Operations

Blocks 42/8, 42/9, 42/12, 42/13 and 42/14 - Breagh

Stratic holds a 10% working interest in Block 42/13 under licence P.1230. This licence, operated by Sterling Resources, is to the north and west of the existing Southern North Sea gas producing provinces. The successful appraisal of West Breagh by well 42/13-3 opens up a new play fairway.

The 42/13-3 well was drilled to a Carboniferous Dinantian target encountered previously by the 43/13-2 well drilled in
1990, which failed to test at commercial rates. The latest well was drilled through the reservoir interval using an oil based
mud system to avoid the formation damage experienced in the discovery well. The well was flow tested successfully at up to 17.6 mmcfd; a significant improvement from the original well.

Interpretation of 3D seismic over this block suggests that there may be a substantial extension of the West Breagh structure to the east, known as East Breagh. The potential identified in East Breagh will be the target of a well to be drilled as the first of a two to three well program commencing in the third quarter of 2008.

Before a development decision is made on West Breagh, the partnership plans to complete more detailed seismic processing of the 3D data, and to drill at least one further
West Breagh appraisal/development well in addition to the East Breagh exploration well.

The Ensco 70 jack-up drilling unit has been contracted to drill at least two wells on the Breagh licence in 2008. By the end of the year, the overall scale of the development will be better defined, and plans well underway for submission of the Field Development Programme.

Stratic also holds a 10% working interest in UK North Sea blocks 42/8, 42/9 and 42/14 under licence P.1327.  The other parties to licence P.1327 and their respective interests are Encore Petroleum (15%) and Sterling Resources (UK) Limited (75%) (“Sterling Resources”). There is currently no operator appointed for these blocks.

The Breagh gas discovery well 43/13-2 was originally drilled and tested by Mobil in 1997. The well encountered gas and was perforated and tested over five intervals within the Carboniferous at an unstimulated rate of 3 mmscfpd, demonstrating the potential for movable hydrocarbons.  An earlier well 42/13-1 drilled by BP in 1968 to the east of the 42/13-2 well encountered 43 feet of wet Scremerston Sandstone. This well provides structural control and helps to identify the Breagh eastern closure.

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