Cluff Natural Resources is a natural resources investing company listed on the AIM market on the London Stock Exchange (CLNR.L) primarily focused on the Southern North Sea gas basin, with a high impact portfolio of operated, high working interest exploration and appraisal assets.

In 2018, Cluff Natural Resources secured six licences in the 30th Round, containing oil as well as gas prospects which are estimated to contain an additional 1.9 TCF of P50 prospective resource, taking the Company’s total resource base to >2.4 TCF. An option agreement was signed with Shell which includes a commitment for them to acquire a 50% interest in licence P2437 and to pay up to 75% of the costs of an exploration well on the Selene prospect. Shell U.K. Limited exercised its exclusive option to farm in to the Licence at the end of April this year.

Shell has also confirmed an agreement to farm into the company's 28th Round licence (P2252) which contains the Pensacola Prospect, and have committed to conduct a comprehensive seismic acquisition programme at their cost. The commitment also includes a contingent well.

Cluff Natural Resources is focused on extracting much needed gas from the North Sea to supply the UK’s energy mix which is currently heavily reliant on foreign supply. The Company is looking to secure partners and funding to embark on a drilling campaign on the proven fairways of the Southern North Sea basin.

Map source: KeyFacts Energy

UK OPERATIONS

Cluff Natural Resources have focused on developing a portfolio of high quality exploration and appraisal opportunities in the UKCS which are located near producing fields and close to new or planned infrastructure.

The Company’s core area of interest is located in the Southern North Sea where it has built a significant portfolio of over 16 independent prospects with combined P50 prospective resources in excess of 4.3 TCF in the emerging Carboniferous fairway and the established Leman Sandstone and Triassic Bunter Sandstone plays.

In the 30th Offshore Licencing Round the Company was awarded also 2 licences in the Central North Sea targeting oil in the Forties Sandstone and gas condensate in the deeper formations.

SOUTHERN NORTH SEA

P2252
P2252 is a 28th Round licence located to the north west of the Breagh gas field, which commenced production in 2013.  Cluff have identified a number of high quality exploration and appraisal targets within Zechstein carbonates including the Pensacola Reef Prospect which has gross P50 recoverable resources of 309 BCF.  The Zechstein reef play is a proven producer elsewhere in the basin and the only well testing this play in the UKCS was drilled at the nearby Crosgan discovery which also successfully flowed gas to surface. The Pensacola prospect is a Z2 Zechstein reef partially mapped on 3D seismic data and is analogous to similar structures identified on adjacent blocks. The reef is 15km long by 6km wide and clearly defined on 2D and 3D seismic and builds to more than 200m above the surrounding Z2 (Hauptdolomite) platform.

The Pensacola prospect may contain up to 982 BCF of gas initially in place with an estimated P50 recoverable resource of  309 BCF. A number of potential commercialisation options exist via the existing Breagh infrastructure or a new pipeline to Teesside.

Gas has already been proven in the Zechstein on block in the three wells drilled to test the Lytham-Fairhaven structure and the overlying anhydrite encases the reef providing a near perfect seal.

Similar Zechstein reef structures produce hydrocarbons in Poland, Netherlands and western Canada but are effectively untested in the UKCS with the exception of the nearby Crosgan well which successfully flowed gas to surface from a similar reefal structure. The Pensacola prospect provides an opportunity to drill a play opening well with significant running room based on the number of reefal structures identified locally.

The Lytham-Fairhaven appraisal opportunity is located across blocks 41/5 and 41/10 and takes the form of a large 4-way dip closed N-S oriented anticline compartmentalised by a series of roughly E-W oriented faults. The key reservoir is a fractured Hauptdolomite platform carbonate and wells 41/5-1 (Walter Petroleum, 2004), 41/10-1 (Marathon, 1993) and 41/10-2Z (Lundin, 2007) have demonstrated the presence of gas in the Zechstein but what limited testing was attempted failed to flow gas due to various technical issues during drilling.

The next logical step for the prospect is to drill a directional appraisal well perpendicular to the intense fracture oriented with the axis of the anticline to demonstrate the ability of the reservoir to deliver gas from the fracture network at commercial rates

The Lytham-Fairhaven prospect is estimated to contain recoverable resources of between 70 BCF and 190 BCF with a Best Estimate (P50) Resource of 168 BCF.

P2437
P2437 is a 30th Round licence situated in the Rotliegend aged Lower Leman Sandstone play fairway, on the eastern edge of the Sole Pit Inversion. The Lower Leman Sandstone is the principal and proven petroleum system in the basin with offset fields including Barque, Mimas and West Sole. One discovery has been made on the block (Sloop) which was drilled by well 48/08a-1. Three other prospects have been identified by previous operators.

Sloop Discovery: Well 48/08A-1 well discovered Sloop in 1989, a Lower Leman gas bearing sand in a heavily faulted structure. A 209.7m gross Leman Sandstone was encountered with certain sections reaching 12% porosity. Log analysis suggests a gas-water contact at 2908m TVDSS. The discovery has a gas initially in place of 17 to 54 BCF.

Selene Prospect: The Selene prospect is located on the northern limb of the Sole Pit Basin inversion axis and takes the form of a NW-SE elongated closure. The prospect is formed by two south-west dipping fault blocks, truncated at the NW region by De Keyser faults running SW-NE.

In April 2019, Shell U.K. exercised its exclusive option under a previously announced agreement between Cluff Natural Resources and Shell to farm in to Licence P2437. Under the terms of the Option Agreement, Shell will receive a 50 per cent. working interest in Licence P2437, which contains the 291 BCF Selene prospect (P50 Gross Prospective Resources).

Shell has indicated its intention to commit to drill an exploration well on the Selene Prospect at the soonest possible opportunity.

Endymion Prospect: Straddling block 48/08b and block 48/03 the Endymion prospect is a structural closure at Leman Sandstone. The structure is formed by the extension of the fault system that controls the Mimas field on strike to the southeast and is separated by a graben from Mimas, therefore likely to be an offset to Mimas. In addition, the proximity to infrastructure enables opportunities for a tie-back option.

P2428
P2428 is a 30th Round licence located to the north-east of the Crosgan discovery. Prospectivity exists at Carboniferous, Bunter Sandstone and potentially Rotliegend level. The Forbes Gas Field which produced from the Bunter Sandstone between 1985 and 1993 is located on the southern part of block 43/8. The Cupertino prospect is the key prospect identified over the licence with additional prospectivity with the Williamson Prospect.

The Cupertino Prospect is a three-way dip closed foot-wall trap structure extending across 52km². The structure lies on the SW flank of a graben complex bounded by a NW-SE striking fault that forms a linked-lateral offset in the regional graben complex trend.

P2424
P2424 is a 30th Round licence comprising of blocks 42/14 and 42/15 located in the Lower Carboniferous play fairway immediately to the east of the producing Breagh gas field and to the south of the Crosgan discovery. The block also contains potential within the Bunter Sandstone and the small Furasta discovery is located centrally on block 42/15b.

Furasta Discovery
Well 42/15b-1 was drilled by Zapata in 1984 on a large four-way dip closed structure which resulted in the discovery of Furasta, located centrally on block 42/15. The key reservoir is the Bunter Sandstone which was the principle reservoir interval in previous producing fields in the area such as Esmond, Forbes and Gordon.

Burbank Prospect: The Burbank Prospect is mapped as a 3-way dip and fault controlled trap in the Bunter Sandstone on the NW end of a 6.5km wide and 25km long NW-SE anticline created by post-depositional salt pillow style halokenesis in the underlying Zechstein salt.

The Cortez-South Lead is mapped as a three-way dip closed hanging-wall trap on the southern bounding fault of the Cortez horst block with an approximate closure of 46km². Most of the Cortez South Lead lies on the 3D seismic survey with only the western and SW closure relying on 2D mapping.

P2435
P2435 (Cluff Natural: 25% non-operated interested) is a 30th Round licence located on the western limit of the Sole Pit Basin of the Southern North Sea, approximately 65km south east of Flamborough Head. The primary play over the licence is the Permian Rotliegendes which provides the reservoir in all adjacent fields and discoveries.

Teviot Discovery: Well 47/10-8 discovered Teviot, drilled in 2005 by Newfield. The well targeted a robust upthrown structural trap at Leman level. Gas was found in the Upper and Lower Leman sands, which are thinly developed compared to the main producing fields to the east e.g. West Sole. The well was not drill stem tested but some indication of flow potential can be estimated from MDT data in the well.

The Blackadder Prospect is a faulted Base Permian structural closure with a Rotliegendes reservoir. It appears to have formed as a pop-up feature on a transpressional restraining bend of the Dowsing Fault Zone.

Farm out agreement

In February 2019, Cluff Natural Resources entered into a binding, conditional farm out agreement and a three month exclusive option with Shell U.K. Limited in relation to the Company’s Southern North Sea Licences P2252 and P2437 respectively.

P2252: Under the terms of the Farm Out Agreement, Shell will acquire a 70 per cent. working interest in Licence P2252, and be appointed as the licence operator, in return for paying 100 per cent. of the costs of an agreed forward work programme to the earlier of 31 December 2020 or the  date on which a well investment decision is made. 

P2437: In April 2019, Shell U.K. exercised its exclusive option between the Company and Shell to farm in to Licence P2437.

On completion of the farm in, Shell has indicated its intention to commit to drill an exploration well on the Selene Prospect at the soonest possible opportunity.   

Proposed Activity Timeline – Key Licences   

CENTRAL NORTH SEA

P2352
P2352 is a 30th Round licence situated in the East Central Graben of the Central North Sea, SE of the Marnock field. It contains prospectivity in the Palaeocene aged Forties Mbr deepwater turbidites play, the Jurassic aged Pentland and Fulmar Fms and the Triassic Skagerrak Fm play.

The licence sits in the middle of the BP operated ETAP (Eastern Trough Area Project)  region of the CNS, which has recently received a c. $1 billion life extension project. To the south west is the Seagull development and to the south east is the Culzean development, both expecting first  oil in 2019.

Tesla Discovery
Well 22/24c-11 (Tesla), drilled in 2009 by GDF SUEZ, targeted the Triassic Skagerrak Fm which was found to be dry, but did intersect oil bearing Pentland Fm sands in the Jurassic. The discovery was judged to be non-commercial but highlights the working petroleum system in the licence.

Dewar Prospect: Since award, technical work has focused primarily on the Dewar prospect which is centrally located on Licence P2352. The availability of newly reprocessed 3D Pre-Stack Depth Migration (PSDM) seismic data, obtained by the Company since the award of the licence in October 2018, has allowed a major geological re-evaluation of the Dewar prospect. New mapping indicates that the Dewar prospect is a Forties Sandstone Channel which the Company estimates to contain STOIIP of up to 270 million barrels of light oil in a high-quality sandstone reservoir with P50 prospective resources of 39.5 million barrels. The prospect is supported by a clear Amplitude Versus Offset (AVO) anomaly and is located less than 10km from the Marnock field infrastructure. Further work to be completed during 2019 includes a rock physics study and review of commercial development options both of which are underway and will be used to support farm-out activities which are expected to commence towards the end of H1 2019.

P2384
P2384 is a 30th Round licence situated in the East Central Graben of the Central North Sea, NE of the Montrose/Arbroath High and South of the Huntington Field.

LEADERSHIP/CONTACT

Mark Lappin Chairman
Graham Swindells Chief Executive Officer
Andrew Nunn Chief Operating Officer
Peter Cowley Non-Executive Director

Cluff Natural Resources plc
Third Floor, 5-8 The Sanctuary
London SW1P 3JS, United Kingdom

Tel: +44 (0)20 7887 2630