REPUBLIC OF SOUTH AFRICA 3RD LICENCE ROUND 2007 Exploration opportunities Mr President, Honourable Minister/Deputy Minister, ladies and gentlemen and fellow explorers. My presentation is intended to provide background information in order to set the scene and to provide the foundation for a better understanding of South Africa’s 2007 Petroleum Licence Round. This first slide is a view of Cape Town looking south across Table Mountain. The top of Table Mountain is about 1000m above sea level and the erosion that is self-evident in this image has led to the accumulation of porous and permeable reservoir sandstones out to sea to the right where Area B, one of the 4 areas being offered, is situated. Dave Broad Petroleum Agency SA

Outline of presentation South Africa’s 2007 Licence Round Why explore in South Africa? Role of Petroleum Agency Basins and data Exploration history Future expectations My presentation will address these five key topics: Why explore in South Africa? – why are you here today and why are you interested in exploring in South Africa? The role of the Petroleum Agency A word about basins and data Some key points in the history of petroleum exploration in South Africa and What does the future hold?

South Africa’s 2007 Licence Round

WHY EXPLORE IN SOUTH AFRICA ? Large prospective basins relatively under-explored Exploration risk reduced by 40 years of state-sponsored exploration Sweet spots are known Petroleum systems identified National petroleum database is well organised The Petroleum Agency will assist Why explore in South Africa? 6 key reasons are given here:

Role of Petroleum Agency The Mineral and Petroleum Resources Development Act formalises the role and responsibilities of the Agency Archiving of data National archive for upstream petroleum data 2. Promotion of exploration and development Appraise potential Promote exploration and development Raise awareness of petroleum resources at national level 3. Regulatory functions Receive applications for rights and permits Appraise technical programmes Approve environmental programmes Manage contracts - compliance The role and functions of the Petroleum Agency are defined by law in the Mineral and Petroleum Resources Development Act. You will hear more about this act in a later presentation. There are essentially 3 main functions 1. Archiving of data – over 40 years data is archived by the Petroleum Agency 2. Promotion of exploration and development – This speaks for itself 3. Regulatory functions

South African basins prospective for oil and gas Karoo Basin Now a word about South African basins which are prospective for oil and gas. Most of the land surface of South Africa is taken up by the Great Karoo Basin. In certain areas there is currently a significant amount of interest in Coal Bed Methane. The Licence Round is focussed on the offshore Orange Basin which also extends into Southern Namibia, and the Outeniqua Basin. The Outeniqua Basin comprises the Bredasdorp, Pletmos, Gamtoos and Algoa basins. Everyone of these basins has a unique geological history. South Africa’s oil and gas production comes from the Bredasdorp Basin.

Exploration wells offshore South Africa The first offshore well was drilled in 1969. Since then over 300 wells have been drilled, mainly in the Bredasdorp Basin. Note the limited drilling – only 40 wells in the Orange Basin.

Seismic coverage offshore South Africa This slide shows the total extent of seismic data offshore. Also shown is some academic data which is privately owned. Note the concentration of the data in the Outeniqua Basin Solid red indicates 3D seismic data The red lines indicate a non-exclusive survey acquired by PGS in 2003. This data really helped to show the deep water potential of the Orange Basin

Data Information Standard data package contains: seg-y, pdf, ascii format on dvd representative seismic data selected well data selected reports discounted price $12 500 All data: additional data may be purchased at standard rates eg.$10/km Ask to see the Data Catalogues DATA CATALOGUES AVAILABLE: 1. STANDARD DATA PACKAGE 2. ALL DATA

The sweet spots - after 40 years of exploration the petroleum systems are mostly understood After 40 years of exploration and data, the sweet spots of petroleum systems are pretty well understood. The most prospective areas for gas are on the shelf in the Orange and Outeniqua basins. The most prospective area for oil are in the deeper water areas, and in the Algoa Basin.

Early exploration 1940s - 1964 onshore work by Geological Survey etc 1965 - SOEKOR formed: starts onshore exploration In order to understand where we are today it is important to understand the elements in the history of exploration. The first exploration was onshore – first by the Geological Survey, and later by SOEKOR which was formed in 1965.

1967 - First Licence Round 1967 - Entry of majors: BP, Shell, CFP, Mobil, Superior, Tenneco, Cities, Placid, Arco, Chevron, Conoco, Esso 1969 - First offshore well: Superior discovers gas in the Pletmos Basin 1974 - Kudu gas discovery offshore Namibia 1976 - 1997 SOEKOR is sole explorer 1980 - Discovery of F-A gas field, Bredasdorp Basin 1986 - Discovery well for Ibhubesi gas field, Orange Basin 1988 - 1990 Oil discovered in Bredasdorp Basin (Oryx, Sable, Oribi fields) 1992 - First gas production from F-A gas field - pipeline to GTL plant in Mossel Bay Then in 1967 the Government made a decision to hold a Licence Round and this brought in some of the major oil companies of the day. The first gas discovery was made in 1969 - the Ga-A gas field which has to this day not been developed due to tight reservoirs. The followed the Kudu gas discovery in Namibia. Then the dark days of apartheid descended on us and for political reasons all the foreign companies withdrew from South Africa and SOEKOR was the only explorer from 1976 – 1997 But SOEKOR made a whole string of discoveries as shown here Etc

1994 - Second Licence Round 1997 - Phillips with PanCanadian, Sasol, Energy Africa explores East Coast 1997 - South Africa produces first oil – Oribi 1999 - Petroleum Agency formed 2000 - 2003 Ibhubesi gas field: Forest appraisal demonstrates highest commercial flow rates in South Africa 2001 - PetroSA formed

Canadian Natural Resources 2007 - Licences, operators and fields Applications for CBM Forest (with Anschutz, PetroSA) Ibhubesi gas field BHP Billiton (with Occidental & Global) BHP Billiton (with Sasol/PetroSA) F-A/E-M gas fields PetroSA (with Pioneer) Sable oil field Canadian Natural Resources Oribi/Oryx oil fields

2006 - South Africa’s oil and gas production PetroSA/Pioneer F-A/E-M gas field 160 MMscf/d 3 900 BCPD Oribi/Oryx oil field 2 260 BOPD PetroSA Sable oil field 9 700 BOPD

Future production - Ibhubesi gas field (Forest) Field Development Plan Application for Production Right Tested at 182 MMCFGD, 1723 BCPD Needs title and introduction

Future oil production will be from deepwater X 1000 BOE Ibhubesi gas Sable oil Oribi/Oryx oil South Coast F-A/E-M gas Gas Project 2010 2011 2012

The future … OIL Oil price remains above $45 World favours African oil Expected future oil discoveries in deepwater Orange Basin (BHP Billiton) Southern Outeniqua Basin (CNR) GAS New gas fields to extend life of GTL plant (PetroSA) Future production from Ibhubesi gas field (Forest) Future production from Kudu gas field (Tullow) Development of CBM in the onshore Karoo Basin 2007 LICENCE ROUND WILL UNLOCK SOUTH AFRICA’S TRUE POTENTIAL

“Enabling your involvement” Petroleum Agency SA Thank you www.petroleumagencysa.com

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