E+P activities in South Africa Good day ladies and gentlemen. I would like to thank APPG and IP for the invitation to speak at this event. I am Anthony Fielies, a geologist at the Petroleum Agency SA. This presentation is about the E+P activities currently ongoing in South Africa as well as exploration and development activity we can expect in the short to medium term. Anthony Fielies Geologist - Petroleum Agency SA AAPG ACE Houston – April 2011

Contents Who we are? Current activity Why South Africa? Sedimentary Basins Onshore Offshore – Orange Basin, Outeniqua Basin and Zululand/Tugela Basin Conclusion

Petroleum Agency SA Promotion and Regulation of oil and gas exploration and production in South Africa 2. Archiving all data Petroleum Agency SA is the entity responsible for promoting and regulating as well as archiving all data related to oil and gas exploration in South Africa. We report to the Ministry of Mineral Resources, headed by the Hon. Minister Susan Shabangu.

MPRDA: First point in the list of our responsibilities: Promote onshore and offshore exploration for and production of petroleum; OUR VISION A viable, sustainable and responsible upstream industry in South Africa. OUR MISSION To promote, facilitate and regulate exploration and sustainable development of oil and gas in South Africa. We are mandated by the Mineral and Petroleum Resources Development Act. The very first responsibility of the Agency, listed in the act is to “Promote …”. We are thus instructed to develop and facilitate the growth of the upstream industry in South Africa. Our vision and mission statements are thus directly concerned with this mandate. Since late 2008, we are in a position where uncertainties regarding investment incentives have been resolved. After a period of relative inactivity in offshore exploration, we now expect the imminent resumption of exploration programs by our international offshore operators and explorers.

Current Activity Image shows current activity in SA. Areas very light green are TCP’s, 12th month period, medium/normal green ER’s, dark green PR and mustard colour under application.

Why South Africa? 1. Makhambathi Nature Reserve- Mkhambathi Nature Reserve (sometimes spelled Mkambati) is an exquisite nature reserve along the Wild Coast. It falls within the Pondoland Centre of Endemism, a botanically biodiverse hotspot. But that hardly conveys its wonders, including antelope-dappled grasslands, a waterfall into the sea, Cape vultures, and a beautiful coastline. 2. Ragged Tooth Shark – top diving sites in KZN, near Umkomaas. The Aliwal Shoal Marine Protected Area conserves a strange ocean anomaly. There is a reef here, but not one made out of coral. Instead, this is a piece of ancient fossilised coastline or sand dune. Adding to the diversity of this tropical reef are the wrecks of two ships, the Nebo and the Produce, which lie in relatively shallow waters (less than 30 metres deep). 3. Leopard - The malaria-free, scenic Waterberg’s a rare wildlife haven. A protected UNESCO Biosphere Reserve, its 4 mountain ranges form a spectacular backdrop to the first-class game reserves of Welgevonden, Entabeni and Lapalala Wilderness. http://www.southafrica.net/sat/content/en/za/home

Cont. Africa’s most developed economy Good infrastructure Stable political climate Excellent fiscal terms Exciting frontiers http://www.amethyst.co.za/Pretoria/index.html http://www.amethyst.co.za/CapeTown/index.html

Sedimentary Basins SA – large country, land area 1.1million sq km, coast line total length nearly 3000km. Cont shelf is 20-160km wide off the west coast, narrow to the south, 50-200km wide south coast, very thin 30km east coast except along the durban basin. We’ll discuss the KB, OB, OB and ZB/DB.

Onshore The Karoo Supergroup of Late Carboniferous to Early Jurassic age (~300-180 Ma) occupies half of South Africa's landsurface. It extends from the Cape Fold Belt in the south to the southeastern boundaries of KwaZulu-Natal, and northwards into the Northern Cape, Free State and Limpopo provinces (Figure 1). The Karoo basins host all of the commercial coal deposits in South Africa.

Onshore cont. CBM Biogenic Gas Shale Gas Now we move to the onshore 10

Onshore cont. Cross section of the karoo. Ne to sw, cbm, oil to gas.

Coalbed Methane (CBM) Ellisras sub-basin containing the Waterberg coalfields is the most promising area for CBM production. This region contains 40 % of South Africa’s remaining coal resources. The coals, which have a high vitrinite content, are up to 70 m thick and are buried to depths greater than 250 m.

Biogenic Gas Virginia and Evander gas fields Found in gold mines Witwatersrand basin Associated with Helium Monitoring wells

Shale Gas Primary Target 10-80m thick Highly Carbonaceous TOC up to 17% Regionally extensive Exploration Well 1.84 Million scf/day ??TCF A gas flow rate of 1.84 Million scf/day was established for an exploration well in the southern Karoo (CR1/68), during early exploration for conventional oil reserves in the 1960s.

Moratorium on Karoo acreage The Minister of MR, having regard for the national interest and the need to promote the sustainable development of SA’s petroleum resources has imposed a moratorium under section 49(1) of the MPRDA, 2002 (Act No 28 of 2002) (“the Act”), on the processing of all new applications for: Reconnaissance Permit, Technical Cooperation Permit, Exploration Right and Production Right in terms of sections 74, 76, 79 and 83 of the Act. This is effective from 1 Feb 2011 (date of publ) until further notice. This moratorium will not affect the processing of applications for TCP, ER and/or PR received before the publication of this notice. The agency is planning a bid round – to be announced - to allow equitable access to all. Not affecting areas applied for before 1 February 2011 Planning bid round – to be announced (Government Gazette Vol. 548 No. 33988)

Offshore   16

Offshore – Orange Basin The Orange Basin areally and volumetrically largest offshore basin. Located in a divergent volcanic margin underlain by a rift basin complex of Late Jurassic to Hauterivian age. Underexplored, 1well/4000km2. Forty exploration wells have been drilled in the basin. Going to change, BHP to drill 3 wells, 2 deepH2O, one shallow water. Age, early cretaceous. The current seismic database of the area consists of 3200 km of migrated stack 2D data in Seg-Y format that range in vintage from 1987 to 2008. Post drift sediments can reach thicknesses of 7km and more in central part of the basin.

Offshore - Western Bredasdorp Basin OPEN ACREAGE Outeniqua basin consists of a series of en-enchelon sub basins each of which comprise a complex of rift half-graben overlain by variable thicknesses of drift sediments. Basin shows a history of strike-slip movement during the late Jurassic and early Cretaceous breakup and seperation of Gondwana. Lets Look at the western bredasdorp basin. The unprospective part is a shallow basement high, the Agulhas Arch, which consists of Table Mountain quartzitic sandstones and shales of the Bokkeveld Group, covered by a very thin overburden of drift shelf sediments.

South Coast – Open Acreage This open acreage covers the western extent of the mature Bredasdorp Basin with producing oil, condensate and gas fields of Sable and Oribi/Oryx, located only 25 to 30 km to the east of the eastern boundary of this open acreage. 19

Western Bredasdorp Basin The area, previously known as Block 7, constitutes the Arniston Half-graben in the north, and the Southern Sub-basin in the south, separated by a basement high, called the Central High. Between 1973 and 1987, Soekor drilled 4 wells. Three of these wells, excluding the D-C1 well, intersected fair to good quality oil to wet-gas prone source sequences, and these two wells in the Southern Sub-basin had oil shows. 2 300 km of migrated 2D data. The Agency has reinterpreted the area and delineated several untested prospects, especially within the Southern Sub-basin. Pioneer had their focus on the Arniston half-graben in the north, and especially the Rinkhals prospects (P6).

Mass-flow Hauterivian structure overlying 5At1 Stratigraphic pinch-out against Central High P50 estimate of STOIIP = 129 MMbbl Volumetrics based on closing contour within open acreage PROSPECT P6: RINKHALS LEAD Pioneer named the P6 prospect the Rinkhals Lead. This Hauterivian aged mass-flow feature is stretched over a vast area into Block 9, but its updip stratigraphic pinch-out lies within the open acreage where it is straddled against the Central High and dipping off towards the east. The P50 estimate is calculated to be 129 MMbbl of oil in place, also supported by an AVO anomaly as highlighted below. The volumetrics are based on rock volumes derived from a closing contour which falls entirely within Western Bredasdorp Basin, as outlined by a dotted red line.

Summary of Western Bredasdorp prospectivity 21 prospects delineated, untested Proven oil & wet-gas prone source rocks Short migration routes and effective charge Oil expulsion throughout the Tertiary Geological risk low on all aspects except seal Central High area affected by intrusion activity 55 million years ago Proven reservoir rocks Potential hydrocarbon accumulations associated with bright spots Many prospects remain untested. The geological risk low on all aspects except seal. Great reservoir rocks associated with bright spots which may be an indication of hydrocarbons, i.e. oil with some gas.

Offshore – Durban/Zululand Basin

Offshore – Durban/Zululand Basin Jurassic to Early Cretaceous 7000km of 2D seismic 4 Wells, exciting under-explored frontier ER Silverwave Energy Various leads identified Zululand Basin Durban The Durban and Zululand basins, located on the eastern continental margin of South Africa, developed during the Jurassic to early Cretaceous break-up of Gondwana. The geology of the Durban Basin is dominated by the Tugela Cone, a large constructional delta that extends across the shelf to water depths of 3000 m. Two sediment growth phases are present, one related to synrift and early drift sediment supply, the other to a renewal of progradation in the Tertiary. Prospective structures, leads and play concepts associated with the Tugela Cone are clearly evident on sparse seismic data. Some examples are illustrated in this brochure. The hydrocarbon potential of the offshore Durban and Zululand basins has been tested by only four wells. Jc-B1 (1989) exhibited a minor gas show and Jc-D1 (Phillips, 2000), although classified as a dry well has provided the first evidence for an active petroleum system. Fluid inclusion studies of Jc-D1 samples provide evidence for the presence of seeping light hydrocarbons. An extract from the same interval yielded lightly biodegraded oil. Fluorescence was also observed. The basal section of the well is characterised by bitumen staining and fluorescence. An extract from this interval yielded light oil apparently derived from a distal marine source rock of Kimmeridgian age.

The Lion lead Cretaceous lowstand BFF complex Stratigraphic trap Sand prone Water Depth's, 75-200m The Lion lead is a stratigraphic trap consisting of an extensive late Cretaceous basin floor fan complex that has been tilted to the east. Well and seismic data suggest the Lion basin floor fan complex is sand prone, and lies above the C e n o m a n i a n unconformity. The Jc-B1 well drilled 1.5 km updip intersected 17 m of sandstone at this stratigraphic level, which exhibited a minor gas show. Geologic setting: Lowstand basin floor fan complex, above the Cenomanian / Turonian boundary. Prospect type: Basin floor fan pinching out against basin slope Water depth: 75-200 m 2 Area of closure: 300 km Potential thickness: 325 m Hydrocarbon potential: Approximately 3000 MMBO in place if filled, assuming 50% net /gross. Source rocks: Probable source rock of Late Jurassic - Early Cretaceous age, below and to the south. Regional faults provide good migration pathways. Reservoir rock: Well and seismic data suggest the Lion basin floor fan complex is sand prone. The Jc-B1 well drilled 1.5 km up-dip intersected 17 m of sandstone which exhibited a minor gas show. Trap type: Stratigraphic Timing: Reservoir deposition and stratigraphic trap formation preceded source rock maturation and hydrocarbon expulsion. Tiger Lead A is situated above an upthrown basement block. The target intervals range from the Cretaceous to the Tertiary and represent more than 1000 m of section draped over the basement block. The lead, defined by two seismic lines, exhibits four-way closure. Tiger lead B comprises a stacked roll-over into a fault. Geologic setting: Situated on a basement ridge horst on the northern flank of the basin. Prospect type: Drape over a horst block with an apparent 4-way dip closure. Water depth: 860 m 2 Area of closure: 84 km at top pre-Cretaceous. 40 - 50 km2 at shallower horizons. Hydrocarbon potential: 800 MMBO. Source rock: Shales of Late Jurassic - Early Cretaceous age are expected to be present, immediately to the south where this section is thick and mature. Reservoir rock: Marine sandstones or sands associated with the Tugela River may be present. Additional reservoir possibilities include turbidite sandstones in the section draped over the horst. Trap types: Interbedded turbidite sandstones and bathyal shales, with differential compaction drape over the horst block comprising combined structural-stratigraphic traps.

Located upthrown basement block 1000m section draped Water depth: 860 m Source - Shales of Late Jurassic - Early Cretaceous Reservoir - Marine sandstones

Block 1 – PetroSA, shot 3D survey, 2nd phase of ER, well commitment Block 2C – Forest, target identified to be drilled Block 2A – Forest, halfway through the GMDP, moving from gas production to power plant, aim to do this by 2014 Block 3B/4B – BHP, 2 deepwater wells, shallow well in 3A/4A Block 5/6 – PetroSA, TCP ends this year. Block 9 – Develop the F-O field East Coast – ER granted to Silverwave. 27

Conclusion Exciting!!! South Africa provides abundant HC opportunities SA regulatory and fiscal terms are highly competitive The Karoo basin present opportunities unconventional oil & gas exploration coalbed methane , biogenic gas, shale gas There is a lot of activity expected in the short to medium term Shallow, deep and ultra-deep seismic acquisition Deep and shallow water drilling of wells Exciting!!! With that Ladies and Gentlemen, thank you for your attention.

THANK YOU