IRAQ

FUTURE SAUDI ARABIA

Harry “Bud” Holzman

AAPG Certified Petroleum Geologist #3000

begeology@aol.com

Oil and Gas Opportunities in Iraq

E & P HISTORY AND STATUS

COUNTRY-WIDE OPPORTUNITIES

KURDISH-NORTHEASTERN REGION CENTRAL-NORTHWESTERN REGION WESTERN DESERT SOUTHERN REGION SUMMARY AND CONCLUSIONS

EXPLORATION HISTORY

• 1901-03 CHIA SURKH • 1923---NAFT KHANEH(NEAR IRAN BORDER) • 1927---KIRKUK BABA DOME-BLEW OUT-

100,000 BOPD-9 DAYS • AFTER WW2 BASRAH(SOUTHERN REGION)

MOST DEVELOPMENT • IN EARLY 1950 ATTENTION WAS FOCUSED

UP NORTH AROUND KIRKUK • LESS THAN 3,200 WELLS DRILLED IN IRAQ • SUCCESS RATE NEAR 70% • OVER 400 2-D PROSPECTS (1950-1980

seismic) REMAIN TO BE DRILLED

Setting of Shaikan anticline (looking east

Shaikan-1

Shaikan -2

Shaikan-1

KURDISH –NORTHEASTERN IRAQ FIELDS

. KIRKUK ---25-40 BBO (IF RESERVOIRS CAN BE REPAIRED), 8-9 TCFG

• BAI HASSAN --- 1.5 BBO, 9-10 TCFG • JAMBUR---2.5 BBO, 9-10 TCFG • KHABBAZ– 3 BBO, Significant associated gas • SHAIKAN– 4-7 BBO, 2-3 TCFG (recently

discovered)) • MIRAN WEST--1 BBO-9TCFG (recently

discovered) • BINA BAWI– 1 BBO-HIGH GAS RESERVES • SMALLER FIELDS(BY IRAQ STANDARDS) • CHEMCHEMAL(GAS), KOR MOR-ANFAL(GAS), • DEMIR DAGH,TAQTAQ,PULKHANA, QARA • CHAUQ, KAND, CHIA SURKH, TAWKE,

HAWLER

KURDISH-NORTHEASTERN IRAQ

PROBLEMS

• KIRKUK RESERVOIR DAMAGE • SOURCE AND RESERVOIR ROCK EROSION-

ESPECIALLY IN NORTHWESTERN REGION • POLITICAL • INFRASTRUCTURE-IRAQ TURKEY EXPORT

PIPELINE • HEAVY (RESIDUAL OIL) PROBLEM • LACK OF 3-D SEISMIC • 1-4%H2S • COMPLEX GEOLOGY-ZAGROS-REGION

KURDISH-NORTHEASTERN IRAQ

POTENTIAL-RECENT DISCOVERIES • DNO -TAWKE RECENT ESTIMATE 2013-1 BBO FIRST HORIZONTAL HOLE-CRETACEOUS

TESTED 8,000 BBO FROM EACH STAGE • GULF-KEYSTONE SHAIKAN BLOCK-4-7 BBO-

RECENT ESTIMATE 20 BBO-4 BLOCKS • MIRAN WEST-1 BBO – 9TCFG • TAQTAQ– 1BBO • MANY COMPANIES DRILLING TODAY • 3-D SEISMIC SURVEYS BEGINNING • GRAVITY SURVEYS STARTED • PIPELINE DEVELOPMENT

CENTRAL-NORTHWESTERN IRAQ

CENTRAL-NORTHWESTERN IRAQ FIELDS

• EAST BAGHDAD---16-20 BBO, 2-3 TCFG • BALAD---1-2 BBO, 1-2 TCFG • HAMRIN--- 1.5 BBO • WEST BAGHDAD---1 BBO • AJEEL-> 1BBO SMALLER FIELDS (BY IRAQ STANDARDS)

MANSURIYAH, TIKRIT, QUMAR, SADID, JUDAIDA, MAKHUL, GILABET, INJANA, KHASHEM AL AHMAR,JARIA PIKA, NAU DORMAN, NAHRAWAN, INJANA, NAFT KHANEH, KHANUQAH, BADRAH

Gilabet, Khashem Al Ahmar, Nau Dorman, Qumar Fields

CENTRAL-NORTHWESTERN IRAQ FIELDS

BAYJI-MOSUL* FIELDS QAIYARAH, NAJMAH, JAWAN, QASAB, ALAN, SASAN, AIN ZALAH, QALIZ, SUFAIYAH BUTMAH, ATSHAN, MUSHORAH, AFAR, ATSHA *FIELDS IN THE MOSUL BLOCK HAVE CONSIDERABLY LESS SEDIMENT THAN THE FIELDS TO THE SOUTHEAST AROUND KIRKUK AND BAYJI DUE TO DIFFERENTIAL MOVEMENT OF THE PLATE BLOCKS

CENTRAL-NORTHWESTERN IRAQ FIELDS

PROBLEMS

• SECURITY • INFRASTRUCTURE • LACK OF 3-D SEISMIC • RESIDUAL CRUDE BUILDUP • 1-4% H2S

CENTRAL-NORTHWESTERN IRAQ FIELDS

POTENTIAL • SUPER GIANT EAST BAGHDAD FIELD NOT

DEVELOPED-ONLY 21,000 BOPD (LAST INFO) • GIANT BALAD FIELD NOT DEVELOPED HEAVY

GRAVITY OIL • JURASSIC (GOTNIA BASIN) NOT DRILLED

(LESS THAN 200 WELLS DRILLED TO THE JURASSIC IN IRAQ)

• TRIASSIC- IN NORTHWEST NOT MANY WELLS DRILLED TO DATE

WESTERN DESERT-IRAQ

WESTERN DESERT FIELDS

• AKKAS---2-3 TCFG, 100 MBO--27 KM LONG • ORDIVICIAN-SILURIAN RESERVOIR ROCK • SILURIAN SOURCE-SEAL ROCK

• SMALLER FIELDS—NOT EVALUATED MARJAN, KIFL WEST, KIFI

WESTERN DESERT FIELDS

PROBLEMS

• SECURITY • LACK OF INFRASTRUCTURE-PIPELINES,

ROADS, AND ELECTRICITY • LACK OF UP-TO-DATE 3-D SEISMIC, GRAVITY • COMPLEX HORST-BLOCK FAULTING

WESTERN DESERT FIELDS

POTENTIAL • OVER 150 IDENTIFIED 2-D SEISMIC

PROSPECTS (NOT SMALL 1-46 KM SIZE • RESERVES COULD TOTAL 100 TCG • LESS THAN 10 WELLS DRILLED INTO

PALEOZOIC • MAINLY SILURIAN-ORDIVICIAN TARGETS IN

WESTERN AREA. • ALONG THE EASTERN EDGE OF THE DESERT-

JURASSIC TARGETS ALONG THE WESTERN EDGE OF GOTNIA BASIN

• GAS PRONE—LOW IN H2S, HIGH GRAVITY 43-53 DEGREE API CRUDE

SOUTHERN IRAQ

SOUTHERN FIELDS

• NORTH & SOUTH RUMAILA--> 30 BBO • WEST QURNA—MY ESTIMATE 10-14 BBO

NEW ESTIMATE IRAQ GOVERNMENT 43 BBO-OCT 2010-DATA NOT RELEASED

• ZUBAIR—8-9 BBO • MAJNOON—16 BBO -175 K BOPD • LUHAIS, SUBBA, RATAWI, BAZURGAN, ABU

GHIRAB, GHARRAF, TUBA, NASSIRIYA, AL AHDAB—1-3 BBO

• NAHR UMR (BIN UMR)—5-6 BBO • HALFAYAH---14-16 BBO (NOT PRODUCED

YET) *ALL FIELDS PRODUCE A SIGNIFICANT

AMOUNT OF ASSOCIATED NATURAL GAS

Majnoon

SOUTHERN FIELDS

• OTHER FIELDS—500 MMBO-1 BBO DHAFRIYAH, KUMAIT,DUJAILA, RADIDAIN,

GHARRAF, AMARA, NOOR, RIFAI, SAMAWA, DIWAN, JABAL FAUQI

SOUTHERN FIELDS PROBLEMS

• SECURITY-ESPECIALLY IN NORTHERN REGION

• INFRASTRUCTURE—PIPELINES, GAS OIL SEPARATION PLANTS, REFINERIES ARE OLD AND OUTDATED

• PIPELINE CAPACITY-EXPORT CAPACITY NEEDS TO BE TRIPLED TO HANDLE FUTURE PRODUCTION

• SECONDARY RECOVERY AND ENHANCMENT SYSTEMS ARE TOTALLY IN NEED OF REPAIR

• RESERVOIR DAMAGE IN SEVERAL LARGE FIELDS DUE TO IMPROPER MANAGEMENT

• MINES-UNEXPLODED ORDINANCE

PROBLEMS

• The pipelines that export most of Iraq’s oil are 15 years past their shelf life, were last inspected in 1991 – when pipeline corrosion forced a 75 percent reduction in safe exporting capacity – and, according to a previously undisclosed study commissioned by the U.S. government, are at risk of failing any time.

SOUTHERN FIELDS

POTENTIAL

• HUGE RESERVES—SEVERAL SUPER GIANT FIELDS> 5 BBO(SEVERAL NOT PRODUCED)

• JURASSIC(GOTNIA BASIN) YET TO BE EXPLORED-BASIN MARGIN CARBONATE BUILD-UPS)

• STRATIGRAPHIC TRAPS WITHIN THE CLASTIC ZUBAIR AND NAHR UMR FORMATIONS

• EXISTENCE OF OIL IN BYPASSED RESERVOIRS

FIELDS& PROSPECTS Green= oil field

Red= gas field

Brown= undrilled 2-D structure

(from various sources)

GOTNIA BASIN IMPORTANT JURASSIC BASIN

• ORGANIC-RICH SOURCE ROCKS • SEALED BY OVERLYING TIGHT CARBONATE-

EVAPORITE STRATA • SEDIMENTS DEPOSITED IN REDUCING

ENVIROMENT • MARINE BAR OR SHELF MARGIN

CALCARENITES DEPOSITED ALONG WESTERN MARGIN OF BASIN

• NEED 3-D SEISMIC TO DEFINE STRATIGRAPHIC RESERVOIRS

• LESS THAN 200 JURASSIC TESTS IN ALL OF IRAQ INCLUDING THE KURDISH REGION

IRAQ CRUDE OIL • OVER 500 IDENTIFIED STRUCTURES—2-D

SEISMIC-OLD DATA • ONLY ABOUT 130 HAVE BEEN DRILLED—90-

95 FIELDS DISCOVERED—70%+ SUCCESS RATE

• 22-23 FIELDS PRODUCING AT SOME RATE • 41 COMMERCIAL FIELDS HAVE NOT BEEN

PRODUCED (600 MMBO-16 BBO ESTIMATE) • 20 FIELDS ARE CONSIDERED NON-

COMMERCIAL (10 MMBO-260 MMBO ESTIMATE)

• 17 FIELDS UNDER EVALUTION (1 MMBO-1BBO ESTIMATE

• PROVED RESERVES—110-120 BBO-NEW ESTIMATE 150 BBO 2013

• MY ESTIMATE- 89 DISCOVERED FIELDS 230-250 BBO

RESERVE GROWTH

• RESERVE GROWTH BY A FACTOR OF AT LEAST 1.5 CAN BE EXPECTED—SEVERAL FIELDS HAVE ALREADY PRODUCED OVER THE 35-50% OF THEIR ORIGINAL ESTIMATED SIZE WITHOUT SIGNS OF DEPELTION

SECONDARY RECOVERY

• INCREASED SECONDARY RECOVERY OF DISCOVERED FIELDS COULD INCREASE IRAQ’S RESERVES BY AN ADDITIONAL 30-50 BBO

• SEVERAL MAJOR INTERNATIONAL OIL COMPANIES HAVE FIELD STUDY CONTRACTS WITH THE IRAQ OIL MINISTRY AT THIS TIME

IRAQ NATURAL GAS

• MOST NATURAL GAS IS ASSOCIATED WITH THE PRODUCTION OF CRUDE AND IS BEING FLARED

• MOST GAS IS SOUR—EXCEPTION AKKAS FIELD AND WESTERN DESERT- POSSIBILITY OF 100 TCFG IN UNEXPLORED REGION

• MIRAN WEST—9 TCFG NEW DISCOVERY IN KURDISTAN

• ESTIMATE OVER 200 TCFG IN ALL OF IRAQ

Bidding Rounds 1&2 Iraq Field Development Service Contracts-Not PSA

• West Qurna 1—Exxon Mobil-Royal Dutch Shell • West Qurna 2—Russia (Lukoil)-Statoil Hydro • Majnoon– Royal Dutch Shell-Petronas (Malaysia) • Halfaya—China National Oil Co-Total (France)-Petronas • Gharraf—Petronas- Japex • Najmah—Sonangol (Angola) • Qaiyarah—Sonangol • Zubair—ENI SpA (Italian)-Occidental-Korea National

Gas Corp • Rumaila– BP- China National Petroleum Corp • Badra—Gasprom-TPAD (Turkey)-KOGAS (Korean)-

Petronas

Bidding Round 3 Natural Gas Fields-Date 20 Oct

• Akkas--Kogas (South Korea), KazMunaiGas (Kazakhstan)

• Siba—Kuwait Energy • Mansuriyah—TPAO (Turkey), Kuwait

Energy, Kogas

• Approximately 11 TCFG

Future Bidding-Major Fields

• East Baghdad • Kirkuk-BP 2013 • Jambur • Bai Hassan • Balad • Nasiriyah • Nahr Bin Umar • Tuba • Chemchemal

NEW IRAQ OIL LAW (IN IRAQ PARLIAMENT-MANY DELAYS)

• REGIONAL GROUPS (KURDS, SUNNIS, SHIA) SHARE OIL REVENUE

• ALLOWS SOME REGIONAL CONTROL OF FUTURE EXPLORATION – I RECOMMENDED TEXAS RRC AND TEXAS BEG MODELS TO IRAQ GOVERNMENT.(KURDISH PROBLEM PERHAPS SOLVED IN NEAR FUTURE)

• IRAQ GOVERNMENT TO OFFER OVER 50 FIELDS FOR BID- SERVICE CONTRACTS ONLY

KURDISTAN FIELD OVERVIEW

• Kirkuk Production: Middle Cretaceous Qamchuqa Limestone, Upper

Cretaceous Shiranish Limestone, Eocene-Oligocene-Lower Miocene Asmari Limestone

Limestones are highly fractured 36-44 deg. API, 2% sulphur Miocene Lower Fars is cap rock Depositional Setting: Open to shallow marine carbonate shelf-

platform Discovered in 1927-production started in 1934 Water injection system-reservoir damaged Production today less than 500,000 BOPD Reserves: Original 25-40 BBO Has associated 8-9 TCFG BP has signed agreement with Iraq to develop the field. Major

problem with the KRG

Gulf-Keystone Blocks Possible 20 BBO

KURDISTAN FIELD REVIEW • Bai Hassan Production: Middle Cretaceous Shiranish Limestone,

Middle Cretaceous Qamchuqa, Eocene-Oligocene-Miocene Asmari Limestone

Limestones are highly fractured 32-34 deg. Gravity, 2-4% sulphur Miocene Lower Fars is cap rock Depositional Setting: Open to shallow marine carbonate

shelf-platform - some marine clastics Discovered in 1953, producing in 1960 Production 100,000 BOPD—can reach 200,000 BOPD

(short time) Has a large gas cap, 9-10 TCFG Reserves 1.5-2 BBO

KURDISTAN FIELD REVIEW • Jambur Production: Middle to Lower Miocene Jerribe-Euphrates

Limestone/Clastic Gas production from Middle Miocene Qamchuqa

Limestone Limestones are fractured 38-47 deg. API, 1.3%sulphur Lower Fars is cap rock Depositional Setting: Open to shallow marine carbonate

shelf-platform - some marine clastics Discovered in 1954-production started in 1959 Production to 75,000 BOPD Reserves: 2.5 BBO, 9-10 TCFG

KURDISTAN FIELD REVIEW • Khabbaz Production: Middle to Lower Miocene Jerribe/Oligocene

Limestone/Clastics, Upper/Lower Qamchuqa Limestone 29-42 deg. API, 2-3% sulphur Discovered in 1976- production started in 1987 Production to 25,000 BOPD, 45 MCFGPD Reserves: 3 BBO, Significant associated gas

KURDISTAN FIELD REVIEW • TaqTaq Production: Cretaceous Carbonate Carbonates are fractured 46-50 deg. API, 2-4% sulphur Reserves: 750 MMBO-1 BBO Expected production: 200,000 BOPD

Production Tests-TaqTaq • TT-04 tested at an aggregate flow rate of 29,790 bbl/d gross in

November 2006 • TT-05 tested at an aggregate flow rate of 26,550 bbl/d gross in March

2007 TT-06 tested at an aggregate flow rate of 18,900 bbl/d gross in June

2007 • TT-07 tested at an aggregate flow rate of 37,560 bbl/d gross in

September 2007 • TT-09 tested at an aggregate flow rate of 16,170 bbl/d gross in January

2008 • TT-08 tested at an aggregate flow rate of 35,750 bbl/d gross in March

2008 • TT-11 tested at an aggregate flow rate of 470 bbl/d gross in November

2008 • TT-10 tested at an aggregate flow rate of 44,240 bbl/d gross in March

2009

KURDISTAN FIELD REVIEW • Chemchemal Production: Upper Cretaceous Shiranish carbonates,

Upper Cretaceous Kometan limestone Carbonates and limestones are fractured Discovered in 1953 Production (1990) 7MCF/D and associated liquids Reserves: 2 TCFG Shell is interested in the field once the Iraqi Oil Law is

signed

KURDISTAN FIELD REVIEW • Pulkhana Production: Lower Miocene Euphrates, Upper Cretaceous

Shiranish Limestone 28-35 deg. API, 2.7 sulphur Discovered in 1956 Production: Unknown Reserves: 300 MMBO, associated gas

KURDISTAN FIELD REVIEW • Demir Dagh Production: Upper Cretaceous Shiranish carbonates Carbonates are fractured Greater than 22 deg. API, 2% sulphur Discovered in 1960 Production: Historical 11 MMCFGPD and associated 43

deg. API condensate

KURDISTAN FIELD REVIEW • Tawke Production: Cretaceous and Tertiary carbonates Carbonates are fractured 25-27 deg. API, 2% sulphur Discovered 2004 Reserves: 1 BBO (2013) First horizontal well-Tawke -20- 25,000 BOPD Tawke 21,22 23 Currently drilling horizontal holes Tawke 23 Reported testing 3,051’ Cretaceous

horizontal 32,500 BOPD DNO is the primary operator

KURDISTAN FIELD REVIEW • Anfal (Kormor) Production: Cretaceous and Tertiary Carbonates. Carbonates are fractured Discovered in 1928 Production unknown Reserves: 1.7 TCFG Dana OIL in agreement with KRG to develop field

KURDISTAN FIELD REVIEW • Other minor fields: Koysinjaq- near Erbil-rumored to produce 6,000 BOPD

in 2002-local consumption

Oil Search-Tazi Block

Shakal

Bina Bawi

Genel -Miran • The Miran West-1 exploration well in the Kurdistan Region of Iraq reached its targeted depth

and encountered oil shows over an 1,100 metre interval including the three principal proven reservoir formations in the region. Heritage announced that good quality light, sweet oil

was recovered to surface indicating the presence of hydrocarbons in the three main producing zones: the Shiranish, the Kometan and the Quamchuqua reservoirs.

1 BBO—9 TCFG

Miran Block, Iraq The license area is 1,015 square kilometers and encompasses the very large Miran structure. This structure, as expressed at surface, constitutes an area of approximately 500 square kilometers and appears to have three separate culminations. Reservoir potential exists at numerous zones that management estimate could contain in excess of 1 billion barrels of oil. Recent drilling results have demonstrated the enormous potential of this region.

Western Zagros-Talisman PSA

• Back in February 2008, Western Zagros Resources

signed a Production Sharing Contract (PSC) with the Kurdistan Regional Government (KRG) for the 2,120 sq km Kalar-Bawanoor Block. The first of its wells, Sarqala 1, was drilled and encountered extremely high pressures. Saraqala-1 is located in the southern portion of the PSC area and was drilled to a total depth of 4,357 metres. It was suspended in early 2009. While numerous oil and gas shows were encountered, the wellbore conditions encountered did not allow the Company to test the well nor penetrate all the reservoir targets. The Company is evaluating the potential to re-enter this well in order to test the Jeribe reservoir.

• Kurdamir-1 The reservoir production potential of approximately 52 million cubic feet per day of gas and 2,240 barrels per day of condensate could be expected from this Upper Oligocene.

Hunt Oil PSA • Hunt Oil and Afren have announced an update on the

on-going testing programme on the Hunt Oil Middle East (HOME) operated Simrit-2 well, yielding incremental flow rates of 5,368 bopd, with a cumulative rate of 18,952 bopd from six of the 12 zones tested.

• Following the conclusion of drilling operations at the Simrit-2 well, located on the northern part of the Ain Sifni PSC, Kurdistan region of Iraq, the Partners have successfully completed three further DSTs in the Jurassic Mus, Adiayah and Butmah formations yielding incremental flow rates of 5,368 bopd of 21o API oil using the Hitech-3 rig. The Partners have now achieved aggregate flow rates of 18,952 bopd to date. The remaining testing operations will focus on Upper Jurassic and Cretaceous reservoirs.

HUNT PSA

Other KRG PSAs

• KRG signed five more petroleum contracts •

KRG signs petroleum contracts with affiliates and subsidiaries of TNK-BP, Korea National Oil Corp, Hillwood, Sterling Energy (left block- 2013), Vast Exploration (left block-2013), Aspect Energy