‐dipandbesealedbytheencasinglacustrineshales.Themaingeologicalriskisassociatedwiththeeffectivenessofthehydrocarboncharge,giventhatthereservoirhorizonsareneartheupperlimitoftheoilgenerationzone.

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CampaignCosts

• SixDesire‐operatedwells(5drilledtodate‐Liz,Rachel,Rachelsidetrack,RachelNorthandDawn/Jacinta)

– RigandequipmentcontractedtoDesire– Sharedrig&equipmentmobilisationanddemobilisationcosts– CostssharedwithRockhopperandBHP

• 3Dseismicsurvey– AcquiredataoverEastFlankplayfairwayandadjacentareasofinterest,includingAnnprospect– SharedmobilisationanddemobilisationcostswithRockhopper

• TotalCampaigncostca.£126milliongross(includes100%of6wellsand100%ofmob‐demob)– Ca.£97millionnettoDesire

• Ca.70%oftotalcostshavebeenincurredtodate

• Demobcostsareincurredatendofcombinedcampaign– >10%ofcampaigncosts

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Desire‐operatedcampaigncost

14

FundingPosition

• Currentcashpositionca.£53millionGBPequivalent– £36mminDesirebankaccounts– £17mminescrowbankaccounts

• Sufficientfor– Remainingwellcostsfor6wellprogramme– Remaining3Dseismicsurveycosts– FIGcontingencyrequirement– Demobcostsattheendofthecampaign

• PotentialupsideifanotheroperatorutilisestheOceanGuardianrig

• Furtherdrillingwillrequireadditionalfund‐raising

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Oil Price Scenario Case 1: 50 MMbo NPV @ 10% ($MM)

Case 2: 150 MMbo NPV @ 10% ($MM)

Case 3: 400 MMbo NPV @ 10% ($MM)

$50/bbl -86 802 3255

$75/bbl 296 1990 6202

$100/bbl 704 3170 9142

Economics

Royalty9%

CorporationTax26%

Source:Senergy(GB)LimitedCompetentPerson’sReport2010

FalklandsFiscalTerms

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Conclusions1.EastFlankPlayFairway

•SeaLionoildiscoveryinEastFlankPlayFairway•Onlycirca40%ofthisplayiscurrentlycoveredby3DdataonDesireacreage

•Rachelwellsinthisplaytypeunsuccessfulbutplayde‐riskedbyestablishingpresenceofgoodqualitysandstonereservoir

•Ninky,ElaineandAnnaprospectsplusanumberofleadsidentifiedontheexisting3Dinthisplaytype

•3Dseismicacquisitionunderwaytoobtainfull3DcoverageofplayonDesireacreage;new3Drequiredtoidentifyandmaptargetsandsandtogenerateprospectsfromleads

•RigduetoreturntoDesireinMarch/AprilwithNinkyprospectlikelytobedrilled,subjecttoallregulatoryapprovals

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Conclusions

2.OtherPlayTypes

•Ann:Itisplannedtoacquire3DovertheAnnprospectnotalreadycoveredby3D‐135km2hasalreadybeenacquiredinDecember/Januarywitharound162km2stilltobeacquired.With3DovertheentireprospectincludingOrcaSouthitwillbepossibletoselectthebestlocationtotestthisprospect.

•Theplannednew3DdatawillalsoallowthedetailedmappingoftheHelenandPamprospects.

•TheDawn/Jacintawellresultswillbeintegratedintotheexisting2Ddatatore‐evaluatethenatureofthepetroleumsysteminthesouthernpartoftheNorthFalklandBasin.

3.Funding

•Sufficientfundingavailabletocomplete6wellcampaignand3Dseismicprogramme.

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