Invitation to tender issued for the provision of a deep-water drilling unit

21 September 2016

The planned spud date for Druid well, FEL 2/14 is June 2017. The well design to allow for optional penetration of the underlying Drombeg prospect

SOSINA hereby provides an operational update on Frontier Exploration Licence ("FEL") 2/14, which lies in c. 2,250 metre water depth in the southern Porcupine Basin and is located c. 220 kilometres off the south west coast of Ireland. The licence is operated by Providence Resources P.l.c. ("Providence") (80%) on behalf of Sosina Exploration Limited ("SOSINA") (20%), collectively referred to the "Druid Partners". FEL 2/14 contains the Paleocene "Druid" and the Lower Cretaceous "Drombeg" exploration prospects.

Issuance of Rig Invitation to Tender ("ITT")

Further to the news message of 31 August, 2016, confirming the Druid Partners' appointment of Senergy Wells Limited (a wholly owned subsidiary of Lloyds Register) to provide integrated well management services for the planned 2017 Druid drilling programme, an invitation to tender for the rig contract has now formally been issued to the market. It is expected that the rig contract will be signed during Q4 2016 to facilitate summer 2017 drilling.

Well Engineering & Design

The detailed well engineering and design for the 2017 Druid exploration well is continuing with the well currently being designed to TD at a depth of c. 4,200 metres true vertical depth subsea ("TVDSS"), which allows for a full evaluation of the resource potential of the Paleocene Druid exploration prospect. The well is also being designed to allow for a potential deepening of the well to encounter the underlying vertically stacked Lower Cretaceous Drombeg prospect at c. 5,200 m TVDSS. This deepening could occur should the Druid exploration well be drilled significantly within the current budget and/or if a third party farminee were to provide additional capital to the project.

Well Cost Estimate

 As disclosed by the SOSINAS news message on 31 August 2016, the latest gross (100%) well cost for the Druid exploration well is now estimated at c. $35 million, which compares to the previous estimate of $46 million. Based on the latest market intelligence, the additional cost for the deepening of the well to penetrate the Drombeg prospect amounts to c. $15 million.

Farm-out Process

In March 2016, Providence and SOSINA launched a farm out process with physical data-rooms commencing in late May 2016. The successful financial restructuring of the business with the provision of specific capital to undertake the Druid drilling operations, together with the substantially lower costs, has allowed the Druid Partners to move forward with the planned drilling operations. Noting the significant interest shown in the recent Atlantic Licensing Round, the Druid Partners are continuing this farm-out process, which has garnered very good industry interest.

Project Timeline

In addition to the preparation and issuance of the ITT for the rig, other service contracts are now being prepared for the planned Druid drilling operations. Based on the latest project timeline and, subject to standard regulatory consents, the 53/6-A Druid exploration well is currently expected to spud in June 2017.

About Druid
During the initial pre-FEL 2/14 authorization phase (Licensing Option 11/9 - 2011 through 2013), Providence and SOSINA identified two large vertically stacked Paleocene (‘Druid’) and Lower Cretaceous (‘Drombeg’) fan systems with notable Class II amplitude versus offset (“AVO”) anomalies primarily from 2D seismic data acquired in 2008. Providence and SOSINA subsequently agreed to underwrite a multi-client 3D seismic survey over the area.  This   3D survey was acquired by Polarcus in the summer of 2014 and subsequently processed by ION Geophysical in 2014/15.

In September 2015, the Company (Providence and SOSINA) entered into a Strategic Exploration Collaboration Project with Schlumberger. In April 2016, the Company published the main results of this Project relating to Druid:

• Two fans located c. 1,750 m BML and structurally up-dip from a potential significant fluid escape feature  from the underlying pre-Cretaceous Diablo Ridge.
• Cumulative in-place un-risked prospective resources of 3.180 BBO (PMean).
                 Fan 1 – 984 MMBO (PMean).
                 Fan 2 – 2,196 MMBO (PMean).
• Pre-stack seismic inversion and regional rock physics analysis shows Druid is consistent with a highly porous (30%) and high net-gross, light oil-filled sandstone reservoir system up to 85 metres thick.
• A depth conformant Class II AVO anomaly is present and synthetic forward modelling of an oil-water contact correlates with the observed seismic response.
• Spectral decomposition, seismic compactional drape and mounding are reflective of a large sand-rich submarine fan system with no significant internal faulting and clear demonstration of an up-dip trap mechanism.
• Geo-mechanical analysis using regional well and high resolution seismic velocity data indicates that Druid is normally pressured and the top seal is intact.

About Drombeg Druid   The Drombeg Druid prospect lies in c. 2,500 metre water depth and is c. 3,000 metres below the seabed. The prospect is located in the southern Porcupine Basin, c. 220 km off West Cork, being c. 60 km from the Eni-operated Dunquin exploration prospect which was drilled in mid-2013.   CLICK on the map and read the Drombeg Druid licence data.