GEOLOGICAL HIGHLIGHTS

STRUCTURE

The Mann anticline is located in the Central Myanmar Basin.  Newly  acquired  seismic by MPRL E&P suggests  that  the  Mann  structure  is  probably  formed  as  an  old
( probably Eocene or older ) growth fold in the downthrown block of a major N-S basement fault followed by a multi-stage more recent strike-slip fault and associated propagation fold resulting from the translational convergent NE’wards movement of the India Plate along the SE Asia Plate to the East. In conformity with dextral strike-slip movements, the Mann anticlinal is dissected by SW-NE normal faults. The Mann fold is tightening southwards and separated by an E-W dextral strike-slip fault in the South from the Htaukshabin Oil Field and by another even more important similar accident from the Yenangyaung Oil Field in the North.

PRESSURE REGIME AND SEISMIC QUALITY

The South of the Mann Field is marked by the Minbu mud volcanoes, a surface feature indicative of strong overpressures in the core of the Mann Field. These mud volcanoes expel gas and traces of kerosene-rich light oil now proven by MPRL E&P’s geochemical studies to be substantially different from the Mann paraffinic oils.

The Minbu Mud Volcanoes ; note the dark rims of oil around the bubbling gas

The seismic in the core of the Mann fold is strongly blurred by a network of shales veins which were recorded for the first time in 1897 in the Yenangyaung Field by Fritz Noetling working for the Geological Survey if India. MPRL E&P’s geoscientists have now proven this network of shales veins to be also outcropping in the South of the Mann Field in the Sabwet Chaung near the cluster of Minbu mud volcanoes. The geological nature of the core of the Mann Field makes it impossible to improve its structural image from seismic.

Outcropping mud veins in the core of the Yenangyaung fold to the North of Mann ; the field of view is ca 250-300 ft. A team of MPRL E&P field geologists observed the same mud veins in the Sabwet Chaung, South of the Mann Field

HISTORY OF EXPLORATION

The Mann Producing Field, discovered in 1970 and put on stream in 1972, flows oil from middle Oligocene to Miocene sandstones. Fields elsewhere in the Central Myanmar Basin have however proven production from stratigraphically deeper intervals. The Letpando and Thargyintaung some 100 km to the N of Mann on the same structural trend produce oil from Lower Oligocene Shwezetaw sandstones at 845 and 1,600 bopd respectively. MOGE and MPRL E&P have tried to reach these deeper objectives in eleven wells in the past, which all failed to achieve commercial production. None of the wells ever reached their intended total depth because of excessive overpressures reaching up to ( 22 ) ppg. Many of these wells had good oil shows and some retrieved light oil.

RESERVOIR

Whilst production in the Mann Oil Field is coming from stacked Oligocene-Miocene sandstones, the target reservoir of the Mann Deep project is the Lower Oligocene Shwezetaw Sandstones outcropping some ( 20 ) miles to the West at the namesake locality. The Shwezetaw Sandstones outcropping to the West of Mann consist of 2-3 fairly massive layers of sandstones some 100 - 150 ft thick including 50% of fine to medium, locally grading to coarse grained, quartz-rich sandstones.

As the sandstones are expected to lie between 9,000 and 15,000 ft deep, the largest risk and uncertainty of the project is the quality of the Shwezetaw Sandstones. MPRL E&P’s geoscience team has closely studied these sandstones and come up to the conclusion that as the Shwezetaw Sandstones are distinctly cleaner, i.e. more quartzitic, than the producing sandstones of the Mann Field. Drilling evidence to the N of Mann shows that those sandstones can retain good porosity and permeability at greater depths, with porosity typically between 10% and 15% at 15,000 ft with a permeability of 1 to 10 mD.

The Composition of the Shwezetaw Sandstones is markedly more quartzitic than the sandstones of the Mann Producing Field

                                                            Reservoir Quality in the ShwezetawFormation is significantly better in the coarser than in the finer grained sandstones

New seismic data acquired by MPRL E&P in 1Q 2010 strongly suggest that the Shweze-taw Sandstones in the Mann Deep location were probably deposited in the downthrown block of a major regional fault, and thus may well include fairly coarse sands.

RISKS AND UNCERTAINTIES

The largest risks and uncertainties related to the Mann Deep prospects are Reservoir Properties ( see above in Reservoir paragraph ), Hydrocarbon Type and Structural Definition.

The depth of the reservoir and the nature of the hydrocarbons expelled by the Minbu mud volcanoes strongly suggest that wet gas is the most likely hydrocarbon present in the Mann Deep structure, possibly capping a light oil rim.

The structural risk and uncertainty is being assessed in June - September 2010 by the interpretation of 210 km ( full coverage ) of 2D seismic acquired by MPRL E&P in 1Q 2010 ( see below under 2D seismic campaign paragraph ). A simple deterministic volume evaluation suggests the possibility of 600 tcf recoverable gas and 12 mmbbls of associated liquids below the Mann field .

OPERATIONAL HIGHLIGHTS

As oil is first found in the mind, MPRL E&P is fully committed to take the risks of evaluating the potential of the Mann Deep structure in the most professional manner with creative thinking and state-of-the-art technical means. MPRL E&P has acquired 2D of excellent quality to alleviate the risks and uncertainties of the structural image of the Mann structure, to reveal the history of its formation and predict reservoir quality and HC volumes.

However only the drill bit will unveil this potential in the end, and MPRL E&P is now mobilizing the equipment for the drilling of one wildcat in the Mann Deep structure to be spud in June 2011. A brand new state-of-the-art 1800-hp rig belonging to sister company Asia Drilling Pre Ltd ( see website on www.asiadrilling.net ) has arrived at the site of Mann Deep East-1 without any incident in spite of challenging logistics and transport conditions.

2D SEISMIC CAMPAIGN

After eight lines were shot by state-owned enterprise MOGE in the 90’s and a 3D cube acquired by the JV of Baker Hughes and MPRL E&P in 1997, the objectives of a new 2D seismic survey were to see deeper and wider around Mann. In particular, MPRL E&P did not have any seismic lines extending far beyond the Ayearwaddy river to the East to better understand the origin of the Mann structure. The seismic was acquired with a long offset of 6 km in 16 lines extending 10-20 km across and along the Mann structure. The contractor of choice was Sichuan Geophysical and the campaign ended after five months in March 2010 below budget and without a single lost time incident. The 2D seismic was processed in Beijing by BGP and is being interpreted and integrated into previous 2D and 3D campaigns by MPRL E&P ’s geoscientists.

Line 2010-MPRL-11 Crossing the Ayearwaddy River

The processing of the MPRL E&P lines already shows a number of new features:

• The seismic character is very significantly and consistently different between the East and the West of the seismic lines, suggesting the presence of a major tectonic accident, the Mann Fault, probably originating in the basement,
• The Mann fold is extremely recent as up to 10,000 ft of Pliocene sediments have been eroded from the top of the fold, this suggests that overpressures are a transient state restricted in the core of the field,
• The geometry of the Mann fold strongly suggests it to be a fault propagation fold, probably related to a combination of over-thrusting and dextral strike-slip along and against the older major Mann Fault,
• The zone of poor seismic due to crushed shales in mud veins in the core of the Mann fold, seems to taper down, suggesting overpressures might be lesser at the depth of Mann Deep objectives,
• Excessive overpressures of the core of the Mann fold above the Mann Deep objectives could be avoided by drilling a strongly deviated well in the W of the Mann fold,
• The up thrown block of the Mann fold has not been drilled in the Mann Area and could be another objective to be assessed with a deviated wildcat along the eastern up-thrown block of the Mann Fault.

PREPARATION FOR DRILLING

Forthcoming drilling operations at Mann Field are to explore deeper prospects below 10,000 ft with spud date in June 2011. Historical experience of such exploration drilling clearly indicates the presence of high pressure clastics in the core of the Mann structure, which hitherto always prevented to reach the intended objective.

Based on field and seismic observations, MPRL E&P’s geoscientists are now quite certain that poor seismic signal is closely related to excessive overpressure. The safest way to reach the Mann Deep objectives is to try to avoid those zones by drilling a highly deviated well. MPRL E&P is now preparing for the challenge of drilling one to two deep wells in a safe and sound way by using all available state-of-the art techniques to ensure the intended total depth is reached, and that if HC are present, they are tested to check for commerciality.

The drilling of Mann-667 in December 2010 at the location of Mann Deep East-1 clearly showed that no overpressures are present over the top 4,300 ft, thus considerably de-risking the tophole section of Mann Deep East-1 and vindicating the assumptions of the G&G team over the overpressures distribution regime n the field.

However the presence of tectonically stressed shales is demonstrated in the well across faults, and low-toxicity synthetic oil-based mud will be used to drill faster and safer across these shales and in the core of the Mann fold.

Mann Deep East-1 will be drilled to PTD 14,600 ft measured depth ( 12,900 ft true vertical depth below ground level ).

MPRL E&P will put a strong emphasis in the most thorough data collection so as not to miss any HC and to assess as early as possible whether and how they could be commercially viable.

CONCLUSION

The costs involved to engage in such exploration to reach these target depths will obviously be quite high. However, since its formation in 1996, MPRL E&P has demonstrated its skills to manage such risks, and has succeeded in establishing a proven track record of successful integration of all technical teams to reach challenging goals.

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