Myanmar Deepwater E&P Operations Outlook

Dr. Zaw Min Than

Technical Advisor

SMART E&P International Co., Ltd.

GE Oil & Gas

Outline

• Deep Water Definition

• Myanmar Deep Water Blocks

• Opportunities & Challenges

Depth Water Definition

“no agreed industry definition of what constitutes deep water. When we started in the North Sea 30 to 40 years ago, depths of 100 to 700 ft would have been regarded as deep water; and, as our abilities and technologies have moved forward, so the definition of what is deep has moved with it. Depths west of Shetland in the UK vary from approximately 500 ft to 6,000 ft plus.”

Malcolm Webb,

chief executive officer of Oil and Gas, UK

Ref: SPE Forum

Deepwater Production

Fig. Federal offshore oil production in the Gulf of Mexico. Source: US Energy Information Administration.

Myanmar Deep Water Blocks

AD-1 (457 to 1829 m <)

AD-2, 3,4,5 ( 1829 m < )

AD-6 ( 5.18 -89.91m <)

AD-7 (89.91 -1395.98m <)

AD-8 (979.56 -1995.13m)

AD-9 ( 979.56-1995.13m < )

AD-10 ( 1995.13m < )

Arakan Deep

AD-11, 12, 13,14, 15, 16

MD-1 ( 1829 m < )

MD-2 ( 457- 1829 m < )

MD-3 ( 183 m – 1829m < )

MD-4 ( 914 – 2439 m < )

MD-5 ( 1829 – 2744 m < )

MD-6 ( 1829 m – 3049m < )

MD-7 ( 914- 3049m)

MD-8, ( 762m-2744m <)

Moattama Deep

YWB

2014 Winners & Opening Blocks Arakan Deep

1 AD-2 BG Asia Pacific+Woodside Energy (Myanmar)

2 AD-3 Ophir Energy Plc

3 AD-4

4 AD-5 BG Asia Pacific+ Woodside Energy (Myanmar)

5 AD-9 Shell Myanmar Energy + MOECO

6 AD-10 Statoil + ConocoPhillips

7 AD-11 Shell Myanmar Energy + MOECo

8 AD-12

9 AD-13

10 AD-14

11 AD-15

12 AD-16

Moattama Deep

13 MD-1

14 MD-2 Eni Myanmar (1829 m <)

15 MD-3

16 MD-4 Eni Myanmar (989-2439 m)

17 MD-5 Shell Myanmar Energy+MOECO

18 MD-6

19 YWB Total E&P Myanmar

9-deep water blocks are still opening out of 19-blocks.

Arakan Shallow

A-4 BG Asia Pacific+ Woodside Energy (Myanmar)

A-5 Chevron (Unocal Myanmar Offshore Co., Ltd)

A-7 BG Asia Pacific + Woodside Energy (Myanmar)

Moattama Shallow

M-4 Oil India Ltd+ Mercator Petroleum Ltd+Oilmax Energy

M-7 ROC Oil + Tap Oil

M-8 Berlanga Holding

M-15 Transcontinental Group

M-16

M-17 Reliance Industries

M-18 Reliance Industries

YEB Oil India Ltd+Mercator Petroleum Ltd+Oilmax Energy

1- Shallow water block is still opening out of 11-blocks.

MD-7 2Q14, EIA/SIA survey report 2Q14, 2D seismic Data processing MD-8 2Q14, EIA/SIA survey report 2Q14, 2D seismic Data processing

M-3 1Q11, Aung Sinkha-2 (EXP) 1Q12, 3D complete 2Q12, pre-conceptual study 3Q12, appraisal drill campaign 3Q12, pre-conceptual study complete 4Q12, appraisal campaign 2Q13, 3 appraisals complete 3Q13, four appraisal, gas discovery (Aung Sinkha-3, Aung Sinkha-4,

Aung Sinkha-5 and Aung Sinkha-6) 1Q14, 5 appraisals + 1 exploratory 2Q14, Ongoing drilling campaign

preparation of 5 appraisal wells and 1 exploration well in 2014 – 2015

2Q14, Data study of drilled wells 2Q14 6-appraisal wells (C&F

Service_Baker)

M-9 2007, ZTK-1,2,3,4,5, Gawthaka-1, Kakonna-1 (7-Exps)

(Dev) 1Q12, 3D complete, 1Q12, Zawtika develop 1Q13, 35 wells in 3 platforms, Zaw tika field 1Q14, Zawtika ZQP complete & comissioning 1Q14, Start gas deliver M-9E 1Q14, 10 appraisal wells drill campaign prepare ( 7 DQ Wellheads & 3 Used WHs) 2Q14, 10 onging, appraisal wells D/C prepare 2Q14 , workover 4Q14, development well (CFT drill contract)

M-11 1Q12, 3D Complete (Exp) 2Q12, Exploratory 3Q12, Exploratory drill campaign 4Q12, appraisal drill campaign 1Q13, preparing explore drill 3Q13, 1st Exp Well spud 4Q13, Completed drilling deepwater

exploration, Manizawta-1, in block M11 2Q14, Data study of drilled wells

M-7 1Q12, relinquish

Offsh

ore

EP-2 2Q12, PSC signed & PSC-G 3Q12, 2D seismic 3Q13, 2D completed 1Q14, 2D processing & Interpretation 2Q14, Drilling campaign preparation for 4 exploration

wells is in process during 2014 – 2015 MOGE-3 Padaukpin-Natmi

On

land

MYA

NM

AR

Dr. Zaw Min Than SMART Technical Service Co., Ltd

MYA

NM

AR

M-3, M-7, M-9, M-11 (Shallow Water Blocks) MD-7, MD-8 (Deep Water Blocks) EP-2 & PSC-G (Onland Blocks)

MOGE-3

M-5&6 3Q98, Gas Production (Yatana 1Q12, Gas Production avg Field) 1Q12, Plan to drill 2 infill horizontal wells in May 2012 (Prod/EXP) 1Q12, Completed re-processing seismic data and in the process to define the 3D seismic area

in Block M6E 2Q12, Started the drilling of 2 infill horizontal wells in mid-May 2012, Jack Up Rig, Seadrill(West

Callisto) 3Q12, Completed the drilling of infill horizontal well in Jul 2012 4Q12, Completed 4D seismic acquisition in Yadana, Badamyar and Sein 4Q12, 3D seismic acquisition in Southeast of block M6 1Q13, Gas Production 1Q13, 4D seismic data processing covering Yadana, Badamyar and Sein is 7.2% completed. 1Q13, Completed 3D seismic data acquisition in Southeast of block M6 2Q13, 4D seismic data processing, covering Yadana, Badamyar and Sein areas, is 53%

completed 2Q13, 3D seismic data processing in Southeast of block M6 is 60% completed 3Q13, 4D seismic data processing covering Yadana, Badamyar and Sein is 71% completed 3Q13, 3D seismic data processing in Southeast of block M6 is 97% progress 4Q13, 4D seismic data processing (covering Yadana, Badamyar and Sein) is 87% completed 4Q13, 3D seismic data processing in Southeast of block M6 1Q14, gas production 1Q14, 4D seismic processing completed, Yadana field, Badamyar field & Sein Field 1Q14, 3D acquisition 67% completed 2Q14, 3D acquisition completed 2Q14, 3D data processing 22% completed 1Q15, 1-Well YWB new awarded block

M-5 & M-6

YWB

Petronas Carigali Myanmar (Hong Kong) Ltd (PCML)

M-12, M-13, M-14 (Yetagun Project_Production/Exploration) 1Q12, Conducted 3D seismic survey (broadband) on Prospects ZY

and P in the North-West of Yetagun Platform 3Q12, Completed Front End Engineering Design (FEED) for Yetagun North Development Project 3Q12, Ongoing processing for 3D seismic data (broadband) covering prospects ZY and P 4Q12, Sanctioned for Yetagun North Development (Phase 5)

Project 4Q12, Ongoing the processing of 3D seismic data for (broadband) covering prospects ZY and P. 1Q13, 3D seismic data processing. 4Q13, Yetagun North Project progress is completed 66% 1Q14, Gas Production 1Q14, Yetagun North Project EPCIC progress is 95% completed 2Q14, 2 wells drilling is 50% completed 3Q14, 2-Exploratory wells (Yethurein Drilling Campaign )

IOR-5 Htantabin IOR-7 Shwepyitha

Offsh

ore

On

land

A-1 (Shwe) 3Q14, drilled 3 Dev Wells, onging drilling 3 out of planned (12) Wells (surface-top side, WHs)-100m A-1 (Shwe Phyu) A-3 (Mya) 4Q11, drilled 4 wells (subsea) AD-7 4Q13, 3 D Seismic

Mobile Offshore Drilling Units (MODUs)

• Jack up Rig

• Tender Rig

• Semisubmersible (moored)

• Semi Tender

• Semisubmersible (Dynamically positioned)

• Drillship

Drilling Contractors & Rigs

• Seadrill Limited – 66 offshore drilling units (15 semi-submersible rigs, 1 drillship, 24 jack-up rigs, and 16 tender

rigs.)

• Transocean Ltd – 82 mobile offshore drilling units (48 high-spec floaters, 25 midwater floaters, and 9 high-spec

jackups, 6 ultra-deepwater drillships and 3 high-spec jackups

• Ensco PLC – 74 rigs (9 drill ships, 13 dynamically positioned semisubmersible rigs, 6 moored

semisubmersible rigs, and 46 jackup rigs)

• Noble Corporation – 14 semisubmersibles, 14 drillships, 49 jackups, and 2 submersibles (5 ultra-deepwater, harsh environment drillships and 6 heavy-duty, harsh environment

jackups)

• Diamond Offshore Drilling, Inc. – 44 offshore drilling rigs (32 semisubmersibles, 7 jack-ups, and 5 dynamically positioned

drillships)

• Hercules Offshore, Inc. – 37 jackup rigs, 13 barge rigs, and 58 liftboat vessels

A Record of Drilling Contractors in Myanmar Offshore

• Seadrill_ Jackup • Ensco 5005_Semisub • Vantage Drilling_Tungsten Explorer • Hercules Offshore_H-208 (Jan – Aug 2013) • UMW Offshore_Naga-5 • KCA Deutag (Drilling)_Tender Assist Glan Affic • SK (Drilling)_T-9 Tender Assist • KNOC (Doo Sung)_Jackup • COSL_GIFT • West Juno_Jack up (may-June 2011) • Hakuryu-5 (Feb-Oct 2011)_Semisubmersible • UMW Naga-1 • SKD (T-19)

Rated Water Depth 1700 Current Water Depth 515 ft Drilling Depth 25,000 ft Low 230000 USD/day

KCA DEUTAG’s self-erect tender (SET) barge, the Glen Affric

SKD’s T-9 Tender assist rated Water Depth: 6,000 ft Drilling Depth: 30,000 ft 13,000 USD/day

Fleet Status Reports

MODU Dayrates (Worldwide)

• 46 rigs in SE

– 41 are in drilling,

– 5 are waiting on location or in shipyards

• 8 Semisubs in SE

– 4 Malaysia,

– 2 Vietnam,

– 1 Jakarta Peninsula,

– 1 Myanmar

• 20 Offshore Operators working/preparing for drilling campaign in 38 offshore blocks (Myanmar)

Southeast Asia Rigs

Drilling Units in Myanmar Offshore

Rated Water Depth 1700 Current Water Depth 515 ft Drilling Depth 25,000 ft

SKD’s T-9 Tender assist ated Water Depth: 6,000 ft Drilling Depth: 30,000 ft

KCA DEUTAG’s self-erect tender (SET) barge, the Glen Affric

• Seadrill_ Jackup

• Ensco 5005_Semisub

• Vantage Drilling_Tungsten Explorer

• Hercules Offshore_H-208 (Jan – Aug 2013)

• UMW Offshore_Naga-5

• KCA Deutag (Drilling)_Tender Assist Glan Affic

• SK (Drilling)_T-9 Tender Assist

• KNOC (Doo Sung)_Jackup

• COSL_GIFT

• West Juno_Jack up (may-June 2011)

• Hakuryu-5 _Semisubmersible (Feb-Oct 2011)

• UMW Naga-1

• SKD (T-19)

Deep Water Drilling System Components

Surface Components 1. Hydril Pressure Control Fluid Reservoir Unit

(FRU)/Mixing System 2. Hydril Pressure Control Automatic Hydraulic Power

Units 3. Hydril Pressure Control Accumulator Banks 4. Hydril Pressure Control Central Control Unit (CCU) 5. Hydril Pressure Control Uninterruptible Power System

(UPS) 6. Hydril Pressure Control Power Distribution Pannels

(POP) 7. Hydril Pressure Control Toolpusher’s Panel 8. Hydril Pressure Control Driller’s Control Panel 9. VetcoGray Spider & Gimbal 10. VetcoGray CSO Diverter 11. Hydril Pressure Control Hose/Cable Reels 12. VetcoGray Telescopic Joint 13. VetcoGray Intermediate Flex Joint 14. VetcoGray Tension Ring 15. VetcoGray Termination Joint

Subsea Components 16. VetcoGray Marine Drilling Riser 17. VetcoGra MR-6E 18. VetcoGray HMF E-H 19. VetcoGray MR-6H SE 20. Blowout Prevanter (BOP) Stack 21. MR-6H SE Riser Adapter 22. Hydril Pressure Control Multiplex Control Pod 23. Hydril Pressure Control Subsea Electronics Module

(SEM) 24. Hydril Pressure Control GX Annular BOP 25. Hydril Pressure Control Compact Ram BOP 26. VetcoGray H-4 Subsea Connectors 27. Hydril Pressure Control Shuttle Valves 28. Hydril Pressure Control Subsea Accumulator Racks

Accessories 29. Hydril Pressure Control Gas Handler 30. Hydril Pressure .Control Riser fill-up Valve 31. Hydril Pressure Control Acoustic Control System (Emergency) 32. Hydril Pressure Control Cable/Hose Reel Control Console 33. Hydril Pressure Control Cable/Hose Sheaves 34. Hydril Pressure Control Diverter Control Panel 35. Hydril Pressure Control Electro-Hydraulic (E/H) Backup Pannel 36. Hydril Pressure Control Remote Service Network (RSN) 37. Hydril Pressure Control Surface/Subsea Electronic Riser Angle System (ERA)

Ref: GE Oil & Gas

Offshore Services & Expenses 10,000 100,000 1,000,000 10,000,000 100,000,000

EIA

G&G

Logistics Consultancy

Agency

3D Seismic Processing

3D Seismic Interpret

Drilling Hazards Assessment

NGH

Project Management Consultancy

Subsea WH & Tubular

Casing Accessories

Drilling Rig and Associated Services

Rig Inspection Services

Rig Positioning Services

Bundled Drilling Services

Mud Logging

Liner Hanger Services

Drilling Fluid and Solids Control Services

Formation Pore Pressure Prediction Service

Offshore Communications Services

Cementing Accessories Services

Aviation Services

Post Drilling Geological Evaluation

Wellsite Geology Supervising Service

Case A

Case B

USD

Services & Estimated Prices in Deep Water Exploration (Myanmar)

1) EIA – USD 0.1 to 0.5 million 2) Geotechnical Survey – USD 1.5 to 2 million 3) Geophysical Survey - USD 4 to 6 million 4) 3D seismic

Data Acquisition Processing - USD 400 to 500 /sq km Interpretation - USD 1000 to 1300/ sq km

5) Rig Day Rate Jack Up - 0.2 to 0.3 million USD/day

• mod/demod - USD 4 to 5 million (based on location)

Semisubmersible (ENSCO 5005) - 230000 USD/day SKD TD T-9 - 133,000 USD/day

6) Rig Accessories Pipe BOP

7) Aviation • Helicopter - • Fixed Wind - 3000 to 4000 USD/hr

8) Wellhead System - USD 2 to 3 million 9) Drilling Fluid and Solids Control - 600 to 2000 USD/meter

10) Floating Warehouse Barge - 30000 to 40000 USD/day 11) Mud Logging -USD 0.2 to 0.5 million < 12) Communication (From Rig to Yangon) - 0.15 to 2 million USD/month 13) Project Management Service (See in Table) 14) Long Lead Equipments Suppliers (Rental/Buy) 15) Rig Inspection Service 16) Rig Positioning Service 17) ROV Services 18) Anchor Handling Tug Supply (AHTS) vessels -10000-15000 USD/day 19) Cementing Services - 20) Dynamic Position Fast Supply Intervene Vessel Service - 21) Crew Boat Rental Service - 22) Consultancy Service for Logistic Supply Chain and Robust Planning & Integrated Operation

Project Management Day Rate (USD)

Drilling Superintendent 3500 - 5000

Day Drilling Supervisors 3000 - 4500

Night Drilling Supervisors 3000 - 4500

Senior Drilling Engineer 3000 - 5000

Contract Specialist 2500 - 4500

Logistics Specilist 2050 - 4200

HSE Engineer 1500 -4000

Drilling Supervisor 1270 - 3800

Drilling Engineer 1000 - 3500

Material Engineer 800 - 3300

Logistics Engineer 800 - 3300

Contract Engineer 900 - 2500

Project Management Service

Estimated Expenditure in Exploration USD 20 to 100 million

Flying to AD-9, Shell Myanmar Energy

Sikorsky Helicopter -S-76 -------------- 287km/h Yangon to AD-9 -------------- 480 km Kyauk-Phyu to AD-9 -------------- 176 km Ranong to AD-9 -------------- 1195 km Maximum takeoff Wt. --------------- 5,306kg Price Rate --------------- 2000 – 3000 USD/hr Mob/Demob --------------- Standing charged --------------- in operation

Measured Points from MOGE Block Map Point A (Lat 18 ° 30’ N- Long 91° 30’E) Point B (Lat 19 ° N- Long 91 ° 30’E) Point C (Lat 18 °30’N- Long 92 °30’E) Point D (Lat 19 ° N- Long 92 ° 30’E) Water Depth of AD-9 979.56-1995.13m <

Shell

Timeline for New Blocks

• 2014 Nov- Dec

(Signing Agreements)

• 2015 Jan-Aug

(EIA/SIA :Shallow-6 months, Deep-1 years)

• 2015 Sept -2016

(Seismic Survey)

• 3Q16

Exploratory Drilling

Opportunities & Challenges

Challenges • Unstable Policy • (Immigration, Import

Permit, Taxation, Visas, etc.)

• Bureaucracy (Document System)

• Limited Information (Ministry to Ministry)

• Shortage of Talent ( Weak Capacity)

• Poor Infrastructure • Closed door for 20 Years

(Red Tape)

Opportunities • 20 newly awarded blocks • Open Blocks • New Service Areas • Capacity Building • Knowledge &

Technological Transfer • Educated nationals

returning to Myanmar • 2015 EITI Potential

Candidate

Conclusion & Discussions

• Deepwater operators will sign very soon.

• Operation work plans or Timeline

• Opportunities for operators

• Essential needs to overcome challenges

• Needs for their exploration/drilling campaign

• Estimated investments

• Why Local & International Partnerships are needed

• Good market places are near