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GCA

GAFFNEY, CLINE & ASSOCIATES

COMPETENT PERSONS REPORT


ON HARDYS PETROLEUM INTERESTS
Prepared for
HARDY OIL AND GAS PLC
MARCH, 2011

The Americas
1300 Post Oak Blvd.,
Suite 1000
Houston, Texas 77056
Tel: +1 713 850 9955
Fax: +1 713 850-9966
email: gcah@gaffney-cline.com

Europe, Africa, FSU


and the Middle East
Bentley Hall, Blacknest
Alton, Hampshire
United Kingdom GU34 4PU
Tel: +44 1420 525366
Fax: +44 1420 525367
email: gcauk@gaffney-cline.com

Asia Pacific
80 Anson Road
31-01C Fuji-Xerox Towers
Singapore 079907
Tel: +65 6225 6951
Fax: +65 6224 0842
email: gcas@gaffney-cline.com

and at Argentina - Brazil - Kazakhstan - Russia - UAE - Australia


www.gaffney-cline.com

Hardy

Copy No.

EE024430

GCA

TABLE OF CONTENTS

Page No.
INTRODUCTION .................................................................................................................................

SUMMARY ...............................................................................................................................................

1.

DISCUSSION ...........................................................................................................................

13

1.1

Cauvery Basin ............................................................................................................

13

1.1.1
1.1.2

PY-3 Field (Hardy NWI 18%) ...............................................................


Block CY-OS/2 (Hardy NW1 75%, Operator)................................

13
21

Saurashtra Basin (west of Mumbai Offshore Basin)..........................................

26

1.2.1 Block GS-01(Hardy NW1 10%) ..................................................................

30

1.2.1.1 Contingent Resources ....................................................................


1.2.1.2 Prospective Resources ...................................................................

30
34

Krishna Godavari Basin ...........................................................................................

36

1.3.1 Block D3 (Hardy NW1 10%).......................................................................

39

1.3.1.1 Contingent Resources ....................................................................


1.3.1.2 Prospective Resources ...................................................................

41
46

1.3.2 Block D9 (Hardy NW1 10%).......................................................................

52

Assam-Arakan Basin ...............................................................................................................

58

1.4.1 AS-ONN-2000/1 (Hardy NWI 10%) ........................................................

61

ECONOMIC EVALUATION ................................................................................................

64

2.1
2.2
2.3
2.4

Fiscal Systems.............................................................................................................
Cost Assumptions ....................................................................................................
Oil Pricing ...................................................................................................................
NPV Results ...............................................................................................................

64
65
65
65

3.

QUALIFICATIONS .................................................................................................................

66

4.

BASIS OF OPINION ...............................................................................................................

66

Summary of Licence Areas....................................................................................................


Summary of Estimated Gross and Net Entitlement Oil Reserves
as at 31st December, 2010 ....................................................................................................
Summary of Hardy Reference Pre-/Post-Tax Net Present Values
as at 31st December, 2010 ....................................................................................................
PY-3 Gross Production and Cost Profiles.........................................................................

1.2

1.3

1.4

2.

Tables
0.1
0.2
0.3
0.4

Hardy

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6
7
7

GCA

TABLE OF CONTENTS
Page No.

0.5
0.6
0.7
0.8
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
2.1

Hardy

Summary of Gross and Net Gas Contingent Resources


as at 31st December, 2010 ....................................................................................................
Summary of Gross and Net Gas Condensate Contingent Resources
as at 31st December, 2010 ....................................................................................................
Summary of Gross and Net Gas Prospective Resources for Prospects
as at 31st December, 2010 ....................................................................................................
Summary of Gross and Net Oil Prospective Resources for Prospects
as at 31st December, 2010 ....................................................................................................
Well Ganesha-1: Summary of DST Results .......................................................................
Summary of CY-OS/2 Gross and Net Gas Contingent Resources
as at 31st December, 2010 ....................................................................................................
Ganesha-1: Summary Prospects Gross GIIP (BCF).........................................................
Summary of Gross and Net Gas Prospective Resources for Prospects
as at 31st December, 2010 ....................................................................................................
GS-01 Summary of Gross and Net Gas Contingent Resources
as at 31st December, 2010 ....................................................................................................
GS-01 Summary of Gross and Net Gas Condensate Contingent Resources
as at 31st December, 2010 ....................................................................................................
GS-01 Prospects Summary of Gross GIIP (BCF) .........................................................
Summary of GS-01 Gross and Net Gas Prospective Resources for Prospects
as at 31st December, 2010 ....................................................................................................
Block D3: Summary of Gross GIIP for Discoveries as at 31st December, 2010 ......
Block D3: Summary of Gross and Net Gas Contingent Resources
for Discoveries as at 31st December, 2010.......................................................................
Block D3: Summary of Gross GIIP for Prospects as at 31st December, 2010 .........
Block D3: Summary of Gross and Net Gas Prospective Resources for Prospects
as at 31st December, 2010 ....................................................................................................
Block D3: Summary of Gross GIIP for Leads as at 31st December, 2010 .................
Block D3: Summary of Gross Unrisked Gas Prospective Resources for Leads
as at 31st December, 2010 ....................................................................................................
Block D9: Summary of Gross GIIP for Prospects/Leads
as at 31st December, 2010 ...................................................................................................
Block D9: Summary of Unrisked Gross STOIIP for Prospects/Leads
as at 31st December, 2010 ....................................................................................................
Block D9: Summary of Gross and Net Gas Prospective Resources
for Prospects as at 31st December, 2010 ..........................................................................
Block D9: Summary of Gross and Net Oil Prospective Resources
for Prospects as at 31st December, 2010 ..........................................................................
Block D9: Summary of Gross Unrisked Gas Prospective Resources
for Leads as at 31st December, 2010 ..................................................................................
Block D9: Summary of Gross Unrisked Oil Prospective Resources
for Leads as at 31st December, 2010 ..................................................................................
AS-ONN-2000/1: Summary of Gross STOIIP for Leads as at
31st December, 2010 ..............................................................................................................
AS-ONN-2000/1: Summary of Gross and Net Oil Prospective Resources
for Leads as at 31st December, 2010 ..................................................................................
Pre- and Post-Tax Net Present Values Net to Hardys Reserves
as at 31st December, 2010 (U.S.$ MM) ..............................................................................

8
8
9
12
22
23
24
26
33
33
35
36
45
45
50
51
52
52
55
55
56
57
57
58
63
63
65

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GCA

TABLE OF CONTENTS
Page No.

Figures
0.1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
1.23
1.24
1.25
1.26
1.27

Location Map of Hardys Interests in India .......................................................................


Location of PY-3 Field and Block CY-OS/2, Offshore Cauvery Basin, India ...........
Cauvery Basin Lithostratigraphic Column ........................................................................
PY-3 Pay Top Structure Map with OWC @3,505 m SS ...............................................
PY-3 Pay Top Structure Map _Volumetric Polygons ......................................................
PY-3 Field Production Performance and Forecast ..........................................................
CY-OS/2 Prospect Location Map ........................................................................................
GS-01 Block Location .............................................................................................................
Offshore Mumbai Basin Lithostratigraphic Column ........................................................
Trap Styles in the Mumbai Basin ..........................................................................................
GS-OSN-1 Map ........................................................................................................................
GS-01 3D Depth Structure Map at Top Bassein Formation.........................................
Block GS-01 Seismic Line through the B-1 and A-1 Locations ....................................
Location Map Showing D3 and D9 Licences ....................................................................
Blocks D3/D9 Cenozoic Stratigraphy.................................................................................
D3 Prospect and Lead Map ...................................................................................................
Surface Geochemical Evidence for Thermogenic Hydrocarbons ................................
Wireline Log Responses at W1 Discovery .......................................................................
Revised Sand 1 Amplitude Map (Main Segment) ..............................................................
Lack of Connectivity between Well -A1 and Prospect AP1 .........................................
Seismic Section through the Q Leads...............................................................................
Seismic Section along the MMI Prospect with Potential Channels ..............................
D9 Prospect and Lead Location Map .................................................................................
Geomorphology in Pliocene D9 revealed by Seismic Attributes ................................
Oil Fields South of Brahmaputra River AS-ONN-2000/1 .............................................
Stratigraphic Column Assam-Arakan Basin .......................................................................
Seismic Line AS-17-08 in Assam Block ..............................................................................
AS-ONN-2000/1 Prospect and Lead Location Map Sylhet Formation
Time Structure Map ................................................................................................................

2
15
16
17
18
20
25
27
28
29
31
32
34
37
38
39
40
42
43
44
47
48
53
54
59
60
61
62

Appendices
I.
II.

Hardy

Glossary
SPE/WPC/AAPG/SPEE, Petroleum Resources Management System Definitions and
Guidelines

EE024430

Bentley Hall
Blacknest, Alton
Hampshire GU34 4PU
United Kingdom

Gaffney, Cline & Associates Ltd


Technical and Management Advisers to the Petroleum Industry Internationally Since 1962

Telephone: +44 (0) 1420 525366


Facsimile: +44 (0) 1420 525367
email: gcauk@gaffney-cline.com
www.gaffney-cline.com

Registered London No. 1122740

MIH/EE024430/cxd

11th March, 2011

The Directors,
Hardy Oil and Gas plc,
Lincoln House,
37-143 Hammersmith Road,
London,
W14 0QL
Dear Sirs,
COMPETENT PERSONS REPORT (CPR) ON HARDYS PETROLEUM INTERESTS
INTRODUCTION
In accordance with the instruction letter of Hardy Oil and Gas plc (Hardy) dated
16th November, 2010 Gaffney, Cline & Associates Ltd (GCA) has reviewed and audited the petroleum
interests owned by Hardy (Figure 0.1).
These assets include producing properties, potential
developments, discoveries and duly licensed exploration interests.
Hardy has made available to GCA a data-set of technical information, including geological,
geophysical, and engineering data and reports, together with financial data and the fiscal and contractual
terms applicable to each of the assets. GCA has also had meetings and discussions with Hardy technical
and managerial personnel. In carrying out this review GCA has relied on the accuracy and completeness
of the information received from Hardy.
GCA has not been requested to perform a site visit, nor has GCA considered this necessary for
the purposes of this CPR.
GCAs review and audit involved reviewing the relevant interpretations and assumptions made by
Hardy or others in preparing estimates of reserves or resources. We carried out procedures necessary
to enable us to render an opinion on the appropriateness of the methodologies employed, adequacy and
quality of the data relied upon, the depth and thoroughness of the reserves and resources estimation
process.
Industry Standard abbreviations are contained in the attached Appendix I Glossary, some or all of
which may have been used in this report.
In this report GCA uses the Petroleum Resources Management System (SPE PRMS) published by
the Society of Petroleum Engineers/World Petroleum Congresses/ American Association of Petroleum
Geologists/Society of Petroleum Evaluation Engineers (SPE/WPC/AAPG/SPEE) in March, 2007 as the basis
for its classification and categorization of hydrocarbon volumes. An abbreviated form of the SPE PRMS is
appended as Appendix II.

UNITED KINGDOM

UNITED STATES

SINGAPORE

AUSTRALIA

ARGENTINA

UAE

RUSSIA

KAZAKHSTAN

GCA

Gaffney, Cline & Associates

FIGURE 0.1
LOCATION MAP OF HARDYS INTERESTS IN INDIA

New
New Delhi
Delhi

Jaipur
Jaipur

Kathmandu
Kathmandu

Lucknow
Lucknow

AS-ONN2000/1

Gangtok
Gangtok

Itanagar
Itanagar

Varanasi
Varanasi

Saidpur
Saidpur

Patna
Patna

Kohim
Kohimaa

Shillong
Shillong

achi
rachi

Im
Imphal
phal

Agartala
Agartala

Ranchi
Ranchi

Bhopal
Bhopal

Ahm
Ahmadabad
adabad

Khulna
Khulna

Chittagong
Chittagong

Nagpur
Nagpur

Dam
Daman
an

Bhubaneshw
Bhubaneshwar
ar

GS-01

I N D I A

Mum
Mumbai
bai
Pune
Pune

Vishakhapatnam
Vishakhapatnam

Hyderabad
Hyderabad

D9

Panaji
Panaji

D3

CY-OS/2
PY-3 Field

Cochin
Cochin

Chennai
Chennai

Bengaluru
Bengaluru

Mangaluru
Mangaluru

Bay of
Bengal

Madurai
Madurai

Colombo
Colombo

500 km

Nepal

akistan
Pakistan

Bhutan

Bangladesh
Bangladesh

Myanmar

India
India

Hardy Block Interests


Source: GCA/Petroview

n
Bay
of
Bengal
Andaman
Sea
Sri Lanka

Hardy

EE024430

GCA

Gaffney, Cline & Associates

Reserves are those quantities of petroleum that are anticipated to be commercially recoverable
by application of development projects to known accumulations from a given date forward under defined
conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial
and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are
further categorized in accordance with the level of certainty associated with the estimates and may be
sub-classified based on project maturity and/or characterized by development and production status. All
categories of Reserve volumes quoted herein have been determined within the context of an economic
limit test (pre-tax and exclusive of accumulated depreciation amounts) assessment prior to any Net
Present Value analysis.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations, but the applied project(s) are not yet considered
mature enough for commercial development due to one or more contingencies. Contingent Resources
may include, for example, projects for which there are currently no evident viable markets, or where
commercial recovery is dependent on technology under development, or where evaluation of the
accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized
in accordance with the level of certainty associated with the estimates and may be sub-classified based on
project maturity and/or characterized by their economic status.
It must be appreciated that the Contingent Resources reported herein are unrisked in terms of
economic uncertainty and commerciality.
Prospective Resources are those quantities of petroleum that are estimated, as of a given date, to
be potentially recoverable from undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of discovery and a chance of
development. Prospective Resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity. Prospective Resources include Prospects and Leads. Prospects are
features that have been sufficiently well defined, on the basis of geological and geophysical data, to the
point that they are considered drillable. Leads, on the other hand, are not sufficiently well defined to be
drillable, and need further work and/or data. In general, Leads are significantly more risky than Prospects
and therefore are not suitable for explicit quantification.
Prospective Resource volumes are presented as unrisked. It must be appreciated that
Prospective Resources are risk assessed only in the context of applying the stated 'Geological Chance of
Success' (GCoS), a percentage which pertains to the percentage probability of achieving the status of a
Contingent Resource (where the GCoS is unity). This dimension of risk assessment does not
incorporate the considerations of economic uncertainty and commerciality.
Proved, Proved plus Probable and Proved plus Probable plus Possible Reserves net to Hardy are
quoted as Net Entitlement Reserves reflecting the terms of the applicable Production Sharing Contracts
(PSCs). Contingent Resources are presented at a gross field level and a net working interest level, as it is
not possible to estimate net entitlements under the relevant PSCs.
It must be clearly understood that any determination of resources volumes, particularly involving
continuing field development, will be subject to significant variations over short periods of time as new
information becomes available and perceptions change. Not only are such estimates of Reserves and
Contingent and Prospective Resources based on that information which is currently available, but such
estimates are also subject to uncertainties inherent in the application of judgmental factors in interpreting
such information. Contingent and Prospective Resources quantities should not be confused with those
quantities that are associated with Reserves due to the additional risks involved. Those quantities that
might actually be recovered may differ significantly from the estimates presented herein. A possibility
exists that the accumulations and prospects will not result in successful discovery and development, in
which case there could be no positive potential present worth.

Hardy

EE024430

GCA

Gaffney, Cline & Associates

It should be clearly noted that the reference Net Present Values (NPVs) of future revenue
potential of a petroleum property, such as those discussed in this report, do not represent GCAs
perception of the market value of that property, or any interest in it. In assessing a likely market value, it
would be necessary to take into account a number of additional factors including: reserves risk (i.e. that
Proved and or Probable Reserves may not be realised within the anticipated timeframe for their
exploitation); perceptions of economic and sovereign risk; potential upside, such as in this case
exploitation of reserves beyond the Proved and the Probable level; other benefits, encumbrances or
charges that may pertain to a particular interest and the competitive state of the market at the time.
GCA has explicitly not taken such factors into account in deriving the reference NPVs presented herein.
GCA is an energy consultancy specialising in independent petroleum advice on resource
evaluation and economic analysis. In the preparation of this report, GCA has maintained, and continues
to maintain, a strict consultant-client relationship with Hardy. The management and employees of GCA
have been, and continue to be, independent of Hardy in the services they provide to the company
including the provision of the opinion expressed in this review. Furthermore, the management and
employees of GCA have no interest in any assets or share capital of Hardy, or in the promotion of the
company.
This report must only be used for the purpose for which it was intended.
SUMMARY
Hardy has interests in a number of assets in India that comprise production, potential
development, discoveries and exploration.
Hardys Indian assets and the pertinent Net Working Interest (NWI) fractions are comprised of
the following:

PY-3 producing oil asset, located in the CY-OS-90/1 Production Licence sub-block of CY-OS/2 in
the Cauvery Basin, offshore Tamil Nadu in South-Western India (Hardy NWI 18%);
Block CY-OS/2, located in the Cauvery Basin, offshore Tamil Nadu (Hardy NWI 75%);
Block GS-OSN-2000/1 (NELP II), located in the Bombay offshore Basin, to the West and North
West of the ONGC operated Bombay High Field (Hardy NWI 10%). Also known as GS-01;
Block KG-DWN-2003/1 (or D3) (NELP V), in the offshore Krishna-Godavari Basin due west and
some 50 km inshore of Reliance's 2003 gas discoveries in Block KG-DWN-98/3 (Hardy NWI
10%);
Block KG-DWN-2001/1(or D9) (NELP III) in the offshore Krishna-Godavari Basin (Hardy NWI
10%), adjacent to the Reliance concession mentioned above; and
Assam Block (AS-ONN-2000/1), located onshore in the North East part of India in the
Assam-Arakan Basin, immediately north of the Brahmaputra River and south of the Eastern
Himalaya (Hardy NWI 10%).

These concession areas are all shown on the regional location map, Figure 0.1. A summary of
licence areas and water depth ranges (where appropriate) is given in Table 0.1.
GCA has conducted its review on the basis of the technical and commercial information made
available by Hardy as well as studies and assessments performed by the operators, other third parties,
other information available from the Public domain and, in some cases, has derived its own estimates of
Reserves, Contingent Resources and Prospective Resources where appropriate.
GCA has not visited the PY-3 Field production facilities and cannot, therefore, attest to the
reliability or integrity of these facilities.
The technical and economic conclusions presented herein are based on the technical and
commercial information provided and represent GCAs opinions as of the effective date of

Hardy

EE024430

GCA

Gaffney, Cline & Associates

31st December, 2010. The conclusions are estimates based upon professional geoscience and engineering
judgment and they may be subject to future revisions as additional information becomes available.
Reserves Summary
The "Proved", "Proved plus Probable" and "Proved plus Probable plus Possible" Reserves
attributed to Hardy's interests in India as at 31st December, 2010 are for the producing field PY-3 as
summarised in Table 0.2. All categories of Reserve volumes quoted herein have been determined within
the context of an economic limit test.
Net Present Value Summary
Net Present Values (NPVs) have been attributed to the Proved, the Proved plus Probable and
the Proved plus Probable plus Possible Reserves. Pre/Post-Tax NPVs are summarised in Table 0.3 based
on GCAs 1Q 2011 Brent price scenario. All NPVs quoted are those exclusively attributable to Hardy's
net entitlement interests in the property reviewed.
Production and Forecast
Forecasts of gross oil production and costs are summarised in Table 0.4.
Resource Summary
Apart from the producing assets, Hardy holds licences with discoveries and in a number of
exploration areas. GCA audited the estimates of Contingent Resources as of 31st December, 2010 and
these are discussed in Section 1.1.2 (CY-OS/2), Section 1.2.1 (GS-01/B1 area) and Section 1.3.2
(Block D3) of this report. See Table 0.5.
In addition, a consideration has been made as to Hardys Prospective Resources that may be
attributed to a number of undrilled Prospects, together with the associated geological chance of success
(GCoS). Further, a significant number of Leads have been acknowledged in Blocks D-3 and D-9 in the
emerging petroleum province of the continental slope off Indias eastern coast. The materiality of this
potential will evolve through identification and subsequent maturation of Leads into drillable Prospects.
The estimates of Hardys Prospective Resources as of 31st December, 2010 are shown in Tables 0.6
and 0.8.
Exploration Potential
Hardy recognizes that the exploration of D3 and D9 merits sequence stratigraphic analysis to
better define the plays. This play analysis approach is being used to determine depositional systems and
consequently the distribution of lithofacies within a chronostratigraphic envelope to give a better
understanding of reservoir distribution and allow a more effective evaluation of existing prospectivity.
Placing Leads in a play context will facilitate ranking in terms of GCoS. GCA endorses this approach and
postulates that additional Leads to those currently identified by Hardy may be generated. This work is
already in progress in Block D3.

Hardy

EE024430

GCA

Gaffney, Cline & Associates

TABLE 0.1
SUMMARY OF LICENCE AREAS
Field/Block
PY-3
CY-OS/2
GS-01
D9
D3
Assam

Contract

Operator

CY-OS 90/1
CY-OS/2
GS-OSN2000/1
KG-DWN2001/1
KG-DWN2003/1
AS-ONN2000/1

Hardy
Hardy

Hardy
NWI
%
18
75

Dec, 2019
Mar, 2007

Block
Area
(km2)
81
859

Water
Depth
(m)
40 - 450
50 - 900

Reliance

Jul, 2001

May, 2010

8,841

80 - 150

10

Feb, 2003

July, 2011

11,850

2,300-3,100

Reliance

10

Sep, 2005

Sep, 2013

3,288

400-2,100

Reliance

10

Jan, 2008

Jan, 2015

5,754

onshore

Permit/PSC
Granted Date

Permit/PSC
Expiry Date

Dec, 1994
Nov, 1996

10

Reliance

Notes:
1.

CY-OS/2 permit extension is pending with the Ministry of Petroleum and Natural Gas, Government of India (MOPNG,
GOI) regarding the discovery type.
In the event of a commercial development of a discovery, ONGC has the option to back-into the CY-OS/2 licence at
an interest of 30%.
The GS-01 joint venture has elected not to enter into exploration phase II and is currently retaining an interest in the
block in accordance with the development provisions of the PSC. The retained area comprises 5,890 km2.
Phase-I exploration period in D9 has been extended to July, 2011.
In 2010 the GOI adopted a drilling moratorium for deepwater exploration licences providing for a three year extension
to 31 December 2020. Hardys D9 and D3 exploration blocks are entitled to the relief provided for in the moratorium.

2.
3.
4.
5.

TABLE 0.2
SUMMARY OF ESTIMATED GROSS AND NET ENTITLEMENT OIL RESERVES
AS AT 31st DECEMBER, 2010

Area

PY-3

Gross Oil Reserves


MMBbl
Proved
Proved
plus
Proved
plus
Probable
Probable
plus
Possible
2.5
15.1
21.4

Net Entitlement Reserves


MMBbl
Hardy
Interest

18%

Proved

Proved
plus
Probable

Proved plus
Probable
plus
Possible

0.4

2.1

2.9

Note:
1.

Hardy

Net Entitlements are Reserves based on Hardys entitlement to Cost Oil plus share of Profit Oil.

EE024430

GCA

Gaffney, Cline & Associates

TABLE 0.3
SUMMARY OF HARDY REFERENCE PRE-/POST-TAX NET PRESENT VALUES
AS AT 31st DECEMBER, 2010

Asset

Reserves
Category
Proved

PY-3

Proved plus
Probable
Proved plus
Probable plus
Possible

Pre-Tax NPVs Net to Hardy


(U.S.$ MM)

Post-Tax NPVs Net to Hardy


(U.S.$ MM)

7.5%

10.0%

12.5%

7.5%

10.0%

12.5%

12.29

12.02

11.77

12.29

12.02

11.77

65.95

60.55

55.82

43.47

39.86

36.72

97.89

88.59

80.54

57.72

51.79

46.69

Notes:
1.
2.
3.

All cash flows are discounted on a mid-year basis to 31st December, 2010;
Post-Tax NPVs include a tax loss position as at 31st December, 2010 of U.S.$24.6 MM as advised by Hardy.
Pre-Tax NPVs are equivalent to Post-Tax NPVs for Proved Reserves due to tax losses carried forward from
31st December, 2010.

TABLE 0.4
PY-3 GROSS PRODUCTION AND COST PROFILES
Proved
Year

Oil
Production
MBbl

CAPEX
U.S.$ MM

OPEX
U.S.$
MM

Proved plus Probable


Oil
CAPEX
OPEX
Production
U.S.$
U.S.$
MBbl
MM
MM

Proved plus Probable plus Possible


Oil
OPEX
CAPEX
Production
U.S.$
U.S.$ MM
MBbl
MM

2011

1,151.5

35

1,151.5

35

1,151.5

35

2012

802.9

37

2,156.4

162

37

2,156.4

162

37

2013

557.6

37

2,981.5

45

4,039.5

162

45

2014

2,205.6

45

4,010.8

45

2015

1,648.9

45

2,771.2

45

2016

1,286.5

45

2,005.1

45

2017

1,068.0

45

1,595.0

45

2018

939.4

45

1,364.5

45

2019

852.2

45

1,205.6

45

2020

780.6

45

1,085.8

45

2021

2022

2,512.0

109

15,070.5

162

324

432

Total
MBbl

434

21,385.4

Notes:
1.
2.

Hardy

Costs are in U.S.$ 2011.


Production is reported in annual quantities.

EE024430

GCA

Gaffney, Cline & Associates

TABLE 0.5
SUMMARY OF GROSS AND NET GAS CONTINGENT RESOURCES
AS AT 31st DECEMBER, 2010
Gross Contingent
Resources
BCF

GS-01/ B1area
Total GS-01
CY-OS/2- Ganesha-1
Total CY-OS/2
D3 / W1 Pliocene
Total D3 / W1 Pliocene
D3 / A1 Pleistocene Sand 0
D3 / A1 Pleistocene Sand 1
Total D3 / A1
D3 / B1 Pleistocene Sand 2
(Southern)
D3 / B1 Well Pliocene Sand
Total D3 / B1
D3 / R1 Sand 1 (Miocene)
D3 / R1 Sand 2 (Miocene)
D3 / R1 Sand 3 (Miocene)
Total D3 / R1
Total D3
Total

Hardy
Interest

Net Hardy Contingent


Resources
BCF

1C

2C

3C

(%)

1C

50.5
50.5
69.1
69.1
101.5
101.5
28.0
33.0
61.0

83.0
83.0
130.0
130.0
162.4
162.4
113.0
97.0
210.0

133.2
133.2
222.5
222.5
258.3
258.3
274.0
209.0
483.0

10
10
75
75
10
10
10
10
10

57.0

146.0

316.0

27.0
84.0
15.0
30.0
25.0
70.0
316.5
436.1

67.0
213.0
21.0
38.0
39.0
98.0
683.4
896.4

125.0
441.0
28.0
49.0
55.0
132.0
1314.3
1670

2C

3C

5.1
5.1
51.8
51.8
10.2
10.2
2.8
3.3
6.1

8.3
8.3
97.5
97.5
16.2
16.2
11.3
9.7
21.0

13.3
13.3
166.9
166.9
25.8
25.8
27.4
20.9
48.3

10

5.7

14.6

31.6

10
10
10
10
10
10
10
-

2.7
8.4
1.5
3.0
2.5
7.0
31.7
88.6

6.7
21.3
2.1
3.8
3.9
9.8
68.3
174.1

12.5
44.1
2.8
4.9
5.5
13.2
131.4
311.6

Notes:
1.

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.
In the event of a commercial development of a discovery, ONGC has the option to back-into the CY-OS/2 licence at
an interest of 30%.

2.
3.

TABLE 0.6
SUMMARY OF GROSS AND NET GAS CONDENSATE CONTINGENT RESOURCES
AS AT 31st DECEMBER, 2010

GS-01- B1area
Total GS-01

Gross Contingent Resources


MMBbl
1C
2C
3C
1.12
1.85
2.97
1.12
1.85
2.97

Hardy
Interest
(%)
10
10

Net Hardy Contingent Resources


MMBbl
1C
2C
3C
0.11
0.19
0.29
0.11
0.19
0.29

Notes:
1.
2.

Hardy

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets, which may be less.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.

EE024430

GCA

Gaffney, Cline & Associates

TABLE 0.7
(Page 1 of 3)
SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR PROSPECTS
AS AT 31st DECEMBER, 2010
Net Hardy Prospective
Resources

Gross Prospective Resources


Licence

BCF

Prospect
Low
Estimate

GS-01
GS-01
GS-01
GS-01
GS-01
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2

D3

D3
D3
D3
D3
D3
D3

B1 /
Deeper
Miocene
B1 /
Oligocene
A1
Prn1 /
Oligocene
Prn1 /
Eocene
Gap-A /
Middle
Gap-A /
Deep
Gap-B /
Middle
Gap-B /
Deep
Gap-E /
Middle
Gap-B (N) /
Middle
Gap-B (NE)
/ Middle
Gap-F /
Deep
B1
Pleistocene
Sand 2
(Central)
B1
Pleistocene
Sand 2
(Northern)
F1
Pleistocene
G1
Pleistocene
K1
Pleistocene
P1
Pleistocene
D1
Pliocene

Best
Estimate

High
Estimate

34.0

68.0

126.0

95.0

160.0

198.0

Hardy
Interest
(%)

BCF

GCoS
(%)

Low
Estimate

Best
Estimate

High
Estimate

10

3.4

6.8

12.6

30

259.0

10

9.5

16.0

25.9

20

335.0

558.0

10

19.8

33.5

55.8

25

9.0

19.8

53.2

10

0.9

2.0

5.3

10

13.0

34.2

84.0

10

1.3

3.4

8.4

10

110.0

173.0

251.0

75

82.5

129.8

188.3

15

93.0

130.0

179.0

75

69.8

97.5

134.3

15

70.0

111.0

164.0

75

52.5

83.3

123.0

15

65.0

122.0

188.0

75

48.8

91.5

141.0

20

61.0

91.0

128.0

75

45.8

68.3

96.0

15

32.0

47.0

67.0

75

24.0

35.3

50.3

10

28.0

45.0

67.0

75

21.0

33.8

50.3

10

40.0

65.0

103.0

75

30.0

48.8

77.3

30.0

127.0

330.0

10

3.0

12.7

33.0

80

73.0

255.0

614.0

10

7.3

25.5

61.4

80

88.0

272.0

589.0

10

8.8

27.2

58.9

80

206.0

297.0

400.0

10

20.6

29.7

40.0

80

123.0

410.0

879.0

10

12.3

41.0

87.9

80

83.0

300.0

691.0

10

8.3

30.0

69.1

80

21.0

39.0

62.0

10

2.1

3.9

6.2

70

D3

E1 Pliocene

75.0

169.0

319.0

10

7.5

16.9

31.9

70

D3

L1 Pliocene

53.0

134.0

262.0

10

5.3

13.4

26.2

70

Hardy

EE024430

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Gaffney, Cline & Associates

TABLE 0.7
(Page 2 of 3)
SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR PROSPECTS
AS AT 31st DECEMBER, 2010
Gross Prospective Resources
Licence

BCF

Prospect
Low
Estimate

D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3
D3

D9

D9

Hardy

U1 Sand 1
Pliocene
U1 Sand 2
Pliocene
QA1 Sand
1 Pliocene
U2 Sand
Pliocene
S1 Sand 1
Pliocene
S1 Sand2
Pliocene
T1
Pliocene
G1
Miocene
J1
Miocene
M1
Miocene
MM1
Miocene
QA1 Sand
2 Miocene
R1 Sand
Miocene
W1 Sand
3 Miocene
H1
Oligocene
Z1
Oligocene
Channel
Complex
C1
Pliocene
Northern
Anticline
(NW
Flank B1) /
U.
Miocene

Best
Estimate

High
Estimate

Hardy
Interest
(%)

Net Hardy Prospective


Resources
BCF
Low
Estimate

Best
Estimate

High
Estimate

GCoS
(%)

52.0

134.0

291.0

10

5.2

13.4

29.1

70

74.0

161.0

306.0

10

7.4

16.1

30.6

70

98.0

168.0

270.0

10

9.8

16.8

27.0

70

72.0

166.0

318.0

10

7.2

16.6

31.8

70

39.0

68.0

104.0

10

3.9

6.8

10.4

70

50.0

70.0

100.0

10

5.0

7.0

10.0

70

52.0

75.0

105.0

10

5.2

7.5

10.5

70

112.0

328.0

675.0

10

11.2

32.8

67.5

70

135.0

281.0

524.0

10

13.5

28.1

52.4

70

175.0

464.0

904.0

10

17.5

46.4

90.4

70

191.0

388.0

645.0

10

19.1

38.8

64.5

70

204.0

308.0

455.0

10

20.4

30.8

45.5

70

23.0

38.0

58.0

10

2.3

3.8

5.8

70

117.0

190.0

282.0

10

11.7

19.0

28.2

70

334.0

840.0

1,641.0

10

33.4

84.0

164.1

24

89.0

300.0

703.0

10

8.9

30.0

70.3

24

210.0

630.0

1,540.0

10

21.0

63.0

154.0

25

800.0

2,500.0

5,600.0

10

80.0

250.0

560.0

20

10

EE024430

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Gaffney, Cline & Associates

TABLE 0.7
(Page 3 of 3)
SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR PROSPECTS
AS AT 31st DECEMBER, 2010
Gross Prospective Resources
Licence

D9

D9

D9

D9

D9

D9

D9

D9

D9

BCF

Prospect

Central
Anticline
(NW
Flank) / U.
Miocene
Central
Anticline
(near B3) /
U.
Miocene
Southern
Anticline
(SE Flank
C1) / U.
Miocene
Northern
Anticline
B1 / M.
Miocene
Central
Anticline
(near B2) /
M.
Miocene
Southern
Anticline
C1/ M.
Miocene
Northern
Anticline
(Near B1)
/ L.
Miocene
Central
Anticline
(near B2) /
L.
Miocene
Central
Anticline
(near A2)
/ L.
Miocene

Hardy
Interest
(%)

Net Hardy Prospective


Resources
GCoS
(%)

BCF

Low
Estimate

Best
Estimate

High
Estimate

Low
Estimate

Best
Estimate

High
Estimate

400.0

1,100.0

2,100.0

10

40.0

110.0

210.0

20

1,000.0

2,500.0

5,300.0

10

100.0

250.0

530.0

20

1,100.0

2,900.0

6,200.0

10

110.0

290.0

620.0

10

1,300.0

2,500.0

4,500.0

10

130.0

250.0

450.0

20

1,300.0

1,900.0

2,700.0

10

130.0

190.0

270.0

20

1,300.0

1,900.0

2,600.0

10

130.0

190.0

260.0

15

1,800.0

6,300.0

15,000.0

10

180.0

630.0

1500.0

15

1,300.0

2,800.0

5,500.0

10

130.0

280.0

550.0

19

800.0

2,300.0

4,900.0

10

80.0

230.0

490.0

15

Notes:
1.

2.
3.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the recategorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.
In the event of a commercial development of a discovery, ONGC has the option to back-into the CY-OS/2 licence at
an interest of 30%.

11

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TABLE 0.8
SUMMARY OF GROSS AND NET OIL PROSPECTIVE RESOURCES FOR PROSPECTS AS
AT 31st DECEMBER, 2010
Net Hardy Prospective
Resources

Gross Prospective Resources


Licence

D9

D9

Central
Anticline (4
way fault
closure B2) /
Palaeocene
Central
Anticline
(Fault
Closure B2)
/ Cretaceous

Hardy
W.I.
(%)

MMBbl

Prospect

High
Estimate

GCoS
(%)

MMBbl

Low
Estimate

Best
Estimate

Low
Estimate

Best
Estimate

High
Estimate

142.0

420.0

961.0

10

14.2

42.0

96.1

18

44.0

122.0

260.0

10

4.4

12.2

26.0

18

Notes:
1.

2.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the recategorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.

12

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1.

Gaffney, Cline & Associates

DISCUSSION

Hardy has five assets offshore India as shown in Figure 0.1. In the Bay of Bengal, beyond the
Krishna-Godavari Basin, are the deepwater exploration Blocks KG-DWN-2003/1 (or KG D3) (NELP V)
and KG-DWN-2001/1(or KG D9) (NELP III), while further south, in the Cauvery Basin is the production
license PY-3 and the exploration licence CY-OS/2, (which surrounds the producing field PY-1). In the
Arabian Sea, lies licence GS-OSN-2000/1 (NELP II in the Bombay Basin). Additionally, Hardy is a partner
in the onshore Assam Block (AS-ONN-2000/1) exploration licence within the Assam-Arakan Basin,
North-East India.
1.1

Cauvery Basin

The Cauvery Basin is located half onshore and half offshore Tamil Nadu, South-East India. It is
the most southerly basin on the east coast and encloses an area of more than 50,000 km2. It was formed
during Late Jurassic/Early Cretaceous rifting as a result of the break-up of eastern Gondwanaland. The
NE-SW-orientated sub-basins characterising the Cauvery Basin are an en-echelon array of horst and
graben structures formed during this rifting and dominated the structural grain of the basin, following
which they subsided as part of a passive margin. The dominant structure was formed by a north/south
dextral strike-slip movement between the main Indian sub-continent and Sri Lanka. In the Hardy acreage
lie the Ariyalur-Pondicherry and Tranquebar sub-basins are separated by the Porto Novo High (on which
lies the PY-1 gas field) as shown in Figure 1.1.
The basement is Precambrian (Archean), overlain by sediment fill, which in places reaches a
thickness of 7,000 m and ranges in age from Permo-Carboniferous to Recent.
Earliest syn-rift deposition during the Barremian-Aptian led to fluvio-lacustrine deposits in
half-grabens followed in the early Albian by a marine transgression. The main extensional phase occurred
in the mid-Albian, with associated footwall uplift and erosion. Eroded material from the basin edges was
trapped in adjacent lows as fault-scarp conglomerates, and transported further as turbidite sand bodies.
These turbidites, where embedded in organic marine shales, constitute a viable petroleum exploration
play. Rifting ceased in the Cenomanian or Turonian after which thermal subsidence predominated.
The post-rift stratigraphy consists of unconformable packages of mainly shallow marine and fluvial
sandstones and sand-rich carbonates (see the lithostratigraphic column Figure 1.2).
The source rocks in the basin are organic-rich marine black shales of the Karai Clay Formation
deposited in Albian/Aptian to Turonian times. These organic shales can be 100 m thick. They are
overlain by major reservoir sand bodies such as the Bhuvanagiri, Nannilam (the reservoir in the PY-3
Field), and Kamalapuram ranging in age from Cenomanian to Eocene (Figure 1.2). The reservoir units are
sealed by shales and limestones in a cyclic sequence. Exploration targets have progressed from the
structural graben-horst features, to deepwater sands and stratigraphic traps such as those drilled by
Hardy in wells Fan E-1 and Fan A-1 (subsequently known as Ganesha-1) in 2006.
Proven traps in the Cauvery basin include structural and combination traps and pure stratigraphic
traps such as pinchouts and isolated sands.
Proven reservoirs include fractured basement (PY-1 Field) and Cretaceous (syn-rift) sands and
Miocene sands.
1.1.1

PY-3 Field (Hardy NWI 18%)


The PY-3 Field is located in the Cauvery offshore basin. It commenced production in July, 1997,
and is presently the only producing oil field in Production Licence CY-OS-90/1 (Figure 1.1). The
Licence covers some 81 km2 and the water depth ranges from 40 m to about 450 m. The field is
operated by Hardy, which holds an 18% Net Working Interest under a Production Sharing
Contract (PSC) with The Government of India. The other licensees are ONGC (40%), Tata

Hardy

13

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Petrodyne (21%) and HOEC (21%). The PSC expires in December, 2019, but can be extended by
mutual agreement for a further five years.
Hardy has made available to GCA a dataset of technical information that included the Hardy
geological model (in Petrel) and seismic data, velocity cube, petrophysical summary, ECLIPSE
model, artificial lift selection study, well test analysis plus all available production and injection
data together with financial data, including the PSC and cost data. Production data have been
used to update the reserves since the 2010 CPR. No further geological work since the 2010
CPR has been presented.
Geology & Geophysics
The PY-3 Field is sited within the Tranquebar sub-basin some 25 km south of the PY-1 Field.
Reservoir sands are present in the Coniacian-Maastrichtian Nannilam Formation, which is the
main prospective reservoir across both PY-3 Field and Block CY-OS/2. These reservoirs are
debris flows (i.e. turbidites) that are poorly sorted, deposited in lows and have a fan/lobe-like
morphology. They vary in thickness, and are laterally and vertically discontinuous. There are
numerous unconformities and pinchouts throughout the geologic section. The entire geological
sequence appears to be located on the old and present day slope edge. A significant lateral
velocity gradient across the field makes depth conversion complex, compounded by the rapidlychanging water bottom.
Hardy defined 5 reservoir units in PY-3 Field, with the upper two zones being on production.
There were six horizons mapped in two-way-time on basic 2D or 3D seismic data. Some faults,
observed on the seismic, were not mapped. Hardy's current interpretation of the top reservoir
is given in Figure 1.3 which shows the locations of existing and proposed development wells.

Hardy

14

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FIGURE 1.1
LOCATION OF PY-3 FIELD AND BLOCK CY-OS/2,
OFFSHORE CAUVERY BASIN, INDIA
Indian Craton

Ganesha-1 Well

CY-OS-2

L-XI
L-XI

NEYVELI

CY-ONN2002/1
CY-ONN2002/1
CY-DWN2001/2
CY-DWN2001/2

CY-OS-2
PY-1 Field
Porto
PortoNovo
Novo
High
High

BHUVANAGI.02
BHUVANAGI.02
CY-ONN2004/1
CY-ONN2004/1

L-I
L-I

Fan E-1 Well

Madanam
High

CY-ONN2002/2
CY-ONN2002/2

PY-3 Field

MADANAM

CY-OS-90/1
L-I
L-I(EXTN.)
(EXTN.)

Tra nq ue ba r
Su b b a s I n
KALI
KALI

CY-ONN2004/2
CY-ONN2004/2

MYILADUTHURAI

KUTHALAM
KUTHALAM

Karaikal High

Nepal

Pakistan
Pakistan

Bhutan

30 Km

Bangladesh
Bangladesh

Myanmar

LEGEND

India
India

Hardy Block Interests

n
Bay
of
Bengal
Andaman
Sea

Oil Field
Gas Field
Gas Condensate Field
High Areas

Sri Lanka

Source: GCA/Petroview

Hardy

15

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FIGURE 1.2

Indian plate
collided with
Tibetan plate

Play /
Play Fairways

Unit 5

UNCONFORMITY

Indian plate
collided with
Eurasian plate/
basin tilt E

Niravi Play

Eocene to
Mid-Miocene

Unit 4

UNCONFORMITY

Deccan trap
volcanism/
basin tilt SE

Kamalapuram

Paleocene to
Eocene

UNCONFORMITY

Unit 3

P O S T - R I F T

Seal

Post MidMiocene

Lithostratigraphy

Source

Age

Reservoir

Unit

Regional / Basinal
Tectonic Events

Unit 6

CAUVERY BASIN LITHOSTRATIGRAPHIC COLUMN

Madagascar
separated f rom
India/Reactivation
of Basement Highs

Nannilam

Coniacian to
Maastrichtian

(PY-3 Reservoir)

Unit 2

UNCONFORMITY

Albian/
Cenomanian/
Turonian

Bhuvanagiri

Unit 1

SYNR IFT

UNCONFORMITY

Syn Rif t

UNCONFORMITY

Basement

Rif ting of East


Gondwanaland

Pre-Albian

Pre-Cambrian

Fractured
Basement
(PY-1 Reservoir)

Source: Hardy

Hardy

16

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FIGURE 1.3
PY-3 PAY TOP STRUCTURE MAP WITH OWC @3,505 m SS

Following Hardys 2006 3D interpretation, additional volumes were attributed to the field in the
South-East, North-East and core area. The core area comprises the main producing area, which
had increased in volume as a result of raising the structure and incorporating two deeper
reservoir zones within closure.
The seismic, wells, velocity field and top and base of the PY-3 reservoir were validated. It is
GCA's opinion that there exists some uncertainty under and around the rapid water-bottom
change in the North-East. Several seismic, velocity and depth profiles showed that there is a
significant velocity gradient laterally from shallow to deep water within the two-way time interval
of about 1,200 ms to 3,300 ms, which clearly impacts on the conversion to the depth structure
map. Ongoing work is currently revising the interpretation in the North-East area.
It is GCA's opinion that there still remains uncertainty in the presence of debris flows in the west
and South West and questionable structural closure to the North East. However, Hardys recent
work through field re-mapping, revised geological modelling and additional petrophysical analysis
has increased the level of confidence in Hardys volumetric estimations.
STOIIP values reported by Hardy in November, 2009 were 132.5 137.5 and 152.5 MMBbl
considering core area, core- South-East, and core- South-East, North-East respectively (Figure
1.4). GCA accepted Hardys STOIIP figures.
Hardy

17

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Production Performance
The PY-3 Field has been producing since July, 1997. Production wells are subsea tied back to a
floating production facility and oil is exported by shuttle tanker. The facility at PY-3 consists of
the floating production unit, Tahara, and a 65,000 DWT tanker, Endeavor, which acts as a
floating storage and offloading unit. Liquid processing capacity on Tahara is 20,000 stbd with
17 MMscfd of gas handling capacity. The field currently produces associated gas in the range of
3.5 MMscfd. This produced gas is used as fuel gas with excess gas being flared. The extension of
the Tahara contract for 18 months from 24th January, 2011 to 23rd July, 2012 is currently being
negotiated.
GCA review of wells and field performance up to end of December, 2010 indicated a cumulative
production of 24.1 MMBbl. After its start, PY3 production peaked to around 10,000 bopd in
1998, and declined gradually afterward mainly because of water breakthrough and eventually the
shutdown of wells. Currently, the field is producing from well PD3S at around 3,400 bopd, with
water injection into the reservoir via wells 3-2RST-RL and 3-3-3RL at around 5,700 bwpd. GOR
is around 1,170 scf/Bbl, about 0.5% water cut and 3,746 psi (PDHG) reservoir pressure.
FIGURE 1.4
PY-3 PAY TOP STRUCTURE MAP_VOLUMETRIC POLYGONS

Northeast
Core +
NE + SE

Core

Southeast

Hardy

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Until July 2008, water injection was insufficient (from one injector) to maintain reservoir
withdrawals and the wells were often choked back to control GOR. At present, Hardy is
injecting at around double voidage replacement which is supporting an increased oil rate and at
the same time keeps GOR at a practical level.
Dynamic Reservoir Modelling
Hardys history match process up to 2009 has only been applied to the oil production and GOR
(beside few static reservoir pressure points) because there have been no flowing bottomhole
pressure data in the field since 2004 and no significant water production. Hardy, however, has
recently updated its simulation model by including history match to BHP, THP and adding lift
curves, which was added more confidence to the dynamic model.
However, GCA considers that the water production data collected to date are still insufficient to
allow the establishment of a reliable water cut history match. Hardy continues to analyse the
water production to determine the scenario that best represents PY-3s water cut performance.
In its audit of Hardys dynamic model, GCA found that the Hardys history match for oil rate,
GOR and the pressure data is reasonable and considers it suitable for forecasting purposes.
Production Forecast
Hardys Phase III development of the PY-3 Field envisages the drilling of two further wells.
Hardys approach to the estimates of remaining recoverable oil is based on the following two
cases:

Case 1: Do nothing; and


Case 2: Phase III, 2 new producers and the activation of well PD-4RL.

Hardys simulation results support the implementation of the Phase III development plan and
should lead to a significant increase in the volume of oil produced, and thereby enhance oil
recovery (Figure 1.5).

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FIGURE 1.5
PY-3 FIELD PRODUCTION PERFORMANCE AND FORECAST
500
450
400

Monthly Oil (MBbl)

350
300
250
200
150
100
50
0

History

1P

2P

3P

Oil Reserves
Proved Reserves
This is based on field historical performance and assumes a do nothing case where oil production
is allowed to decline from its current rates.
The Gross Proved Reserves as at
31st December, 2010 are estimated at 2.51 MMBbl (0.38 MMBbl Net Entitlement to Hardy).
Proved plus Probable Reserves
For the Proved plus Probable Reserves case, GCA incorporated Hardys Phase III field
development plan by including two further producers to be drilled in January, 2012 and the
activation of well PD-4RL. The resulting estimated Gross Proved plus Probable Reserves as at
31st December, 2010 are 15.07 MMBbl (2. 1 MMBbl Net Entitlement to Hardy).
Proved plus Probable plus Possible Reserves
This is based on PY-3 Field performance, Hardys Phase III activities, and three further producers
in the north, North-East & South-East parts of the Field that are to come on stream in July, 2013.
GCA estimated Gross Proved plus Probable plus Possible Reserves are at 21.39 MMBbl
(2.9 MMBbl Net Entitlement to Hardy as at 31st December, 2010). Figure 1.5 summarises
Hardys three forecast cases.

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Block CY-OS/2 (Hardy NWI 75%, Operator)


The CY-OS/2 Block is located in the Cauvery Basin and encompasses an area of 859 km2. The
CY-OS/2 Block, which after various relinquishments is now split into northern and southern
sectors, (Figure 1.1), is operated by Hardy. Hardy has a 75% WI, and remaining 25% is held by
GAIL. Water depths over the retained areas range from a few tens of metres at points where
the acreage is 2 km from the shore, to almost 500 m at its remotest point (Figure 1.1).
The Block was awarded in 1996 under a PSC, the terms of which provided for three exploration
phases, the last of which expired, with all commitments fulfilled, on 23rd March, 2007. The PSC
provides for 100% Cost Recovery and Profit Oil sharing. As the PSC pre-dates the NELP, in the
event of a commercial discovery, ONGC has the option to back-into the block at an interest of
30%. At the time of this report, a proposed appraisal programme (approved by the operating
committee) is being reviewed by the Directorate General of Hydrocarbons (DGH). Hardy is
involved in a debate on the nature of fluid in well Fan-A-I (aka Ganesha-1) discovery with the
DGH. Hardy maintains the discovery as gas based on the test results and the results of DST-2
where it flowed around 10.7 MMscfd of gas with some condensate. DST-1 was inconclusive
because the tubing became plugged while testing and the well flowed small quantity of fluids but
was predominantly gas with condensate. The DGH has restricted the appraisal period to
24 months from discovery date interpreting the discovery as oil. Hardy has submitted all the
relevant documents to the MOPNG and the DGH supporting the nature of the discovery as gas.
The documents provided to the DGH, included the DST reports by Schlumberger, the CPCL
(Chennai Petroleum Corporation Limited) laboratory reports on the liquid samples collected
from DST#1 & #2 and the ISM University report. Hardy has submitted to the DGH the legal
opinions from an independent lawyer and from the Attorney General of India, which opines that
Hardy should get 60 months extension under the PSC. The significance of this is that if it is only
oil, then there is a twenty four month appraisal period from January, 2007; if it is oil and gas
where gas predominates, then there is a five year appraisal period from January, 2007. In
accordance with the dispute resolution provisions of the PSC, Hardy and the GOI have appointed
arbitrators to resolve the dispute described above. As of this date each party has made initial
filing and the arbitration process is ongoing.
In the preparation of this CPR, GCA has accepted Hardys explanation but acknowledges that the
decision of the MOPNG, GOI could have a significant impact on the CY-OS/2 license.
The CY-OS/2 Block contains 12,000 line km of 2D seismic, 1,381 km of which have been
re-processed. Four 3D seismic surveys have been shot totalling almost 830 km2.
Two relinquishments have been made, one at the end of each of the first two exploration phases.
In the final exploration phase, from May, 2005 to March, 2007, Hardy has acquired 653 km2 of the
above 3D (617 km on-block) and drilled two wells; Fan E-1, which was dry (the main Eocene
reservoir was absent), and Fan A-1, as described earlier. This well is now renamed Ganesha-1.
Well Fan E-1 is in the Tranquebar sub-basin, and well Ganesha-1 is in the Araiyalur-Pondicherry
sub-basin to the north (Figure 1.1).
No additional geoscience work since the 2010 CPR has been presented. Work is in abeyance
while dispute resolution process is ongoing.

Well Fan A-1 (Ganesha-1)


The Ganesha-1 well was spudded on 26th September, 2006, and was drilled as a vertical hole to a
depth of 4,089 m MD where it terminated in Turonian Sattapadi shales, having intersected all
planned targets. Hydrocarbon shows were logged in the Nannilam (Campanian) and Bhuvanagiri
(Turonian) Formations, and between these a thin sand flow-tested gas.

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The prospective intervals were seismically identified fans that relied upon updip pinchout of the
re-worked shelfal sands against shale-prone deepwater slope sediments. Top seal was provided
by transgressive deepwater shale. The dual nature of the potential targets Campanian sands of
the Nannilam Formation underlain by Turonian sands of the Bhuvangiri Formation is seen very
clearly, partly because of anomalous seismic amplitude response, particularly at the shallower
level.
The well found several sands of various ages: Campanian sands (Top Fan), Santonian - Coniacian
thin sand intervals within the Kudavasal Shale Formation (Middle Fan sand) and Turonian (Deep
Fan sand). Shows were observed in the cuttings while drilling through each sand. Flow tests
were run on the Deep Fan sand and the Middle Fan sand. According to the Final Geological
Report for the well, the Top Fan sand, in which 50 m of net sand were intersected, was not
tested because of heavy mud losses experienced while drilling. Two MDT samples in this sand
provided no representative formation fluid (though they revealed the presence of gas).
Hydrocarbon shows were encountered during drilling, at three (possibly four) zones in the Top
Fan sand.
The Deep Fan sand, (3,759 m MD) comprises two sand bodies each about 20 m thick separated
by 15 m of shale. Net sand was about 35 m, with log-derived porosity 14-17%. The zone from
3,800 - 3,809 m was tested, producing a weak flow of gas and condensate, and anomalously fresh
water (all test results are summarised below). DST-1, in the Deep Fan sand, is considered
unreliable due to the reported heavy mud losses. This may have been contributed to poor casing
cementation, so the well was sidetracked a horizontal distance of about 250 m at the target level.
This time the Bhuvanagiri sandstone occurred as a single 45 m sand. Two tests were run,
opening perforations from 3,775-3,795 m (DST-4), and then 3,779-3,785 m plus 3,805-3,812 m
(DST-4A). The results essentially replicated those of DST-1; as before, the cement bond log
indicated poor cementation. Table 1.1 is a summary of Ganesha-1 DST results.
TABLE 1.1
WELL GANESHA-1: SUMMARY OF DST RESULTS
Test

Depth
(m MD)

Deep Fan Sand

DST-1

3,800 3,809

Middle Fan Sand

DST-2

3,565 3,569

Middle Fan Sand


Deep Fan Sand

DST-3
DST-4 (in ST)

Deep Fan Sand

DST-4A (in ST)

3,336 3,341
3,775 3,795
3,779 3,785 & 3,805
3,812

Interval

Results
Max gas 0.47 MMscfd,
Max cond. 2.4 bcpd,
Freshwater c. 120 bpd
Max gas 10.7 MMscfd, Max gas
10.7 MMscfd falling to 1.47 MMscfd
Intermittent gas 0.1 MMscfd
100 bpd freshwater with weak gas flow
Gas flow 0.47 MMscfd plus freshwater

The water produced in DSTs 1, 4 and 4A was typically of salinity 2,500 2,800 mg/litre. GCAs
petrophysical analysis has shown that this does not correspond to the formation water.
The Middle Fan sand was encountered between 3,565 - 3,569 m. The zone flowed gas (DST-2) at
rates which declined from a maximum of 10.7 MMscfd to 1.47 MMscfd showing that a small
permeable reservoir was tested and depleted on production. The reservoir had a channel-like
morphology: long (119 m) and narrow (37 to 58 m) and thin (1 m). This tight reservoir may
recharge from surrounding low permeable sandstones but the stable flow rate would be less than
1.14 MMscfd based on a reservoir engineering study. A further 5 m section, at 3,336 - 3,341 m
was tested by DST-3, but also yielded disappointing results.
GCA agrees with Hardys interpretation of hydrocarbon presence in both the Deep Fan sand and
in the Middle Fan sand. GCA also supports Hardys gas case based upon well test results. GCAs
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analysis confirms 217 BCF as Best Estimate GIIP figure for the accumulation. GCAs estimated
Contingent Resources for the Ganesha-1 discovery is shown in Table 1.2 below
TABLE 1.2
SUMMARY OF CY-OS/2 GROSS AND NET GAS CONTINGENT RESOURCES
AS AT 31st DECEMBER, 2010
Gross Contingent Resources
BCF

CY-OS/2- Ganesha-1
Total CY-OS/2

1C

2C

3C

69.1
69.1

130.0
130.0

222.5
222.5

Hardy
Interest
(%)
75
75

Net Hardy Contingent Resources


BCF
1C

2C

3C

51.8
51.8

97.5
97.5

166.9
166.9

Notes:
1.
2.
3.

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.
In the event of a commercial development of a discovery, ONGC has the option to back-into the CY-OS/2 licence at
an interest of 30%.

Ganesha-1 area Prospects


Since GCAs CPR of 2010 the resources remain unchanged.
A study was conducted by Hardy using the reprocessed 3D seismic data (AVO/AVA and
derivative products) to mitigate the risk of drilling the Fan-A/Ganesha appraisal well; and to define
the vertical and lateral limits of the Fan-A-1 Deep and Middle hydrocarbon-bearing sands. Several
seismic attribute volumes were generated including P-Impedance, S-Impedance, Vp/Vs, density
LamdaRho, MuRho, and Poissonss Ratio. Proprietary software provided by CGG generated
geobodies from the 3D inverted seismic data using the seismic data. In this instance, the
Lamda-Rho versus Vp/Vs was used to extract the geobodies using different cut-offs for the P90,
P50 and P10 cases. These data were merged with a spectral decomposition (seismic frequency
analysis for thin beds) data to identify prospective areas for appraisal drilling. The northern area
is called Ganesha Appraisal-A (Gap-A) and Gap-A-1, both about 2 km from the discovery well.
The southern area is called Gap-B , and lies about 14 km from the discovery well. The spectral
decomposition was convincing in the southern, Gap B area. These and the other seismic data are
supporting evidence, but are not themselves conclusive.
Extraction of geobodies from AVO/AVA volumes represents state-of-the-art technology
application in geophysics but caution is required when interpreting what these geobodies
represent. It is well known that because of the link to seismic amplitudes, false positives are
common with geobody extractions. This method of extraction assumes that the seismic
amplitude is related to hydrocarbon effects only; whereas, the seismic wavelet is constructed
from changes in lithology (vertical and horizontal), stratigraphy (thick, thin, tuning, unconformities,
etc.) and fluid content (oil, gas, water). Often, geobodies are extracted for reasons that are
non-hydrocarbon related; and, are sensitive to cut-offs. Additionally, the extracted geobodies are
discontinuous and fragmented which suggests lateral changes in lithology, stratigraphy and fluid
content.
GCA performed an independent volume estimate based on the data supplied by Hardy. The
relationship between seismic attribute analysis and presence of hydrocarbons is ambiguous and
inconclusive. Consequently, it was used as a guideline for the GCA area estimates. Gross/Net
thickness, porosity and water saturation were obtained from logs where available. Thickness
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estimates used by GCA to compute volumetrics are lower than those used by Hardy to reflect
the broken distribution of the strong attributes and indeed areas of no seismic response, the lack
of supporting evidence for fluid trapping mechanism within potential reservoir imaged, and the
limited confidence that can be placed on the calibration via a single control point.
It should be noted that in the various Ganesha area probabilistic cases, the extracted geobodies
did not always intersect the discovery well so extrapolating lithology and fluid content is risky. It
should also be mentioned that not all the geobodies seemed geological in form, or were
associated with an obvious structural trap. The amplitude derived geobodies in some cases
parallel structural contours in a way more usual with tuning, than with stratigraphic or structural
traps. Therefore GCA has lowered the GCoS for these Prospects compared to the GCoS
originally proposed by Hardy.
Prospective Resources can be attributed to Block CY-OS/2 based on the results of Fan-A-1 well
and geobody analysis discussed above (Figure 1.6). These are considered as Prospects. There are
4 locations, Gap-A, Gap-B, Gap-E and Gap-F that are related to appraising the Ganesha discovery.
GCA audited Hardys volume estimates for these Prospects and made changes where
appropriate. GCAs current GIIP estimates are as listed in Table 1.3 below.
TABLE 1.3
GANESHA-1: SUMMARY PROSPECTS GROSS
GIIP (BCF)
GIIP
Prospect
Gap-A
Gap-A
Gap-B
Gap-B
Gap-E
Gap-B (N)
Gap-B (NE)
Gap-F

Horizon

Low
Estimate
183
155
116
115
102
53
47
67

Middle Sand
Deep Sand
Middle Sand
Deep Sand
Middle Sand
Middle Sand
Middle Sand
Deep Sand

Best Estimate

High Estimate

288
217
185
209
152
79
75
109

418
298
273
320
214
111
111
171

Note:
1.

Hardy

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

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FIGURE 1.6
CY-OS/2 PROSPECT LOCATION MAP

Deep
Fan
Middle
Fan

Source: Hardy

Hardy

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GCAs estimated Prospective Resources for these Middle and Deep Fan sands are shown in
Table 1.4 below.
TABLE 1.4
SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR PROSPECTS
AS AT 31st DECEMBER, 2010
Gross Prospective Resources
Licence

BCF

Prospect
Low
Estimate

CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2
CY-OS/2

Gap-A /
Middle
Gap-A /
Deep
Gap-B /
Middle
Gap-B /
Deep
Gap-E /
Middle
Gap-B (N) /
Middle
Gap-B (NE)
/ Middle
Gap-F /
Deep

Best
Estimate

High
Estimate

Net Hardy Prospective Resources


Hardy
W.I.
(%)

BCF
Low
Estimate

Best
Estimate

GCoS
(%)
High
Estimate

110.0

173.0

251.0

75

82.5

129.8

188.3

15

93.0

130.0

179.0

75

69.8

97.5

134.3

15

70.0

111.0

164.0

75

52.5

83.3

123.0

15

65.0

122.0

188.0

75

48.8

91.5

141.0

20

61.0

91.0

128.0

75

45.8

68.3

96.0

15

32.0

47.0

67.0

75

24.0

35.3

50.3

10

28.0

45.0

67.0

75

21.0

33.8

50.3

10

40.0

65.0

103.0

75

30.0

48.8

77.3

Notes:
1.

2.
3.

1.2

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the recategorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.
In the event of a commercial development of a discovery, ONGC has the option to back-into the CY-OS/2 licence at
an interest of 30%.

Saurashtra Basin (west of Mumbai Offshore Basin)

The Mumbai Offshore Basin extends over 145,000 km2. It is bounded to the east by volcanic lava
flows known as the Deccan Trap and to the south by the E-W-trending Pre-Cambrian Panjim Ridge.
Adjacent basins are the Saurashtra Basin to the north and the Cambray Basin to the North East.
Block GS-01, in which Hardy has a 10% working interest, lies 220 km west of Bombay and 60 km south of
the Saurashtra Peninsular straddling the Bombay and Saurashtra basins.
The Mumbai Basin is characterised by NNW-SSE horst and graben systems, developed during the
Palaeogene. The most prominent horst is the Mumbai High (Figure 1.7). The Mumbai High oil field was
the first discovery in the basin, made in 1974, in Miocene carbonates. Since then the basin has
experienced continuous exploration, which has resulted in the discovery of many other oilfields, including
Ratna, Heera, Panna, Mukta, and Neelam, and the gas fields of Bassein, South Bassein, Mid Tapti and South
Tapti.

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FIGURE 1.7
GS-01 BLOCK LOCATION
To Hazira
MID. TAPTI

DIU

Gujarat-Saurashtra
Basin
S. TAPTI

C23

C24

36"

42"

GS-01

BOMBAY
HIGH

MUKTA

PANNA

BASSEIN

Mumbai

26"
30"

BASSEIN S.

Bombay Basin

Uran
Terminal

26"

HEERA

Arabian Sea

RATNA
Nepal

Pakistan
Pakistan

Bhutan

Bangladesh
Bangladesh

Myanmar

India
India

n
Bay
of
Bengal
Andaman
Sea

0
25
LEGEND
Oil Field
Gas Field
Sub-sea Gas Pipeline (Existing)
Sub-sea Oil Pipeline (Existing)
Basin Limits
Original Area
Retained Area

50

75

100 Km

Sri Lanka

Source: GCA/Petroview

Onshore geology is principally basalt lavas overlying crystalline basement. In deeper areas Upper
Cretaceous sediments can be preserved beneath the Deccan Trap. The basalts are overlain by
continental and estuarine clastic sediments of the Upper Palaeocene to Lower Eocene (Panna) formations
(Figure 1.8). Offshore the thickness of basin fill can exceed 8,000 m. The majority of the 600 exploration
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and appraisal wells that have been drilled in the Basin have tested the section down to the Deccan Trap
or Precambrian granitic basement. During Upper Eocene to Lower Oligocene thick carbonate
successions were deposited. The Upper Oligocene to Middle Miocene succession of the Alibag, BombayRatnagiri and Saurashtra formation is predominantly carbonate in the central and southern part of the
basin but in the north and west it is fine clastic lithology. From Upper Eocene to Middle Miocene a
shallow marine environment of deltas and lagoons was widespread. The Tarapur Fm (Middle Miocene to
Recent) was deposited over the entire basin as thick regional shale.
FIGURE 1.8
OFFSHORE MUMBAI BASIN LITHOSTRATIGRAPHIC COLUMN

FORMATION

LITHOLOGY

AGE

Miocene to
Recent

Tarapur

OBJECTIVES

Clay (soft,plastic), Shale

Predominantly claystone & silts

Mid
Miocene

Saurashtra

BombayRatnagiri

Lower
Miocene

Secondary Target-I
-Top of Reef 3
Limestone with minor
shale/marlstone
Primary Target - I
-Lr. Miocene Limestone

Primary Target - II
-Ur. Oligocene Limestone

Alibag

Oligocene
Heera/Mahum

Mid
Eocene

Bassein

Secondary Target-II
- Bassein Limestone
Limestone with minor
shale/marlstone
Secondary Target-III
- Panna Limestone
Limestone with minor
shale/marlstone

Early
Eocene

Panna

Late Paleocene Trap wash: Weathered basalt & minor shale/siltstone


Up. Cretaceous (?)
Volcanics:Basalt

Deccan Trap
Basement

Hardy

Pre Cambrian

Claystone
Claystone

Limestone
Limestone

Marlstone
Marlstone

Shaly
ShalyLimestone
Limestone

Sandstone
Sandstone

Trapwash
Trap
Trapwash
wash

Intrusives/
Metamorphics

28

Volcanics
Volcanics

Siltstone
Siltstone

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Proven producing reservoirs are Lower and Middle Miocene lagoonal wackestones with
secondary targets of Oligocene and mid Miocene limestone build-ups.
The main source rocks are the Palaeogene and Miocene pro-delta muds deposited in intra-basinal
lows. The main such kitchen is the Dahanu Depression, extending for around 500 km parallel to and
offshore from the present-day coastline. There is a second kitchen below GS-01, the Hardy block, where
the source rocks below 3,500 m are over-mature and mainly gas-prone. There are no known carrier
beds so, although close, migration between kitchen and reservoirs required either fault plane routes or
reservoir-reservoir juxtaposition Migration began in early Miocene into Palaeogene reservoirs, and
continued in a second phase into Lower and Middle Miocene reservoirs during the Pliocene, when traps
were already formed.
Typical trap types are rollover anticlines, fault-bounded monoclines and stratigraphic carbonate
traps (including reefal structures) (Figure 1.19).
FIGURE 1.9
TRAP STYLES IN THE MUMBAI BASIN

Source: USGS

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Block GS-01 (Hardy NWI 10%)


Block GS-01 encompasses 8,841 km2, and lies in water depths varying from 50 m to 90 m. The
block is operated under a PSC by RIL whose working interest is 90%. Hardy has the remaining
10%. The exploration concession (PEL) was awarded on 16th August, 2001 under NELP II terms,
comprising:

Three exploration phases, each not exceeding three years, for a total period of seven years;
The operator has elected not to go to exploration Phase II but to go straight to the
development phase.

An extensive geophysical database exists over GS-01 including 2D and 3D seismic and potential
field data. Prior to Hardys involvement in the licence, six exploration wells had been drilled in
the northern half of the block. None of these wells encountered commercial hydrocarbons
although B-107-1, drilled by ONGC in 1990, is reported to have oil shows. RIL and Hardy have
drilled four wells: S1, M1, GS01-A-1 and GS-01-B-1. Figure 1.10 shows the locations of these
four wells and the remaining Prospects.
No additional geoscience work has been undertaken since the 2010 CPR as Hardy is in
correspondence with the DGH pertaining to the declaration of commerciality of the Dhirubai-33
discovery submitted to the DGH on 28th August, 2010.
1.2.1.1 Contingent Resources
Dhirubhai 33 (GS-01-B1)
Well GS-01-B1 was spudded on 2nd March, 2007, 240 km North West of Mumbai in 79 m of
water and at 2,282 m MD (2,256 m TVDSS) reached TD in Lower Miocene reefal carbonates.
The structure being tested was a narrow, four-way dip-closed anticline, as shown at Top Bassein
(Eocene) level in Figure 1.11. The well had been planned to intersect several limestone targets,
from Middle Miocene through to Lower Eocene (Panna Fm) but the well terminated prematurely
in the Lower Miocene due to mud losses/lost circulation. It had encountered gas and condensate
in Lower Miocene limestones before entering reefal material of high vuggy porosity and
permeability.
Twenty-four metres of perforations were opened within the Lower Miocene fractured dolomitic
reservoir above the reef, and following acidisation the well flowed gas at 18.6 MMscfd and
condensate at 415 bcpd through a 56/64 choke with a FTHP of 1,346 psi. Levels of hydrogen
sulphide between 1,700 ppm and 3,800 ppm, and CO2 up to 7% were noted in the produced gas.
GCA assumed a Condensate Gas Ratio (CGR) of 22.3 Bbl/MMscf based on GS-01-B1 test results.
A test was attempted within the reef, but this failed, possibly because of earlier efforts to stem
the mud losses with cement.
The operator officially notified the government of a discovery named Dhirubai 33, on
14th May, 2007. It is the most westerly discovery in India to date. A Declaration of
Commerciality was submitted to GOI in 2010. An estimate of Contingent Resources for the
tested zone is presented in the Tables 1.5 and 1.6 below. Hardys 1C, 2C and 3C estimates of
GIIP, 72, 111 and 167 BCF respectively, seem reasonable based on the data provided to GCA.
Recovery factors of 70%, 75% & 80% were accepted, based on analogue cases.
The unreached reservoir levels remain as Prospects and are discussed in the next section of this
report.

Hardy

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FIGURE 1.10
GS-OSN-1 MAP

GS01-M1

B-1

Prn-1

A-1

Plugged & Abandoned


Discovery

Prospects

Hardy

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FIGURE 1.11
GS-01 3D AREA DEPTH STRUCTURE MAP AT TOP BASSEIN FORMATION

LEGEND
Depth Contour (metres subsea)
Gas/Condensate Discovery
Gas Shows
Plugged & Abandoned
Proposed Well Location

B1
B2

S1

Prn1

A1

Possible arcuate trend


of reef al build up

Fig 1.12

10 Km

C.I. = 20m

Hardy

Source: Hardy

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TABLE 1.5
GS-01 SUMMARY OF GROSS AND NET GAS CONTINGENT RESOURCES
AS AT 31st DECEMBER, 2010
Gross Contingent Resources
BCF

GS-01- B1area
Total GS-01

1C

2C

3C

50.5
50.5

83.0
83.0

133.2
133.2

Hardy
Interest
(%)
10
10

Net Hardy Contingent Resources


BCF
1C

2C

3C

5.1
5.1

8.3
8.3

13.3
13.3

Notes:
1.
2.

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.

TABLE 1.6
GS-01 SUMMARY OF GROSS AND NET GAS CONDENSATE CONTINGENT
RESOURCES AS AT 31st DECEMBER, 2010
Gross Contingent Resources
MMBbl

GS-01- B1area
Total GS-01

1C

2C

3C

1.12
1.12

1.85
1.85

2.97
2.97

Hardy
Interest
(%)
10
10

Net Hardy Contingent Resources


MMBbl
1C

2C

3C

0.11
0.11

0.19
0.19

0.29
0.29

Notes:
1.
2.

Hardy

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.

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1.2.1.2 Prospective Resources


GS-01-B1 Deep Prospects
Because GS-01-B1 did not reach all prospective intervals, a first deeper Miocene prospect,
trapped by stratigraphic pinch out and has a top seal of a 50 m thick shale sequence remains.
A second deeper prospect with similar trap style as the first is a suggested Upper Oligocene
carbonate build-up. Its reservoir parameters were predicted from PSDM, inversion and
bandwidth extension data, as being similar to the nearby B-192 field.
Low, Best and High estimates of GIIP for these B1 Prospects are 48, 90 and 157 BCF for the
deeper Miocene, and 136, 213 and 324 BCF respectively for the Oligocene limestone reservoir.
GCA has verified Hardys GCoS estimates and accepts them as 30% for the deeper Miocene, and
20% for the Oligocene prospect. The estimated Prospective Resources are shown in Table 1.8.
FIGURE 1.12
BLOCK GS-01 SEISMIC LINE
THROUGH THE B-1 AND A-1 LOCATIONS

NNE

Well B-1

Reefal
Buildups

Well A-1

SSW

Secondary source
kitchen
Basal
clastics

Main
source
kitchen
10 km

Source: Hardy

(approx)

GS-01-A1 Deep Prospect


GS-01-A1 was drilled by RIL and Hardy in 2006. All the five main targets of GS-01-A1 well
proved tight (low permeability) although two were gas bearing, but the highest gas saturations
occurred in an unexpected basal sandstone beneath the Panna limestone. Flow testing was not
possible due to limitations of the drilling rig which was operating in HP/HT conditions 300+m
deeper than prognosis. The well reached TD at 4,374 m MD and was suspended.
Maps of Top Panna limestone show a very well developed four-way dip closure with relief of
more than 100 m. Below, at Top Basement, a smaller four-way dip closure of over 60 m was
mapped suggesting that a structural feature exists. No gas/liquid contact was intersected in the
GS-01-A1 well but there is seismic brightening downdip of the discovery. Mapping on Top Basal
Hardy

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Sand with suitable scale has not been presented to GCA and AVO studies investigating the
presence of stratigraphically trapped gas vs. lithology or tuning have not yet been made available
to Hardy (and would be difficult at this depth).
GCA audit of the A1 Basal Clastics area is based only on the seismic cross-section and map
provided by Hardy. Analogue data from D-33, D-31 and B-192 near Block GS-01, which produce
hydrocarbons from the Eocene Basal Clastics, were used by Hardy to predict the reservoir
parameters. GCA accepted Hardys estimates of Low, Best and High GIIP for the A1 Basal
Clastic prospect of 283, 446 and 698 BCF respectively. GCA considered Hardys estimated
Prospective Resources as reasonable. These are summarised in the Tables 1.7 and 1.8.
Prn1 Prospect
Prospect Prn1 lies a little over 10 km North East of well GS-01-A1 (Figure 1.11). The seismic
expression of the Oligocene carbonates appears similar to A1 with a high-amplitude reflection
down-dip of a minor drape / shelf margin feature. In the light of the result at well A-1, where all
the targets proved barren, this Prospect has been downgraded and GCoS is assessed as
under 10%.
A Deeper Eocene, age prospect remains.
GCA accepted the estimates of GIIP for the Prn1Oligocene Prospect as 18, 33 and 76 BCF for
the Low, Best and High estimates respectively with slightly more (26-57-120 BCF) at Eocene.
The estimated Prospective Resources are shown below.
TABLE 1.7
GS-01 PROSPECTS SUMMARY OF GROSS GIIP (BCF)
Prospect
B1
B1
A1
Prn1
Prn1

Play

Low Estimate

Best Estimate

High Estimate

Deeper Miocene
Oligocene
Basal Clastics(Panna)
Oligocene
Eocene

48.0
136.0
283.0
18.0
26.0

90.0
213.0
446.0
33.0
57.0

157.0
324.0
698.0
76.0
120.0

Note:
1.

Hardy

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

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TABLE 1.8
SUMMARY OF GS-01 GROSS AND NET GAS PROSPECTIVE RESOURCES FOR
PROSPECTS AS AT 31st DECEMBER, 2010
Net Hardy Prospective
Resources

Gross Prospective Resources


Licence

BCF

Prospect
Low
Estimate

GS-01
GS-01
GS-01
GS-01
GS-01

B1 / Deeper
Miocene
B1 /
Oligocene
A1
Prn1 /
Oligocene
Prn1 /
Eocene

Hardy
W.I.
(%)

BCF
Low
Estimate

Best
Estimate

GcoS
(%)

Best
Estimate

High
Estimate

High
Estimate

34.0

68.0

126.0

10

3.4

6.8

12.6

30

95.0

160.0

259.0

10

9.5

16.0

25.9

20

198.0

335.0

558.0

10

19.8

33.5

55.8

25

9.0

19.8

53.2

10

0.9

2.0

5.3

10

13.0

34.2

84.0

10

1.3

3.4

8.4

10

Notes:
1.
2.

4.

The B1 Oligocene Time Map provided by Hardy, shows the structure to have a regional dip to the North-East.
The B1 Oligocene thickness range could not be confirmed by GCA due to lack of supporting data. Remaining
parameters were considered to be reasonable.
A1 Basal Clastics Area derived from the seismic cross-section from Presentation, as aerial map not provides with
suitable scale, but numbers reached were close enough to those of Hardys.
Independent validation was undertaken on the GcoS which verified Hardys numbers.

1.3

Krishna Godavari Basin

3.

The Krishna Godavari basin is located in eastern India and covers an area of about 45,000 km2,
approximately 50% of which lies onshore and 50% offshore. The basin is aligned North East-South West,
and slopes south-eastwards down the passive margin into the deep water of the Bay of Bengal. Hardy has
working interests in two deep-water Blocks; Blocks D3 and D9 (Figure 1.13).
The Krishna Godavari Basin began to form during Permian rifting and is filled with a clastic
succession of Permian to Jurassic age sediments. These filled the incipient rift valley and local topographic
lows and were overlain by a Lower Cretaceous transgressive sedimentary wedge. Since the Cretaceous,
Krishna-Godavari has become a pericratonic basin. The South-Eastern part of the basin became a major
Tertiary depositional centre as NE trending Precambrian lineaments were reactivated during the early
Palaeocene, stepping down to the South East. Delta progradation to the South East has been ongoing
since the Palaeocene, filling in remaining topographic lows.
Sandstone reservoirs embedded within Lower and Upper Cretaceous source shale beds have
been found to contain both oil and gas, as have Lower Eocene sandstones that overlie Palaeocene source
beds (Figure 1.14). The main reservoir is the Ravva Sandstone of Miocene-Pliocene age.

Hardy

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FIGURE 1.13
LOCATION MAP SHOWING D3 AND D9 LICENCES

LEGEND
Nepal

Pakistan
Pakistan

Hardy Block Interests

Bhutan

Bangladesh
Bangladesh

Myanmar

India
India

Oil Field
Gas Field
Gas Condensate Field
Basin Limits

n
Bay
of
Bengal

Source: GCA/Petroview
Andaman
Sea

Sri Lanka

Hardy

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FIGURE 1.14
BLOCKS D3/D9 CENOZOIC STRATIGRAPHY

Age

Formation

Lithology

Thickness (m)

Principal
Sedimentary
Cycle

Regional
tectonic events

Godavari
Clay
(Seal)

Holocene

> 2000
Pleistocene

Regression

Pliocene
Collision of
Indian and
Tibetan Plates

Miocene
> 1200
Transgression
Oligocene

Eocene

Regression
Transgression

Vadaparu
Shale
(Source & Seal)

> 2500
Regression

Palaeocene

Collision of
Indian and
Eurasian Plates

Transgression

Source: Hardy/GCA

In addition to the Cretaceous and Palaeocene source rocks, gas prone Lower Eocene shales with
TOC of up to 4%, have generated hydrocarbons since the early Miocene. However, the main source
rock in the deep water is thought to be Miocene Godavari Clay, matured by an abnormally high
geothermal gradient.
Structural traps exist in the basin in the form of tilted fault-blocks and rollover anticlines, though
they are usually modest in size. Stratigraphic trapping elements, includes erosional channels, updip
pinchouts, unconformities. Permeability barriers are of great importance. The shale-dominated section
(see the lithostratigraphic column of Figure 1.14) provides a strong regional seal. A thick Middle Eocene
carbonate is an additional seal for Cretaceous and Lower Eocene reservoirs.
In the shallow water and onshore, discoveries are a mixture of oil fields, gas and gas condensate
(Figure 1.13) however in deep water the only hydrocarbons yet found in fields, discoveries or shows are
gas. This is likely to be due to the deeper burial of source rocks in the deep water section, leading to
overmaturity of the source rock or generation of biogenic gas within the sediment column. The only
evidence of oil in the petroleum system to date is a single thin-section fluid inclusion in the analysis run on
Hardys KG-D9-A1 core. The oil sample was of unknown specific gravity. The remaining samples were
all dry gas, in a gas-prone kerogen background. There is not yet compelling evidence to predict large oil
accumulations in the D3 and D9 deepwater Blocks although this inclusion is encouraging.

Hardy

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1.3.1

Gaffney, Cline & Associates

Block D3 (Hardy NWI 10%)


The block measures 3,288 km2 in area, with water-depths varying from North West to South
East between 400 m and 2,200 m. The block was under a 4 year work programme which ended
in December, 2009 with a commitment to acquire 2,100 km2 3D seismic and drill 6 exploration
wells. An extension to June, 2010 was granted by the GOI pursuant to various delays. At the
Effective Date of this CPR four exploration wells had been drilled and four gas discoveries made.
Due to the non-availability of suitable deep water rigs in the international market, the Phase 1
exploration programme has been extended until June, 2013 during which time the remaining two
commitment wells will be drilled and the PSTM will be reprocessed to PSDM.
Since the 2010 CPR, the W1 discovery has been made, further analysis of the R1 discovery has
been undertaken and additional Prospects have been added to the corporate inventory. These
are mostly structural targets although with additional stratigraphic targets as discussed below.
Some of these Prospects have stemmed from the interpretation of the PSTM seismic cube
acquired over the phase 2 area. The company has not yet completed the electromagnetic analysis
over this second area.
The key plays identified in Block D3 are Pleistocene, Pliocene, Miocene, Oligocene, Eocene and
Palaeocene. Exploration methodology in Blocks D3 is driven primarily by the identification of
seismic amplitudes anomalies. Thirty five features based upon amplitude anomalies have so far
been identified. Amplitude extraction maps were provided to GCA for validation. A further four
structural traps have recently been identified (Figure 1.15).
FIGURE 1.15
D3 PROSPECT AND LEAD MAP

P1

Appraisal Area
(750 Sq.Km.)
S2
D1

E1

B1 Well
A1 Well
U1 Sand 2
U2 Sand
U1 Sand 1

S1
L1

W1 Well

G1

F1

H1

QTs

MM1

J1

QSu QTu

QA1 Sand2
QA1 Sand1

M1

T1

K1

Z1

R1 Well

Gas Discovery
Proposed Well

R1

10

20km

Source: Hardy/GCA

Hardy

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Previously, GCA has conducted a play fairway analysis over the D3 Block. The methodology
used, established the basin architecture and a sequence stratigraphic framework, thereby enabling
an understanding of the petroleum system and the key influences upon reservoir and seal
distribution. The discovery wells on Block D3 provided a stratigraphic tie to the Pliocene and
Pleistocene sequences.
The study highlighted that the basin as a whole is relatively
under-explored in terms of testing the various play-types that may exist and further work to
place Leads and Prospects in a play context may generate additional Leads and Prospects to those
currently identified by Hardy. GCA recognises that this play analysis approach has, over the past
year, resulted in the successful test of the Miocene play in the W1well.
The W1 well, drilled since the 2010 CPR was declared a Pliocene gas discovery.
The A1 well is a Pleistocene discovery whilst the B1 well is a discovery in both the Pleistocene
and Pliocene sequences. R1, which is located in the southern part of the block was drilled in
2009 targeting a seismic amplitude anomaly. The well made discoveries in three Miocene
laminated sandstone reservoirs. The reservoirs are interpreted to have been deposited as
amalgamated channels with well defined massive sands but with inter-channel areas which are
very shale prone. Sands are thin and may be found below log resolution. These discoveries are
discussed in the next section.
Most of the Pliocene and Pleistocene discoveries are of biogenic gas but there is evidence of
thermogenic gas in the D3 area too, from surface geochemistry studies. This is shown from data
such as Surface Geochemical Exploration (Figure 1.16).
Future discoveries containing
thermogenically derived gas may possibly yield some condensate fraction.
FIGURE 1.16
SURFACE GEOCHEMICAL EVIDENCE FOR THERMOGENIC HYDROCARBONS

Source: Hardy

Hardy

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1.3.1.1 Contingent Resources


The Contingent Resources of Block D3 are four discoveries: three made prior to 2010 in the
Pleistocene, Pliocene and Miocene by wells A1, B1 and R1 as discussed below and shown on
Figure 1.15. In 2010 the well W1 discovered gas in the Pliocene. W1 discovery, being new since
previous CPRs is discussed first in the sections below.
GCA understands that the Declaration of Commerciality for wells A1 and B1, and the Appraisal
Proposal for R1 Discovery were submitted to the DGH in February 2011.
GCA had earlier independently reviewed the seismic data and amplitude extract maps and
estimated the in-place volumes related to the A1, B1 and R1 discoveries. GCA calculated its own
P90, P50 and P10 area outlines for each of the discoveries using the amplitude extract maps
provided by Hardy. GCA based its estimation of the recovery efficiency from the A1 and B1
sands on the MDT measurement of the pressure and the gas properties that were integrated with
some assumed abandonment pressures between 500 and 1,000 psi. Tables 1.9 and 1.10
summarize the GIIP and the Contingent Resources for Block D3 discoveries.
Discovery W1
Exploration well W1 targeted a deep water channel lobe complex interpreted to be Pliocene in
age. The channel lobe complex was gas bearing in two 8 m intervals (Figure 1.17). A deeper 1m
net gas sand was also encountered although this is too small to contribute to contingent
resources.
GCA has reviewed the post-well analysis performed by RIL and Hardy and re-examined the
seismic attribute maps used as the basis of well-planning and resource estimation. The two gas
sands are both thin (from the top of Sand 1 to base of Sand 2 is only 30 m), which is within a
seismic cycle at these depths (Figure 1.18) (seismic cycle length = 40 m). GCA consequently
believes that the two pre-drill amplitude maps do not represent Sand 1 and Sand 2 individually,
particularly as they have been derived with large seismic windows, and thus should be combined
in one areal extent. GCA believes resources should be computed based on a single map for both
intervals and in this case the most appropriate map is the upper, Sand 1 map, perhaps with a
smaller time window such as 0-50 m which defines the channel edge more sharply, but at the
same location.

Hardy

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FIGURE 1.17
WIRELINE LOG RESPONSES AT W1 DISCOVERY

Source: Hardy

GCA considers that the W1 discovery has uncertainty in its areal extent due to the low
resolution of seismic mapping, the elongate geometry of the field and the difficulty of
distinguishing water-bearing, from gas-bearing sands. The volumes quoted for W1 discovery
allow for a range of areal extents at P90 to P10 with P50 determined by lognormal distribution.
Recognising the tighter areal constraints and the off-axis location of the well in Sand 1, the revised
Sand1 reservoir thicknesses and parameters allow for enhanced properties beyond those found at
the well.
There is also some up-dip prospectivity near the channel which cannot be considered contingent.

Hardy

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FIGURE 1.18
REVISED SAND 1 AMPLITUDE MAP (MAIN SEGMENT)

P10 polygon

P90 polygon

Further
prospectivity

Well W1
0

1 km

Source: GCA

Dhirubhai 39
Well A1 is located in water depth of 715 m. On the basis of MDT results and petrophysical
analysis, A1 encountered two gas zones designated as Pleistocene Sands 0 and 1. The DST test of
Sand 1 produced gas at a maximum rate of 38.05 MMscfd in the interval 1,565 1,585 mBRT.
The produced gas was dry with a gravity of 0.57 at standard conditions. Results of the pressure
transient analysis indicate a permeability range from 2,700 mD to 3,800 mD and an estimated
static reservoir pressure of 2,554.3 psi (at gauge depth of 1,509.2 mBRT) and reservoir
temperature of 114 deg F. GCAs review verifies the results of well A1 DST and supports its
transient pressure analysis procedure.

Hardy

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Dhirubhai 41
Well B1 is located at a water depth of 711 m, and was drilled to a total depth of 2,730 mBRT. It
encountered gas in two intervals in the Pleistocene (Pleistocene Sand 2 Southern) and one
interval in the Pliocene (Pliocene Sand). No DST was performed in this well.
In the A1-B1 area the operator (RIL) has been reviewing the connectivity between the existing
discovery wells and the AP1 Prospects. Near and Far Stack difference volumes do show a strong
response at both the AP1 location and the A1 discovery well which is supporting evidence for
hydrocarbon bearing sands at both locations. It is GCAs interpretation that these sands are both
sourced from the North West and charged likely from the South East and GCAs firm conclusion
that lateral connectivity between the two is unproven and unlikely. The bright sand reflectors
fade away and are also heavily faulted (Figure 1.19). The same is true on all attribute volumes
examined, including the Vp/Vs cube. For that reason GCA keeps the A1& B1 contingent
resources separate from prospectivity at AP1.
FIGURE 1.19
LACK OF CONNECTIVITY BETWEEN WELL -A1 AND PROSPECT AP1

SW

KGV-D3-A1

AP1

NE

Source: Hardy/GCA

Dhirubhai 44
Well R1 is located at water depth of 1,982.5 m, and was drilled as a directional well with a total
depth of 4,113 m TVDSS. A Formation testing tool, Reservoir Characterization Instrument
(RCI), was run. Three gas samples and one water sample were collected. A gas gradient of 0.12
psi/ft was established in the upper zone (3,832-3,853 m TVDSS) and a water gradient of 0.44psi/ft
was established in the lower zone (3,939.9-3,966.7 m TVDSS). Gas composition showed C1 of
98.33 99.4 mole% and a gas gravity of around 0.56.

Hardy

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TABLE 1.9
BLOCK D3: SUMMARY OF GROSS GIIP FOR DISCOVERIES
AS AT 31st DECEMBER, 2010

W1 Pliocene Sands
Total W1
A1 Pleistocene Sand 0
A1 Pleistocene Sand 1
Total A1
B1 Pleistocene Sand 2
(Southern)
B1 Well Pliocene Sand
Total B1
R1 Sand 1 (Miocene)
R1 Sand 2 (Miocene)
R1 Sand 3 (Miocene)
Total R1
Total D3

Low Estimate
1C
145
145
41.0
48.0
89.0

Gross GIIP (BCF)


Best Estimate
2C
232
232
163.0
140.0
303.0

84.0

209.0

450.0

40.0
124.0
21.0
42.0
35.0
98.0
456.0

96.0
304.0
30.0
53.0
54.0
137.0
976.0

175.0
625.0
39.0
68.0
77.0
184.0
1,862.0

High Estimate
3C
369
369
388.0
296.0
684.0

TABLE 1.10
BLOCK D3: SUMMARY OF GROSS AND NET GAS CONTINGENT RESOURCES FOR
DISCOVERIES AS AT 31st DECEMBER, 2010

W1 Pliocene Sands
Total W1
A1 Pleistocene Sand 0
A1 Pleistocene Sand 1
Total A1
B1 Pleistocene Sand 2
(Southern)
B1 Well Pliocene Sand
Total B1
R1 Sand 1 (Miocene)
R1 Sand 2 (Miocene)
R1 Sand 3 (Miocene)
Total R1
Total D3

Gross Contingent
Resources
BCF
1C
2C
3C
101.5
162.4
258.3
101.5
162.4
258.3
28.0
113.0
274.0
33.0
97.0
209.0
61.0
210.0
483.0

Hardy
Interest
10
10
10
10
10

Net Hardy Contingent


Resources
BCF
1C
2C
3C
10.2
16.2
25.8
10.2
16.2
25.8
2.8
11.3
27.4
3.3
9.7
20.9
6.1
21.0
48.3

57.0

146.0

316.0

10

5.7

14.6

31.6

27.0
84.0
15.0
30.0
25.0
70.0
316.5

67.0
213.0
21.0
38.0
39.0
98.0
683.4

125.0
441.0
28.0
49.0
55.0
132.0
1314.3

10
10
10
10
10
10
10

2.7
8.4
1.5
3.0
2.5
7.0
31.7

6.7
21.3
2.1
3.8
3.9
9.8
68.3

12.5
44.1
2.8
4.9
5.5
13.2
131.4

Notes:
1.
2.

Hardy

The Net Hardy Contingent Resources on this table are only indications of Hardys working interest fraction of the
gross resources. They do not represent Hardys actual net entitlement under the terms of the permits that govern
these assets.
The primary Contingent Resource volume reported here is the 2C, or Best Estimate, value.

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1.3.1.2 Prospective Resources


GCAs workflow for volumetric estimation for stratigraphic targets is probabilistic. The criteria
used by GCA for amplitude extraction and subsequent identification of the areal extents (P90,
P50 and P10) used in the volumetrics are:

Absolute magnitude of seismic amplitude, relative to well calibrations;


Consistency of seismic amplitude magnitude across the areas to define the Low (P90), Best
Estimate (P50) and High Estimate (P10) probability range; and
Morphology of seismic amplitudes as related to environment of deposition.

This approach was consistently applied throughout validation of each amplitude event.
For structural targets a probabilistic approach is still taken but GCAs estimation of areal extent
allows for uncertainty in the depth conversion of time surfaces to depth which would affect spill
points, and for structures to be compartmentalised (where appropriate) or not filled to spill.
Reservoir parameters are a range of realistic averages across the whole target.
New Prospects and Leads added to the prospect inventory since the 2010 CPR are described in
some detail below.
New Prospects and Leads include QT/QS, which are structural and stratigraphic Leads in the area
of the new seismic dataset and MM1, a structural Prospect in the existing study area.
QT and QS AREA
South East of the existing discoveries Hardy has begun interpreting the new area of 3D seismic
data acquired in 2009 and has identified some structural targets in thrusts (Figure 1.20). These
features are at an early stage of the exploration workflow, having been identified and mapped on
the PSTM cube but further work is anticipated prior to drilling (such as re-mapping on the PSDM
volume once reprocessing is complete, depth conversion, fault seal analysis etc). They are
classified as Leads, but with little additional work, could soon be elevated to Prospect status.
GCA has found good consistency between its own and Hardys GIIP estimates for these Leads.
Pliocene QTu
Pliocene QTu is the youngest Lead in this area and is located in a backthrust rollover. There is
structural closure bounded by faults to the North East and South West. GCA notes that there is
some fault segmentation of the structure at the crest so reduces area slightly over that initially
proposed, but it remains a valid prospect. Being stratigraphically younger, the range of reservoir
properties is slightly better than those found in the nearby Miocene sands.
Miocene QTu
Miocene QTu is an upthrown fault block which has structural closure in the time domain. GCA
has reviewed the volumetric parameters used by Hardy to quantify this prospect and has only
revise slightly down the P90 area. Miocene reservoir parameters are consistent with those found
in the R1 discovery well to the west.
Miocene QTs
Miocene QTs is the downthrown unit below the QTu Lead. It should be possible to test both
targets with the same well. The reservoir properties are predicted to be very similar to QTu,
although the size of trap is smaller and with greater uncertainty.

Hardy

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An additional stratigraphic target (QSu) below the main thrust/Miocene unconformity was
proposed. There is no structural closure at this level. A bright amplitude consistent with an
increase in acoustic impedance is noted from RMS mapping around this interval. Using the
relaxed amplitude cut-offs shown, there is a high chance of leakage into adjacent sands, so GCA
has restricted the area to the very brightest amplitude response which might be taken as having
the best sand quality.
No analysis as to potential fluid fill has yet been done on these Q Leads, nor have they been
mapped in depth. Both steps would be expected to be completed prior to drilling.
FIGURE 1.20
SEISMIC SECTION THROUGH THE Q LEADS
A

4 km

A
A

3s TWT

Pliocene

Upthrust
(QTu)

Sub Unconformity
(QSu)

4s TWT

Miocene
Subthrust
(QTs)

Source: GCA

Hardy

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MM1
MM1 is a Miocene combination Prospect on a ridge extending East West in the centre of the D3
Block. Based on the PSDM migration there is a 5 km2 closure in depth at the Miocene Deep 4
level, increasing for older units. Sands of Miocene age have been found in the nearby R1 well.
Bright amplitudes suggest discrete sand bodies draped over this palaeo-high (Figure 1.21).
FIGURE 1.21
SEISMIC SECTION ALONG THE MM1 PROSPECT WITH POTENTIAL CHANNELS
SW

NE

R1
0

2 km

Source: GCA

Hardy

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GCA suggests that traps in this area are structural-stratigraphic combination traps. The strongest
amplitudes are likely channel systems draped over the structural closures (Figure 1.22). Hardy
intends to test this structure during the 2011 drilling campaign.
Volumetrically, there is a wide range of Prospective Resources associated with this feature. The
potential sands appear to be channelized rather than sheet like. GCAs low case is for a single
channel segment overlying the structural closure to be hydrocarbon bearing. However, given the
region is dipping generally to the south east, there is potential for stratigraphic trapping in some
of the down-dip extensions beyond the 4-way dip closure. Analysis has shown several sequences
of Miocene channels draped over the structure. The inter-relationships of the channels is likely
to be complex so careful well design is required to maximise the number of potential sands and
thereby volumes intersected.
Existing Prospects
GCA has sufficient data to validate the resource volumes of the Prospects in the 3D seismic area.
GCA reviewed the 3D seismic data and the relevant well data for the A1, B1, R1 and W1 wells to
use as benchmarks and calculated the probabilistic volumetric resource estimates.
The anomalies reviewed, by GCA in Block D3 are associated with high seismic amplitudes in the
Plio-Pleistocene geologic section. In general, the relative size of the individual horizon amplitude
identified Prospects are small, averaging some 9 km2 and ranging between 4 to 16.4 km2. The
Pleistocene and Pliocene gas sand responses as defined by petrophysics in the A1, B1 and R1
wells are calibrated to their respective seismic amplitude responses at the well locations. These
calibrated seismic amplitude responses are extrapolated away from the well bore to identify areas
of similar gas sand occurrence. Results from recent technical evaluations that includes
reprocessing of 3D seismic data (work in progress), will modify the seismic amplitude
methodology and the assumptions used.
Hardy provided an AVO analysis performed including fluid factor analysis, fluid substitution
models generated and seismic inversion. This was used, in conjunction with other seismic
attributes to guide volumetric estimates. According to the report, the Pleistocene Sands 1 and 2
exhibit a polarity reversal, increase amplitude with offset, and is a Class III anomaly. The Pliocene
gas sand exhibits a polarity reversal and was designated as a Class III anomaly. GCA
independently validated these conclusions using the data provided by Hardy.
GCA performed probabilistic volumetric calculations using Crystal Ball and applying the
Low-Best-High Estimates range of reservoir parameter values in a triangular distribution.
The Prospective Resources attributed to D3 are shown in Table 0.7 of the Summary section and
in Table 1.12 below. A summary of the Low Estimate (P90), Best Estimate (P50), and High
Estimate (P10) GIIP values are listed in Table 1.11. GCA has previously reviewed the GCoS for
the Prospects identified by Hardy in Block D3.

Hardy

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TABLE 1.11
BLOCK D3: SUMMARY OF GROSS GIIP FOR PROSPECTS
AS AT 31st DECEMBER, 2010
Gross GIIP (BCF)
Prospect

Play

B1 Pleistocene Sand 2 (Central)


B1 Pleistocene Sand 2
(Northern)
F1 Pleistocene
G1 Pleistocene
K1 Pleistocene
P1 Pleistocene
D1 Pliocene
E1 Pliocene
L1 Pliocene
U1 Sand 1 Pliocene
U1 Sand 2 Pliocene
QA1 Sand 1 Pliocene
U2 Sand Pliocene
S1 Sand 1 Pliocene
S1 Sand2 Pliocene
T1 Pliocene
G1 Miocene
J1 Miocene
M1 Miocene
MM1 Miocene
QA1 Sand 2 Miocene
R1 Sand Miocene
W1 Sand 3 Miocene
H1 Oligocene
Z1 Oligocene

Pleistocene

43.0

184.0

472.0

Pleistocene

107.0

367.0

867.0

Pleistocene
Pleistocene
Pleistocene
Pleistocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Pliocene
Miocene
Miocene
Miocene
Miocene
Miocene
Miocene
Miocene
Oligocene
Oligocene

130.0
298.0
177.0
119.0
30.0
107.0
78.0
76.0
107.0
143.0
103.0
57.0
73.0
75.0
157.0
189.0
247.0
272.0
289.0
32.0
165.0
468.0
125.0

391.0
426.0
592.0
431.0
56.0
244.0
193.0
191.0
231.0
241.0
240.0
98.0
100.0
107.0
459.0
390.0
646.0
554.0
444.0
54.0
265.0
1,170.0
415.0

834.0
568.0
1,249.0
992.0
89.0
450.0
370.0
404.0
431.0
385.0
453.0
152.0
141.0
148.0
939.0
722.0
1,259.0
922.0
659.0
80.0
398.0
2,274.0
966.0

Low
Estimate

Best
Estimate

High Estimate

Note:
1.

Hardy

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

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TABLE 1.12
BLOCK D3: SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR
PROSPECTS AS AT 31st DECEMBER, 2010

Prospect
B1 Pleistocene
Sand 2
(Central)
B1 Pleistocene
Sand 2
(Northern)

Gross Prospective Resources


BCF
Low
Best
High
Estimate
Estimate
Estimate

Hardy
W.I.
(%)

Net Hardy Prospective Resources


BCF
Low
Best
High
Estimate
Estimate
Estimate

GCoS
(%)

30.0

127.0

330.0

10

3.0

12.7

33.0

80

73.0

255.0

614.0

10

7.3

25.5

61.4

80

F1 Pleistocene

88.0

272.0

589.0

10

8.8

27.2

58.9

80

G1 Pleistocene

206.0

297.0

400.0

10

20.6

29.7

40.0

80

K1 Pleistocene

123.0

410.0

879.0

10

12.3

41.0

87.9

80

P1 Pleistocene

83.0

300.0

691.0

10

8.3

30.0

69.1

80

D1 Pliocene

21.0

39.0

62.0

10

2.1

3.9

6.2

70

E1 Pliocene

75.0

169.0

319.0

10

7.5

16.9

31.9

70

L1 Pliocene

53.0

134.0

262.0

10

5.3

13.4

26.2

70

52.0

134.0

291.0

10

5.2

13.4

29.1

70

74.0

161.0

306.0

10

7.4

16.1

30.6

70

98.0

168.0

270.0

10

9.8

16.8

27.0

70

72.0

166.0

318.0

10

7.2

16.6

31.8

70

39.0

68.0

104.0

10

3.9

6.8

10.4

70

50.0

70.0

100.0

10

5.0

7.0

10.0

70

T1 Pliocene

52.0

75.0

105.0

10

5.2

7.5

10.5

70

G1 Miocene

112.0

328.0

675.0

10

11.2

32.8

67.5

70

J1 Miocene

135.0

281.0

524.0

10

13.5

28.1

52.4

70

M1 Miocene

175.0

464.0

904.0

10

17.5

46.4

90.4

70

MM1 Miocene

191.0

388.0

645.0

10

19.1

38.8

64.5

70

204.0

308.0

455.0

10

20.4

30.8

45.5

70

23.0

38.0

58.0

10

2.3

3.8

5.8

70

117.0

190.0

282.0

10

11.7

19.0

28.2

70

H1 Oligocene

334.0

840.0

1,641.0

10

33.4

84.0

164.1

24

Z1 Oligocene

89.0

300.0

703.0

10

8.9

30.0

70.3

24

U1 Sand 1
Pliocene
U1 Sand 2
Pliocene
QA1 Sand 1
Pliocene
U2 Sand
Pliocene
S1 Sand 1
Pliocene
S1 Sand2
Pliocene

QA1 Sand 2
Miocene
R1 Sand
Miocene
W1 Sand 3
Miocene

Notes:
1.

2.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the recategorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.

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TABLE 1.13
BLOCK D3: SUMMARY OF GROSS GIIP FOR LEADS
AS AT 31st DECEMBER, 2010
Gross GIIP (BCF)
Lead

Play

QTu
QTu
QTs
QSu

Low
Estimate
-

Pliocene
Miocene
Miocene
Miocene

Best Estimate
556
184
177
194

High
Estimate
-

Notes:
1.

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

TABLE 1.14
BLOCK D3: SUMMARY OF GROSS UNRISKED GAS PROSPECTIVE RESOURCES FOR
LEADS AS AT 31st DECEMBER, 2010
Lead
QTu
QTu
QTs
QSu

Play
Pliocene
Miocene
Miocene
Miocene

Gross Unrisked Prospective Resources (BCF)


Low
Best
High
Estimate
Estimate
Estimate
389.2
128.8
123.9
135.8
-

GCoS
(%)
17
17
17
15

Notes:
1.

2.

1.3.2

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to report summed-up Prospective Resource volumes or to otherwise focus upon those of other
than the Best Estimate.

Block D9 (Hardy NWI 10%)


Block D9 is located offshore the east coast of India (Figure 1.13). It covers an area of 11,605 km2
in water depths ranging from 2,400 m in the North West to 3,150 m in the South East of the
block. Hardy has a 10% interest with Reliance Industries owning the remaining 90% and
operatorship. The block is under an eight year (3 phases) exploration programme which started
in April, 2003 with a phase 1 commitment to acquire 2D & 3D seismic and drill 4 exploration
wells. The phase 1 seismic commitment was for 2,100 km of 2D and 1,650 km2 of 3D. To date
2,087 km 2D seismic, 4,188 km2 3D seismic & 4 (196 km) controlled source electromagnetic
(CSEM) lines have been acquired. This is considered to have met the minimum work
requirement regarding seismic acquisition. In addition, 570 km of 2D seismic is available from the
old (1997) exploration activities.
Exploration well KG-D9-A1 was drilled in 2009 and B3 in 2010. Well B3 found gas shows and
good reservoir but no discovery (Figure 1.14). The results of this well have reduced the source
and reservoir risks on some of the D9 Prospects. A remaining four wells have been approved for
drilling to complete the minimum work obligations of the exploration phase. In December 2010,
the operator applied to the Government for, and received, a 337 day extension to the Drilling
Moratorium due to statutory delays.

Hardy

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Exploration well KG-D9-A1 was drilled in 2009 to a TD of 4,875 m MD, reaching the Early
Miocene. The well targeted an anticline which contained Prospects in the Lower Miocene, Middle
Miocene, Upper Miocene and Palaeocene/Cretaceous but did not reach the
Palaeocene/Cretaceous prospect. GCA was provided with composite and mud logs of the well.
Despite being drilled on a structural closure the well did not find any hydrocarbon accumulations.
GCA has reviewed the composite well log and concludes this largely due to a lack of reservoir,
the well encountering limestone formations at the Lower Miocene reservoir depths. These are
interpreted as calc-lucite deposits in a turbiditic depositional environment. In addition, GCA
notes that while there is significant dip closure on the target structure, closure in a strike
direction is of shallow relief. Minor gas shows in the well confirms the presence of a possible
biogenic gas source. There is not yet strong evidence from surface geochemical exploration for a
thermogenic source in the D9 area.
FIGURE 1.22
D9 PROSPECT AND LEAD LOCATION MAP

Mid Miocene
Lead

KG-D9-B3

B2
B1

KG-D9-A1
Cretaceous

Cretaceous Prospects
Paleocene / Cretaceous
Palaeocene/Cretaceous
Prospects
Lr. Miocene

Lower Miocene Prospects


Mid Miocene
Prospects
Mid. Miocene
and lead (labelled)

C1
A2

10 Km

Gas Shows

Miocene Prospects
UpperUp.
Miocene

Dry Hole

Pliocene
Leads
Pliocene

Clusters

Pliocene
Leads
Pliocene

Lead and Prospect


Map

Source: Hardy

Hardy

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Depth maps were provided for validation of the structural anomalies. Additionally, some
amplitude extraction maps were provided by Hardy. GCA validated the depth structure closures
and confirms that the methodologies employed are according to industry standards and
procedures. GCA believes that the 3D depth-migrated seismic data is a good representation of
the depth structure and that the Prospects and Leads in D9 are predominantly structural driven
with the exception of the five channel Leads.
Edge, Similarity and Spectral attributes analysis is beginning to reveal the edge of sedimentary
bodies and from analysis of images such as Figure 1.23 below an informed prediction of reservoir
quality, type and geometry can be made. The B3 well found encouraging gas shows during drilling
and excellent reservoir, consistent with its location in the centre of a wide Pliocene channels
meander. Once applied more widely, this attribute work will help with defining and risking
Prospects in D9 in future.
FIGURE 1.23
GEOMORPHOLOGY IN PLIOCENE D9 REVEALED BY SEISMIC ATTRIBUTES

B3 well

1 km

Source: Hardy

Work undertaken since the last CPR includes biostratigraphy and fluid inclusion studies of the
Miocene section of the KG-D9-A1 well. A number of dry gas bearing intervals were found, along
with both gas prone kerogen and a thermogenic sulphur signature. A single sample below the dry
gas at 4,660 m MD was also found as an inclusion within a carbonate cement. These are both
encouraging evidence for thermogenic generation in deeper kitchens however there is no
evidence to suggest A1 is located on a major migration pathway.
The Low Estimate, Best Estimate and High Estimate GIIP and STOIIP for Prospects and Leads are
listed in the summary Tables 1.15 and 1.16 below. This is followed by a summary of the Gross
Hardy

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and Net gas and oil Prospective Resources for Prospects as Low, Best, and High Estimates
(Tables 1.17 and 1.18) and a summary of the Gross and Net gas and oil Best estimate for
Prospective Resources for Leads (Tables 1.19 and 1.20).
TABLE 1.15
BLOCK D9: SUMMARY OF GROSS GIIP FOR PROSPECTS/LEADS
AS AT 31st DECEMBER, 2010

Prospect/Lead
Channel Complex (C1)
Northern Anticline
(NW Flank B1)
Central Anticline
(NW Flank)
Central Anticline (near B3)
Southern Anticline
(SE Flank C1)
Northern Anticline B1
Central Anticline (near B2)
Southern Anticline C1
Northern Anticline
(near B1)
Central Anticline (near B2)
Central Anticline (near A2)
Channel Complex (A2)
Middle Miocene Channel

Gross GIIP (TCF)

Play

Class

Low
Estimate

Best
Estimate

High
Estimate

Pliocene

Prospect

0.3

0.9

2.2

U. Miocene

Prospect

1.1

3.6

8.1

U. Miocene

Prospect

0.6

1.5

3.0

U. Miocene

Prospect

1.4

3.6

7.6

U. Miocene

Prospect

1.5

4.2

8.8

M. Miocene
M. Miocene
M. Miocene

Prospect
Prospect
Prospect

1.9
1.8
1.9

3.7
2.7
2.7

6.4
3.8
3.7

L. Miocene

Prospect

2.6

9.0

21.2

L. Miocene
L. Miocene
Pliocene
M. Miocene

Prospect
Prospect
Lead
Lead

1.8
1.2
-

4.1
3.3
0.1
0.3

7.8
6.9
-

Note:
1.

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

TABLE 1.16
BLOCK D9: SUMMARY OF UNRISKED GROSS STOIIP FOR PROSPECTS/LEADS
AS AT 31st DECEMBER, 2010

Prospect/Lead
Central Anticline (4 way fault
closure B2)
Central Anticline (Fault Closure
B2)
Wedge

Play

Class

Gross STOIIP (MMBbl)


Low
Best
High
Estimate
Estimate
Estimate

Palaeocene

Prospect

460.0

1,320.0

2,930.0

Cretaceous

Prospect

140.0

390.0

800.0

Palaeocene

Lead

1,460.0

Note:
1.

Hardy

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

55

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TABLE 1.17
BLOCK D9: SUMMARY OF GROSS AND NET GAS PROSPECTIVE RESOURCES FOR
PROSPECTS AS AT 31st DECEMBER, 2010
Gross Prospective Resources
Prospect

Net Hardy Prospective


Resources
BCF
Low
Best
High
Estimate Estimate Estimate
21.0
63.0
154.0

GCoS
(%)

BCF
Best
Estimate
630.0

High
Estimate
1540.0

800.0

2,500.0

5,600.0

10

80.0

250.0

560.0

20

400.0

1,100.0

2,100.0

10

40.0

110.0

210.0

20

1,000.0

2,500.0

5,300.0

10

100.0

250.0

530.0

20

1,100.0

2,900.0

6,200.0

10

110.0

290.0

620.0

10

1,300.0

2,500.0

4,500.0

10

130.0

250.0

450.0

20

1,300.0

1,900.0

2,700.0

10

130.0

190.0

270.0

20

1,300.0

1,900.0

2,600.0

10

130.0

190.0

260.0

15

1,800.0

6,300.0

15,000.0

10

180.0

630.0

1500.0

15

1,300.0

2,800.0

5,500.0

10

130.0

280.0

550.0

19

800.0

2,300.0

4,900.0

10

80.0

230.0

490.0

15

Low
Estimate
C1 Pliocene
210.0
Northern
Anticline
(NW Flank
B1) / U.
Miocene
Central
Anticline
(NW Flank)
/ U.Miocene
Central
Anticline
(near B3) /
U. Miocene
Southern
Anticline (SE
Flank C1) /
U. Miocene
Northern
Anticline B1
/ M.
Miocene
Central
Anticline
(near B2) /
M. Miocene
Southern
Anticline
C1/ M.
Miocene
Northern
Anticline
(Near B1) /
L. Miocene
Central
Anticline
(near B2) /
L. Miocene
Central
Anticline
(near A2) /
L. Miocene

Hardy
W.I.
(%)
10

25

Notes:
1.

2.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.

56

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TABLE 1.18
BLOCK D9: SUMMARY OF GROSS AND NET OIL PROSPECTIVE RESOURCES FOR
PROSPECTS AS AT 31st DECEMBER, 2010
Net Hardy Prospective
Resources

Gross Prospective Resources

Low
Estimate
Central
Anticline (4
way fault
closure B2) /
Palaeocene
Central
Anticline
(Fault
Closure B2)
/ Cretaceous

Hardy
W.I.
(%)

MMBbl

Prospect

Best
Estimate

High
Estimate

GCoS
(%)

MMBbl
Low
Estimate

Best
Estimate

High
Estimate

142.0

420.0

961.0

10

14.2

42.0

96.1

18

44.0

122.0

260.0

10

4.4

12.2

26.0

18

Notes:
1.

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to sum Prospective Resource volumes or to otherwise focus upon those of other than the Best
Estimate.

2.

An estimate of the Prospective Resources for the Leads identified on Block D9 is summarised
below.
TABLE 1.19
BLOCK D9: SUMMARY OF GROSS UNRISKED GAS PROSPECTIVE RESOURCES FOR
LEADS AS AT 31st DECEMBER, 2010

Lead

Play

Channel Complex (A2)


Middle Miocene Channel

Pliocene
M. Miocene

Gross Unrisked Prospective Resources


(BCF)
Low
Best
High
Estimate
Estimate
Estimate
70
210
-

GCoS
(%)
20
10

Notes:
1.

2.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to report summed-up Prospective Resource volumes or to otherwise focus upon those of other
than the Best Estimate.

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TABLE 1.20
BLOCK D9: SUMMARY OF GROSS UNRISKED OIL PROSPECTIVE RESOURCES FOR
LEADS AS AT 31st DECEMBER, 2010
Prospective Resources (MMBbl)
Lead

Wedge

Play

Low
Estimate

Palaeocene

Best
Estimate
456.0

High
Estimate
-

GCoS
(%)
18

Notes:
1.

2.

1.4

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to report summed-up Prospective Resource volumes or to otherwise focus upon those of other
than the Best Estimate.

Assam-Arakan Basin

The Assam-Arakan Basin is located in North East India and covers about 115,000 km2. The first
commercial oil was discovered in 1889 and since then several oil and gas fields have since been
discovered in thrust sheets of the Assam-Arakan fold belt. In 1996, there were 38 oil fields and 1 gas
field, each with more than 1 million barrels of oil equivalent production or proven reserves (USGS, 2004).
Indeed, until the 1974 discovery of the Mumbai High Field, Assam-Arakan was the region with largest oil
and gas production in India (USGS, 2004).
Assam-Arakan Basin comprises several elements each trending North East. Naga and Mirkir Hills
are found in the South East. North West of these hills is the flat lying Assam Shelf and beyond that the
Brahmaputra River and the Himalayan Foreland and mountains.
The Naga and Mirkir Hills are formed by tectonic compression on several NE-SW striking thrust
faults (Figure 1.24). These have also formed the structures which form the traps for most of the fields in
the area (anticlines and faulted anticlines). Further traps are found below the thrust sheets and the faults
have caused elevated thermal maturity and vertical migration pathways.
The Assam Shelf (Basin) contains up to 7,000 m of Cretaceous to Recent alluvial and clastic
sediments (Figure 1.25) overlying a crystalline and metamorphic basement. Interbedded with these clastic
units are an Eocene limestone (Kopili Fm) and Oligocene (Barail Group) coals. The major oil
accumulations are found in Oligocene and Miocene sandstones with additional minor production from
limestones, shales and fractured granite in fields which are related to the trend of basement ridges.
These reservoirs were deposited in environments ranging from delta front, distributary channels / point
bar to fluvial deposits of a braided channel system.

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FIGURE 1.24
OIL FIELDS SOUTH OF BRAHMAPUTRA RIVER
AS-ONN-2000/1

Source: Hardy

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FIGURE 1.25
STRATIGRAPHIC COLUMN ASSAM-ARAKAN BASIN

Source: ONGC
Note: Stratigraphic column downloaded f rom ONGC website. Although the local geology may
be dif f erent than the generalised geology shown here, it represents the key reservoirs.

Source rocks are likewise present throughout the geological section, typically with low TOC but
good thermal maturity, increasing to the South East. The known petroleum systems that exist in the area
are the Sylhet-Kopili and Barail-Tipam units as seen in the Formation, Source, Reservoir, Seal and Oil and
Gas columns of Figure 1.18. Both regional and local cap rocks are present.

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The trap types found in the Assam-Arakan basin are:

Anticlines and faulted anticlines associated with ENE-WSW or NNE-SSW trends;


Fault closures;
Pinchouts;
Fractured basement; and
Stratigraphic sandstone lens traps.

1.4.1

AS-ONN-2000/1 (Hardy NWI 10%)


The AS-ONN-2000/1 Block measures 5,754 km2 and is located immediately north of the
Brahmaputra River and south of the Eastern Himalaya (Figure 0.2). It is a frontier exploration
block being further west and on the other side of the river from the existing, numerous
hydrocarbon discoveries, in an area where there is currently very little data and the geological
history is less well understood. There is some 2D seismic (vintage 124 km; new 391 km) of poor
to locally fair quality in the shallow geologic section (Figure 1.26); regional gravity data,
geochemical survey (work in progress) and environmental studies for well locations. A
commitment to acquire more 2D and reprocess 1,020km is complete save for extra, optional,
reprocessing.
FIGURE 1.26
SEISMIC LINE AS-17-08 IN ASSAM BLOCK

Namsang
Tipam

Gondwana?

Sylhet

Basement

10 km

Source: Hardy

Source: Hardy

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AS-ONN-2000/1 is operated by RIL who has a 90% interest in the block. Hardy has the
remaining 10% interest. The block is held under a three phase programme. Phase 1 was a 3 year
period from 10th January, 2008 through to 9th January, 2011. The minimum work commitment
has been completed. RIL, however, has written to the Directorate General of Hydrocarbons on
10th December, 2010 asking for a six month extension period to complete further studies prior
to deciding whether to enter Phase 2, which carries a one well obligation and ends in
9th January, 2013.
During GCAs review in 2009, the following geo-technical issues were presented based on the
known plays and potential new plays:

Complex structures in the block will require 3D seismic for proper imaging;
Reservoir compartmentalization can be expected; and
Relatively small to medium field size per analogue trends.

Two Leads have been defined from the existing 2D seismic data; Gohpur is a faulted anticline and
Rajabari is a horst block (Figure 1.27). GCA has reviewed the seismic data. The seismic quality is
fair but the grid density is coarse (3 km to 5 km by 3 km). Leads Gohpur and Rajabari are each
defined by 3 seismic lines.
FIGURE 1.27
AS-ONN-2000/1 PROSPECT AND LEAD LOCATION MAP
SYLHET FORMATION TIME STRUCTURE MAP

GOHPUR

RAJABARI

Source: Hardy

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The reservoir rocks in AS-ONN-2000/1 are expected to be fractured granite basement, and
sandstones throughout the geologic section. The targets are the Kopili, Sylhet, Tura and Bokabil
Formations and the Middle Eocene Sylhet Formation that consists of interbedded limestone and
siltstone.
It is GCAs opinion that the additional DHI and facies attribute studies RIL/Hardy propose will
have limited impact on the prospect viability when there is still a coarse seismic input dataset but
reprocessing and seal related studies could reduce the risk for individual Leads.
GCA reviewed the volumetric data supplied by Hardy and validated the parameters as needed.
No additional material has been supplied since the 2010 CPR. It is the opinion of GCA that these
Leads are high risk, but with moderate to large potential. Finding reservoir quality rocks and a
working petroleum system are the major geological risks as nearby wells have apparently found
no Barail (source and reservoir) or Girujan Clay (seal). Maturity studies have thus far shown
thermal indices increasing to the South East, where the fields are more prolific, under the thrust
sheets so long distance migration may be required. GCA estimates the GCoS is 10%, typical for a
frontier exploration play. A summary of the estimated STOIIP and the Prospective Resources for
Assam Leads is shown below:
TABLE 1.21
AS-ONN-2000/1: SUMMARY OF GROSS STOIIP FOR LEADS
AS AT 31st DECEMBER, 2010
STOIIP (MMBbl)
Lead
Gophur
Rajabari

Low Estimate

Best Estimate

High Estimate

67.0
15.0

Note:
1.

It is inappropriate to focus on any of these volume postulations other than the Best Estimate.

TABLE 1.22
AS-ONN-2000/1 : SUMMARY OF GROSS AND NET OIL PROSPECTIVE RESOURCES
FOR LEADS AS AT 31st DECEMBER, 2010

Lead
Gophur
Rajabari

Gross Prospective Resources


(MMBbl)
Low
Best
High
Estimate Estimate
Estimate
20.0
5.0
-

Hardy
W.I. (%)
10
10

Net Prospective Resources


(MMBbl)
Low
Best
High
Estimate Estimate Estimate
2.0
0.5
-

GCoS
(%)
10
10

Notes:
2.

3.

Hardy

The Geologic Chance of Success (GCoS) reported here represents an indicative estimate of the
probability that the drilling of this prospect would result in a discovery which would warrant the
re-categorisation of that volume as a Contingent Resource. The GCoS value for Contingent Resource is
100%. These GCoS percentage values have not been arithmetically applied within this assessment.
It is inappropriate to report summed-up Prospective Resource volumes or to otherwise focus upon those of other than
the Best Estimate.

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ECONOMIC EVALUATION

NPVs have been calculated for the Proved, Proved plus Probable and Proved plus Probable
plus Possible Reserve categories, at nominal discount rates of 7.5%, 10% and 12.5%, these being discount
rates considered to be typical of those used in the petroleum industry for the appraisal of assets such as
PY-3. GCA's assessment is based upon GCAs understanding of the fiscal and contractual terms
governing this asset.
The values of physical assets, i.e. plant and equipment, have not been considered separately as
such values have been implicitly included in the assessment of the NPVs as part of the petroleum
property rights and facilities relating to the project.
The NPVs of estimated after-tax cash flows (as at 31st December, 2010) attributable to a net
economic interest in Hardys PY-3 Field, have been derived using the pricing and inflation assumptions as
described herein. No adjustments have been made for cash balances, inventories, indebtedness or other
balance sheet effects, other than those stated herein.
It should be clearly understood that the NPV of future revenue potential of a petroleum property
such as those discussed in this report, does not represent a GCA opinion as to the market value of that
property, nor an interest in it. In assessing a likely market value, it may be necessary to take into account
a number of additional factors including: Reserves risk (i.e. that Proved and/or Probable and/or Possible
Reserves may not be realised within the anticipated timeframe for their exploitation); perceptions of
economic and sovereign risk; potential upside, such as in this case exploitation of Reserves beyond the
Proved and Probable and Possible level; other benefits, encumbrances or charges that may pertain to a
particular interest and the competitive state of the market at the time. GCA has explicitly not taken such
factors into account in deriving the NPVs presented herein.
2.1

Fiscal Systems
The Production Sharing Contract pertaining to the PY-3 asset is summarised below:
Cost Recovery Limit: 100.0%
Profit Share Basis: Investment Multiple (IM), rates as shown below:
IM
<1.5
1.5-2.0
2.0-2.5
2.5-3.0
3.0-3.5
>3.5

GOI Share (%)


10.0
25.0
40.0
55.0
60.0
70.0

Investment Multiple (IM) is defined as the ratio of accumulated net cash income from the contract
area to accumulated investment in the contract area, earned by the companies, as determined in the PSC.
It is understood that the IM ratio cannot be adjusted downwards once a higher threshold has been
reached.
Hardy has advised that taxation of Hardys Indian assets is conducted at a Corporate rather than
an asset/ contract level. However, in order to arrive at post-tax NPVs, GCA has assumed that the
following Petroleum Income Tax and Minimum Alternative Tax rates are applicable. Hardy has advised
that a carried forward loss of U.S.$24.6 MM is available to the company to offset future taxes payable on
PY-3. This carried forward loss was included in the post-tax NPV analysis.

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Petroleum Income Tax:


Royalty:
Minimum Alternative Tax (MAT):
2.2

42.23%
0.0%
18.6%

Cost Assumptions

GCA has based its assessment of forward capital and operating costs on the information provided
by Hardy in the course of its audit. These have been benchmarked against GCAs cost database for
operations offshore India and found to be acceptable.
2.3

Oil Pricing

The prices expected from the sale of crude oil produced from PY-3 were determined by applying
a discount of U.S.$1/Bbl to Brent (based on 2010 realised prices) to reflect quality variation and location
against the Brent marker prices below.
GCAs Brent price scenario for 1Q 2011 (used in this analysis) is presented below:
Year
2011
2012
2013
2014
2015
2016
Thereafter

(U.S.$/Bbl)
95.02
94.82
94.23
94.72
97.42
99.37
+2.0% p.a.

Costs are inflated at 2.0% per annum from 1st January, 2012.
2.4

NPV Results
The results of the economic analysis are presented in Table 2.1 below.
TABLE 2.1
PRE- AND POST-TAX NET PRESENT VALUES NET TO HARDYS RESERVES
AS AT 31st DECEMBER, 2010 (U.S.$ MM)
Asset

PY-3

Pre-Tax NPV

Post-Tax NPV

Reserves
Category

7.5%

10.0%

12.5%

7.5%

10.0%

12.5%

Proved

12.29

12.02

11.77

12.29

12.02

11.77

65.95

60.55

55.82

43.47

39.86

36.72

97.89

88.59

80.54

57.72

51.79

46.69

Proved plus
Probable
Proved plus
Probable plus
Possible

Notes:
1.
2.
3.

Hardy

All cash flows are discounted on a mid-year basis to 31st December, 2010;
Post-Tax NPVs include a tax loss position as at 31st December, 2010 of U.S.$24.6 MM as advised by Hardy.
Pre-Tax NPVs are equivalent to Post-Tax NPVs for Proved Reserves due to tax losses carried forward from 31st
December, 2010.

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QUALIFICATIONS

GCA is an independent international energy advisory group of over 50 years standing, whose
expertise includes petroleum reservoir evaluation and economic analysis.
The report is based on information compiled by professional staff members who are full time
employees of GCA.
Staff who participated in the compilation of this report includes Mr. Brian Rhodes, Dr M.I.
Hussain, Mrs. Abby French, Mr. Michael Ring and Mr. Joel Chan. All hold degrees in geoscience,
petroleum engineering or related discipline. Mr. Rhodes holds a B.Sc. (Hons) Geology, is a member of
the Energy Institute, the Petroleum Exploration Society of Great Britain, the Society of Petroleum
Engineers and the European Association of Geoscientists and Engineers, and has more than 35 years
industry experience. Dr. Hussain is a senior reservoir engineer with 26 years industry experience. She
has a Ph.D. and M.Sc in Petroleum Engineering and is a member of the Society of Petroleum Engineers
and is a member of the Energy Institute. Mrs. French has a Masters degree and a diploma in
Geochemistry, is a member of the Society of Petroleum Engineers and the Geological Society and has ten
years experience in the industry. Mr. Ring holds a Bachelor of Science in Geology and a Masters of Arts
in Geophysics; he is a member of the Society of Exploration Geophysicists and has over 34 years of
industry experience. Mr. Chan is a senior economist with 13 years experience in economic analysis and
valuations. He has a M.Soc.Sci. and B.Sc in Economics; he is a member of the Association of International
Petroleum Negotiators and International Association for Energy Economics.
4.

BASIS OF OPINION

This assessment has been conducted within the context of GCAs understanding of the effects of
petroleum legislation, taxation, and other regulations that currently apply to these properties. However,
GCA is not in a position to attest to property title, financial interest relationships or encumbrances
thereon for any part of the appraised properties.
It should be understood that any determination of reserve volumes and corresponding NPVs,
particularly involving petroleum developments, would be subject to significant variations over short
periods of time as new information becomes available and perceptions change.
Yours sincerely,
GAFFNEY, CLINE & ASSOCIATES LTD.

Brian Rhodes
Principal Advisor

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APPENDIX I
Glossary

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GLOSSARY
List of key abbreviations used in this report
oAPI

AVO
AVA
B
Bbl
BCF
BCM
BRT
bcpd
BHP
bpd
boe
bopd
BS&W
BTU
bwpd
CO2
CAPEX
cm
CT
Deg C
DHI
DST
E&A
EMV
EUR
ft3
Fx
G&A
GIIP
GOR
GOI
H2S
HP
HT
kl
km
km2
LNG
LoF
LPG
m
m3
mD
mg
M
MM
ms
mya
NGL
N

Hardy

Degrees API (American Petroleum Institute)


Amplitude versus Offset
Amplitude versus offset Analysis
Billion (109)
Barrels
Billion cubic feet
Billion cubic metres
Below rotary table
Barrels of condensate per day
Bottom hole pressure
Barrels per day
Barrels of oil equivalent @ xxx mcf/bbl
Barrels oil per day
Basic sediment and water
British Thermal Units
Barrels water per day
Carbon Dioxide
Capital Expenditure
centimetres
Corporation Tax
Degrees Celsius
Direct hydrocarbon indicator
Drill Stem Test
Exploration & Appraisal
Expected Monetary Value
Estimated Ultimate Recovery
Cubic feet
Foreign Exchange Rate
General and Administrative costs
Gas initially in place
Gas Oil Ratio
Government of India
Hydrogen Sulphide
High pressure
High temperature
Kilolitres
Kilometers
Square kilometres
Liquefied Natural Gas
Life of Field
Liquefied Petroleum Gas
Metres
Cubic metres
Permeability in millidarcies
Milligram
Thousand
Million
milliseconds
Million years ago
Natural Gas Liquids
Nitrogen

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GLOSSARY (Cont'd.)
NELP
NPV
NWI
OCM
OPEX
p.a.
ppm
psi
psig
PVT
PDHG
RFT
scf
scfd
SL
SS
stb
STOIIP
T
TCF
Te
TCM
THP
TOC
Tpd
TVDSS
WD
WI
2D
3D
%
U.S.$

Hardy

New Exploration Licensing Policy


Net Present Value
Net Working Interest/Net Participating Interest
Operating Committee Meeting
Operating Expenditure
Per annum
Part per million
Pounds per square inch
Pounds per square inch gauge
Pressure volume temperature
Downhole pressure gauge
Repeat Formation Tester
Standard Cubic Feet
Standard Cubic Feet per day
Straight line (for depreciation)
Subsea
Stock tank barrel
Stock tank oil initially in place
Trillion (1012)
Trillion cubic feet
Tonnes equivalent
Technical Committee Meeting
Tubing head pressure
Total Organic Carbon
Tonnes per day
True Vertical Depth Subsea
Water depth
Working Interest
Two dimensional
Three dimensional
Percentage
United States Dollar

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APPENDIX II
Society of Petroleum Engineers, World Petroleum Council, American Association of
Petroleum Geologists and Society of Petroleum Evaluation Engineers, Petroleum Resources
Management System
Definitions and Guidelines

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Geologists and Society of Petroleum Evaluation Engineers
Petroleum Resources Management System
Definitions and Guidelines (1)

March 2007
Preamble
Petroleum resources are the estimated quantities of hydrocarbons naturally occurring on or within the Earths
crust. Resource assessments estimate total quantities in known and yet-to-be-discovered accumulations;
resources evaluations are focused on those quantities that can potentially be recovered and marketed by
commercial projects. A petroleum resources management system provides a consistent approach to estimating
petroleum quantities, evaluating development projects, and presenting results within a comprehensive
classification framework.
International efforts to standardize the definition of petroleum resources and how they are estimated began in the
1930s. Early guidance focused on Proved Reserves. Building on work initiated by the Society of Petroleum
Evaluation Engineers (SPEE), SPE published definitions for all Reserves categories in 1987. In the same year,
the World Petroleum Council (WPC, then known as the World Petroleum Congress), working independently,
published Reserves definitions that were strikingly similar. In 1997, the two organizations jointly released a single
set of definitions for Reserves that could be used worldwide. In 2000, the American Association of Petroleum
Geologists (AAPG), SPE and WPC jointly developed a classification system for all petroleum resources. This
was followed by additional supporting documents: supplemental application evaluation guidelines (2001) and a
glossary of terms utilized in Resources definitions (2005). SPE also published standards for estimating and
auditing reserves information (revised 2007).
These definitions and the related classification system are now in common use internationally within the
petroleum industry. They provide a measure of comparability and reduce the subjective nature of resources
estimation. However, the technologies employed in petroleum exploration, development, production and
processing continue to evolve and improve. The SPE Oil and Gas Reserves Committee works closely with other
organizations to maintain the definitions and issues periodic revisions to keep current with evolving technologies
and changing commercial opportunities.
The SPE PRMS document consolidates, builds on, and replaces guidance previously contained in the 1997
Petroleum Reserves Definitions, the 2000 Petroleum Resources Classification and Definitions publications, and
the 2001 Guidelines for the Evaluation of Petroleum Reserves and Resources; the latter document remains a
valuable source of more detailed background information.,
These definitions and guidelines are designed to provide a common reference for the international petroleum
industry, including national reporting and regulatory disclosure agencies, and to support petroleum project and
portfolio management requirements. They are intended to improve clarity in global communications regarding
petroleum resources. It is expected that SPE PRMS will be supplemented with industry education programs and
application guides addressing their implementation in a wide spectrum of technical and/or commercial settings.
It is understood that these definitions and guidelines allow flexibility for users and agencies to tailor application
for their particular needs; however, any modifications to the guidance contained herein should be clearly
identified. The definitions and guidelines contained in this document must not be construed as modifying the
interpretation or application of any existing regulatory reporting requirements.
The full text of the SPE PRMS Definitions and Guidelines can be viewed at:
www.spe.org/specma/binary/files/6859916Petroleum_Resources_Management_System_2007.pdf

These Definitions and Guidelines are extracted from the Society of Petroleum Engineers / World Petroleum Council /
American Association of Petroleum Geologists / Society of Petroleum Evaluation Engineers (SPE/WPC/AAPG/SPEE)
Petroleum Resources Management System document (SPE PRMS), approved in March 2007.

RESERVES
Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of
development projects to known accumulations from a given date forward under defined conditions.
Reserves must satisfy four criteria: they must be discovered, recoverable, commercial, and remaining based on the
development project(s) applied. Reserves are further subdivided in accordance with the level of certainty associated
with the estimates and may be sub-classified based on project maturity and/or characterized by their development and
production status. To be included in the Reserves class, a project must be sufficiently defined to establish its
commercial viability. There must be a reasonable expectation that all required internal and external approvals will be
forthcoming, and there is evidence of firm intention to proceed with development within a reasonable time frame. A
reasonable time frame for the initiation of development depends on the specific circumstances and varies according to
the scope of the project. While 5 years is recommended as a benchmark, a longer time frame could be applied where,
for example, development of economic projects are deferred at the option of the producer for, among other things,
market-related reasons, or to meet contractual or strategic objectives. In all cases, the justification for classification as
Reserves should be clearly documented. To be included in the Reserves class, there must be a high confidence in the
commercial producibility of the reservoir as supported by actual production or formation tests. In certain cases,
Reserves may be assigned on the basis of well logs and/or core analysis that indicate that the subject reservoir is
hydrocarbon-bearing and is analogous to reservoirs in the same area that are producing or have demonstrated the
ability to produce on formation tests.
On Production
The development project is currently producing and selling petroleum to market.
The key criterion is that the project is receiving income from sales, rather than the approved development project
necessarily being complete. This is the point at which the project chance of commerciality can be said to be
100%. The project decision gate is the decision to initiate commercial production from the project.
Approved for Development
A discovered accumulation where project activities are ongoing to justify commercial development in the
foreseeable future.
At this point, it must be certain that the development project is going ahead. The project must not be subject to
any contingencies such as outstanding regulatory approvals or sales contracts. Forecast capital
expenditures should be included in the reporting entitys current or following years approved budget. The project
decision gate is the decision to start investing capital in the construction of production facilities and/or
drilling development wells.
Justified for Development
Implementation of the development project is justified on the basis of reasonable forecast commercial conditions
at the time of reporting, and there are reasonable expectations that all necessary approvals/contracts will be
obtained.
In order to move to this level of project maturity, and hence have reserves associated with it, the development
project must be commercially viable at the time of reporting, based on the reporting entitys assumptions of future
prices, costs, etc. (forecast case) and the specific circumstances of the project. Evidence of a firm intention to
proceed with development within a reasonable time frame will be sufficient to demonstrate commerciality. There
should be a development plan in sufficient detail to support the assessment of commerciality and a reasonable
expectation that any regulatory approvals or sales contracts required prior to project implementation will be
forthcoming. Other than such approvals/contracts, there should be no known contingencies that could preclude
the development from proceeding within a reasonable timeframe (see Reserves class). The project decision
gate is the decision by the reporting entity and its partners, if any, that the project has reached a level of
technical and commercial maturity sufficient to justify proceeding with development at that point in time.

Proved Reserves
Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data,
can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from
known reservoirs and under defined economic conditions, operating methods, and government regulations.
If deterministic methods are used, the term reasonable certainty is intended to express a high degree of
confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a
90% probability that the quantities actually recovered will equal or exceed the estimate. The area of the
reservoir considered as Proved includes:
(1)

the area delineated by drilling and defined by fluid contacts, if any, and

(2)

adjacent undrilled portions of the reservoir that can reasonably be judged as continuous with it and
commercially productive on the basis of available geoscience and engineering data.

In the absence of data on fluid contacts, Proved quantities in a reservoir are limited by the lowest known
hydrocarbon (LKH) as seen in a well penetration unless otherwise indicated by definitive geoscience,
engineering, or performance data. Such definitive information may include pressure gradient analysis and
seismic indicators. Seismic data alone may not be sufficient to define fluid contacts for Proved reserves (see
2001 Supplemental Guidelines, Chapter 8). Reserves in undeveloped locations may be classified as Proved
provided that the locations are in undrilled areas of the reservoir that can be judged with reasonable certainty
to be commercially productive. Interpretations of available geoscience and engineering data indicate with
reasonable certainty that the objective formation is laterally continuous with drilled Proved locations. For
Proved Reserves, the recovery efficiency applied to these reservoirs should be defined based on a range of
possibilities supported by analogs and sound engineering judgment considering the characteristics of the
Proved area and the applied development program.
Probable Reserves
Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate
are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible
Reserves.
It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the
estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there
should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
Probable Reserves may be assigned to areas of a reservoir adjacent to Proved where data control or
interpretations of available data are less certain. The interpreted reservoir continuity may not meet the
reasonable certainty criteria. Probable estimates also include incremental recoveries associated with project
recovery efficiencies beyond that assumed for Proved.

Possible Reserves
Possible Reserves are those additional reserves which analysis of geoscience and engineering data indicate
are less likely to be recoverable than Probable Reserves
The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved
plus Probable plus Possible (3P), which is equivalent to the high estimate scenario. When probabilistic
methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or
exceed the 3P estimate. Possible Reserves may be assigned to areas of a reservoir adjacent to Probable
where data control and interpretations of available data are progressively less certain. Frequently, this may be
in areas where geoscience and engineering data are unable to clearly define the area and vertical reservoir
limits of commercial production from the reservoir by a defined project. Possible estimates also include
incremental quantities associated with project recovery efficiencies beyond that assumed for Probable.
Probable and Possible Reserves
(See above for separate criteria for Probable Reserves and Possible Reserves.)
The 2P and 3P estimates may be based on reasonable alternative technical and commercial interpretations
within the reservoir and/or subject project that are clearly documented, including comparisons to results in
successful similar projects. In conventional accumulations, Probable and/or Possible Reserves may be
assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the
same accumulation that may be separated from Proved areas by minor faulting or other geological
discontinuities and have not been penetrated by a wellbore but are interpreted to be in communication with the

known (Proved) reservoir. Probable or Possible Reserves may be assigned to areas that are structurally
higher than the Proved area. Possible (and in some cases, Probable) Reserves may be assigned to areas
that are structurally lower than the adjacent Proved or 2P area. Caution should be exercised in assigning
Reserves to adjacent reservoirs isolated by major, potentially sealing, faults until this reservoir is penetrated
and evaluated as commercially productive. Justification for assigning Reserves in such cases should be
clearly documented. Reserves should not be assigned to areas that are clearly separated from a known
accumulation by non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test
results); such areas may contain Prospective Resources. In conventional accumulations, where drilling has
defined a highest known oil (HKO) elevation and there exists the potential for an associated gas cap, Proved
oil Reserves should only be assigned in the structurally higher portions of the reservoir if there is reasonable
certainty that such portions are initially above bubble point pressure based on documented engineering
analyses. Reservoir portions that do not meet this certainty may be assigned as Probable and Possible oil
and/or gas based on reservoir fluid properties and pressure gradient interpretations.
Developed Reserves
Developed Reserves are expected quantities to be recovered from existing wells and facilities.
Reserves are considered developed only after the necessary equipment has been installed, or
when the costs to do so are relatively minor compared to the cost of a well. Where required facilities
become unavailable, it may be necessary to reclassify Developed Reserves as Undeveloped.
Developed Reserves may be further sub-classified as Producing or Non-Producing.
Developed Producing Reserves
Developed Producing Reserves are expected to be recovered from completion intervals
that are open and producing at the time of the estimate.
Improved recovery reserves are considered producing only after the improved recovery
project is in operation.
Developed Non-Producing Reserves
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves
Shut-in Reserves are expected to be recovered from:
(1)

completion intervals which are open at the time of the estimate but which have
not yet started producing,

(2)

wells which were shut-in for market conditions or pipeline connections, or

(3)

wells not capable of production for mechanical reasons.

Behind-pipe Reserves are expected to be recovered from zones in existing wells which
will require additional completion work or future re-completion prior to start of production.
In all cases, production can be initiated or restored with relatively low expenditure
compared to the cost of drilling a new well.
Undeveloped Reserves
Undeveloped Reserves are quantities expected to be recovered through future investments:
(1)

from new wells on undrilled acreage in known accumulations,

(2)

from deepening existing wells to a different (but known) reservoir,

(3)

from infill wells that will increase recovery, or

(4)

where a relatively large expenditure (e.g. when compared to the cost of drilling a new well)
is required to
(a)

recomplete an existing well or

(b)

install production or transportation facilities for primary or improved recovery


projects.

CONTINGENT RESOURCES
Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known
accumulations by application of development projects, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingent Resources may include, for example, projects for which there are currently no viable markets, or
where commercial recovery is dependent on technology under development, or where evaluation of the
accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in
accordance with the level of certainty associated with the estimates and may be sub-classified based on project
maturity and/or characterized by their economic status.
Development Pending
A discovered accumulation where project activities are ongoing to justify commercial development in the
foreseeable future.
The project is seen to have reasonable potential for eventual commercial development, to the extent that
further data acquisition (e.g. drilling, seismic data) and/or evaluations are currently ongoing with a view to
confirming that the project is commercially viable and providing the basis for selection of an appropriate
development plan. The critical contingencies have been identified and are reasonably expected to be
resolved within a reasonable time frame. Note that disappointing appraisal/evaluation results could lead to a
re-classification of the project to On Hold or Not Viable status. The project decision gate is the decision
to undertake further data acquisition and/or studies designed to move the project to a level of technical and
commercial maturity at which a decision can be made to proceed with development and production.
Development Unclarified or on Hold
A discovered accumulation where project activities are on hold and/or where justification as a commercial
development may be subject to significant delay.
The project is seen to have potential for eventual commercial development, but further appraisal/evaluation
activities are on hold pending the removal of significant contingencies external to the project, or substantial
further appraisal/evaluation activities are required to clarify the potential for eventual commercial
development. Development may be subject to a significant time delay. Note that a change in circumstances,
such that there is no longer a reasonable expectation that a critical contingency can be removed in the
foreseeable future, for example, could lead to a reclassification of the project to Not Viable status. The
project decision gate is the decision to either proceed with additional evaluation designed to clarify the
potential for eventual commercial development or to temporarily suspend or delay further activities pending
resolution of external contingencies.
Development Not Viable
A discovered accumulation for which there are no current plans to develop or to acquire additional data at the
time due to limited production potential.
The project is not seen to have potential for eventual commercial development at the time of reporting, but
the theoretically recoverable quantities are recorded so that the potential opportunity will be recognized in the
event of a major change in technology or commercial conditions. The project decision gate is the decision
not to undertake any further data acquisition or studies on the project for the foreseeable future.

PROSPECTIVE RESOURCES
Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations.
Potential accumulations are evaluated according to their chance of discovery and, assuming a discovery, the estimated
quantities that would be recoverable under defined development projects. It is recognized that the development
programs will be of significantly less detail and depend more heavily on analog developments in the earlier phases of
exploration.
Prospect
A project associated with a potential accumulation that is sufficiently well defined to represent a viable drilling
target.
Project activities are focused on assessing the chance of discovery and, assuming discovery, the range of
potential recoverable quantities under a commercial development program.
Lead
A project associated with a potential accumulation that is currently poorly defined and requires more data
acquisition and/or evaluation in order to be classified as a prospect.
Project activities are focused on acquiring additional data and/or undertaking further evaluation designed to
confirm whether or not the lead can be matured into a prospect. Such evaluation includes the assessment of
the chance of discovery and, assuming discovery, the range of potential recovery under feasible development
scenarios.
Play
A project associated with a prospective trend of potential prospects, but which requires more data acquisition
and/or evaluation in order to define specific leads or prospects.
Project activities are focused on acquiring additional data and/or undertaking further evaluation designed to
define specific leads or prospects for more detailed analysis of their chance of discovery and, assuming
discovery, the range of potential recovery under hypothetical development scenarios.

RESOURCES CLASSIFICATION

PROJECT MATURITY