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Project Report
             N° PR-GE-08.01

              West Medvezhye 1

                       Siberia

                       Russia




       Project N° PR-GE-08.01
Operated by GeoDynamics Research S.r.l., Rovereto (TN)
                       Italy

                       June 2009




             Abridged version for publication



                           1/14
DISCLAIMER


The technical results, conclusions and recommendations contained in this report are
based on the Low Frequencies Passive Seismic Spectroscopy Method provided by
GeoDynamics Research IPDS® Technology with the objective to reveal prospective oil and
gas areas and substantiate the results from a prior gas seismic tomography survey.

The work was carried out according to the standard of skill and care that is expected of
professionally qualified and experienced consultants. However, GeoDynamics Research
does not warrant operational decisions based on any results, conclusions or
recommendations and accepts no liability for any loss, damage or costs that may be
incurred or sustained through the use of results, conclusions or recommendations of this
report.




                                         2/14
Table of contents


1.    Summary ........................................................................................................ 4
2.    Data Acquisition ............................................................................................... 5
2.1   Description of Acquisition .................................................................................. 5
2.2   Field Acquisition and Quality Check ..................................................................... 8
3.    Processing Techniques ...................................................................................... 8
4.    First Results..................................................................................................... 9
5.    Discussion of Results ...................................................................................... 10
6.    Conclusions and Recommendations................................................................... 13




                                                     3/14
1.     Summary

This project report presents the results of the Geospectra IPDS® survey conducted in the
West Medvezhye area for “Victoria Oil and Gas” Plc, London.

The survey area as a part of the West Siberian Plain is located in Siberia, Russia, 25 km
South-West of the Medvezhye gas field and 12 km to the North-East of the Nadym oil
and condensate field.

The main purpose of the Spectrometric IPDS® survey was to substantiate the results
from a prior gas seismic tomography survey conducted in the West Medvezhye license
area of the client. The survey area included Well 103 which was drilled in the center of
the survey area in 2006 and revealed the presence of hydrocarbons.

The acoustic recordings acquired in the field were processed at the Head Office of
GeoDynamics Research in Italy, allowing state-of-the-art quality control, signal
processing and filtering.

The processed results show two areas displaying relatively high Low Frequencies Energy
(RHI = Reservoir Hydrocarbon Indicator) values which have been highlighted in Figure
with Well 103 being at the edge of one of the two areas.

These two areas represent interesting exploration targets according to the GeoDynamics
Spectrometric IPDS® technique. The present survey therefore indicates areas with higher
prospectivity and areas with lower prospectivity within the limits of the anomaly
measured during the geochemical survey completed in 2006.




                                          4/14
2.    Data Acquisition

2.1   Description of Acquisition

From the base camp at the border of the survey area tracked vehicles were used to reach
the measurement points due to the surface conditions.

The measurements took place along profiles which were agreed with the client (Figure 4).
Daylight lasted four hours a day. Therefore, in general, three setups per day were
achieved (6 data points).

Each measurement setup consisted of three Recording Stations. Two of them were
Kinemetrics Quanterra Q330 24 bit ADC and one station Kinemetrics K2 24 bit.
All the Seismometers were GeoDynamics Seismometers SM-3Kv verticals with
electromagnetic sensor that measured simultaneously at 500 m from each other, as
presented on the Figure 1.

Before the acquisition campaign started, all the Seismometers were tested in a low
temperature laboratory at the Physics department of University of Trento to guarantee
their functioning [as per internal report “GDR Report - Test at Low Temperature on GDR
Seismometers SM-3kv”]. The working performance of the Seismometers at -37 °C was
flawless.

All ADC converters have temperature limits down to -40 C°, so the acquisition team did
not have any particular technical problem with the GDR Equipment.




                             Figure 1: Acquisition setup


Mobile and independent measurement units were used. These units are suited for the
extreme weather conditions and working environment of this survey.

Each measurement point was located with a Garmin GPS unit. Synchronization of the
measurements was also achieved by accurate GPS timing of each recorder in a continue
loop modality.




                                         5/14
The third recorder and seismometer couple was used as a reference unit and measured
continuously on Well 103 throughout the entire measurement day.

To avoid additional unwanted artificial noise, measurements started after all crew
members and vehicles had reached a distance of at least 500m from each measurement
point.




Figure 2: Seismometer placement




 Figure 3: Shows examples of the units used, with the Seismometer coupled to
                              the frozen ground




                                       6/14
Figure 4: Data point map




             7/14
2.2    Field Acquisition and Quality Check

After each measurement, the recordings were checked directly in the field to control the
reliability and quality of the data.

No significant artificial noise source was recorded in this remote area, as evidenced also
by inspection of the spectrograms and PSDs of the measurements. As an example of the
calibration measurement points, at CAGE 12 and CAGE 13 no artificial noise was
recorded and the PSD and Spectrogram were clean.

At the beginning, in the middle and at the end of the survey calibration measurements
were performed to calibrate sensors and recorders.

In general, calibration is also used to verify that the coupling with the ground was
optimal and consistent. The analysis was made by using coherence methods, as it is
necessary that the Seismometers are equally calibrated, i.e. they produce the same
response when they are close to each other. The Seismometers are calibrated within 5%
which is within our calibration limits.




3.     Processing Techniques

The total number of measurements was 84.
These included 38 calibrations and 4 reference measurements.
The total number of useful data points measured was 42 (this number did not include
calibrations or reference measurements).
The total number of measurements processed was 38.

The survey was conducted in an area of the West Medvezhye license area where a prior
gas seismic tomography exploration identified an anomaly.
To better define and localize the measured anomaly, several data points (Figure 4) were
measured outside the limits of the anomaly.

The data received from the field crew was reviewed by staff at GeoDynamics Research
offices in Rovereto, both in the time domain and in the frequency domain to ensure that
all recordings used were of acceptable quality.

This was especially important because of the very low temperatures (-36°C to -8°C) at
which the Seismometers and recorders were used. No significant problems were
encountered and no artificial noise had a negative impact on the data analysis.

The objective of the Geospectra IPDS® approach is to process passive seismic data, using
different types of signal analysis methodology, to identify and isolate particularities,
related to hydrocarbon reservoirs.

The objective of the passive seismic data pre-processing in the time and frequency
domain is to clean the signals from potential human noise, and then find out as clearly as
possible, using particular methodologies of analysis, the earth seismic background. We
include the Oceanic Peak at 0.25 Hz, as we use it as a reference during all the steps of
the processing.




                                          8/14
4.      First Results

Result of the data processing is the creation of the RHI map (Reservoir Hydrocarbon
Indicator).

Results are reviewed by reference to all the processing procedures adopted by
GeoDynamics and applied to many fields in different parts of the world. The only
difference is in the order of filtering and windowing of the signals to reflect the
background noise of particular areas where the signals were acquired.




     Figure 5: Iso-Energy Spectrometric map measured in terms of RHI values.
        Values at the rim of survey are the result of only one measurement.

                                       9/14
All the Iso-Energy curves in the RHI map are created from the Low Frequencies Energy.

The Iso-Energy map from the passive acoustic spectroscopy shows then 3 types of
Area:
   • very low (Yellow),
   • low (Light Red) and
   • potential exploration targets (Red)




5.     Discussion of Results


Most surveys conducted by GeoDynamics Research have revealed a positive correlation
between hydrocarbon presence and the RHI values measured. The positive correlation
appears to be linked to the cumulative thickness of hydrocarbons from all hydrocarbon
bearing reservoirs. Red Areas thus contain potential exploration targets.

Any parameter that influences hydrocarbon content and distribution will be expected to
influence the RHI indicator. These parameters include structure, stratigraphy and as well
as porosity and permeability. The combination of these factors will determine the
distribution of hydrocarbons in the subsurface. The RHI map might reveal structural
elements, but only where these have a major influence on the distribution of
hydrocarbons in the subsurface.

By analyzing the Spectrographic map and making a path between the measurement
locations we can analyze all the Power Spectral Densities (PSD) inside the Hydrocarbon
potential Areas. We can also see from the analysis that all the PSDs have similar
characteristics.

High RHI values in certain areas are related then to an increase in the Energy content of
the measured signal with respect to the same frequency window from measurements
displaying lower RHI values.
This means that RHI values are always relative to the local acquisition, and should not
be considered as an absolute indicator.

The low number of data points collected in the West Medvezhye survey does not allow us
to achieve the necessary resolution and, therefore, we have had to increase the
uncertainty in some areas as shown in the yellow zones. The uncertainty could also be
connected with actual lower hydrocarbon potential.

Values at the rim of the survey area which result from only one measurement should be
considered less reliable, as the case for example of the acquisition point CAGE28A to the
west of the measured area, shown in the Figure 6.

To have more resolution on the Spectrographic map and avoid systematic errors that
may have occurred during the survey and to improve the processing in the border area of
the survey, a greater number of data points could be collected on a subsequent survey
for West Medvezhye.




                                         10/14
Figure 6: Iso-Energy RHI map with measurement points. Values at the rim of
    survey are the result of only one measurement and thus less reliable.




                                  11/14
Figure 7: Iso-Energy Spectrographic map with measurement points.
            Red Areas as potential exploration target




                             12/14
Figure 8: 3D Iso-Energy Spectrographic map with measurement points.
RHI values are on Z. Red Spot is the most interesting potential exploration area




6.      Conclusions and Recommendations


The Iso-Energy Spectrometric map (RHI map) is the final result of the Passive Seismic
Interferometry Geospectra IPDS® processing technique.

•    Areas with higher values of RHI represent areas with higher likelihood of
     hydrocarbon accumulations.

•    Two areas have been highlighted in red in Figure 7 and they represent
     potential exploration targets.

•    The location of Well 103 is placed at the limits of one of these areas.

•    Only where there is consistent well control would it be possible to derive a
     direct correlation with hydrocarbon column thickness. One well is not
     sufficient to determine a reliable correlation.



                                        13/14
•   The surrounding measurements play an important role to close the Iso-Energy curves
    (Figure 7). Without additional measurements we are not able to close the Iso-Energy
    paths completely. Consequently, we have had to make extrapolations which may not
    always be consistent.

•   In order to improve the resolution, it would be advantageous to take additional
    measurements in our next survey campaign, and thus reduce the uncertainty which is
    always present.

•   The Iso-Energy map generally gives an estimation in terms of quantity, but in this
    case we are not able to provide a reliable estimation of the NPZ (Net Pay Zone), due
    to insufficient data to make a correlation.

It is important to remark that any Passive Spectroscopy IPDS® survey should be
used as a complementary approach to existing exploration methods and should
not be expected to produce 100% correlations with hydrocarbon accumulations.




                                         14/14

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West Med Seismic Survey Project Report - June 2009

  • 1. Project Report N° PR-GE-08.01 West Medvezhye 1 Siberia Russia Project N° PR-GE-08.01 Operated by GeoDynamics Research S.r.l., Rovereto (TN) Italy June 2009 Abridged version for publication 1/14
  • 2. DISCLAIMER The technical results, conclusions and recommendations contained in this report are based on the Low Frequencies Passive Seismic Spectroscopy Method provided by GeoDynamics Research IPDS® Technology with the objective to reveal prospective oil and gas areas and substantiate the results from a prior gas seismic tomography survey. The work was carried out according to the standard of skill and care that is expected of professionally qualified and experienced consultants. However, GeoDynamics Research does not warrant operational decisions based on any results, conclusions or recommendations and accepts no liability for any loss, damage or costs that may be incurred or sustained through the use of results, conclusions or recommendations of this report. 2/14
  • 3. Table of contents 1. Summary ........................................................................................................ 4 2. Data Acquisition ............................................................................................... 5 2.1 Description of Acquisition .................................................................................. 5 2.2 Field Acquisition and Quality Check ..................................................................... 8 3. Processing Techniques ...................................................................................... 8 4. First Results..................................................................................................... 9 5. Discussion of Results ...................................................................................... 10 6. Conclusions and Recommendations................................................................... 13 3/14
  • 4. 1. Summary This project report presents the results of the Geospectra IPDS® survey conducted in the West Medvezhye area for “Victoria Oil and Gas” Plc, London. The survey area as a part of the West Siberian Plain is located in Siberia, Russia, 25 km South-West of the Medvezhye gas field and 12 km to the North-East of the Nadym oil and condensate field. The main purpose of the Spectrometric IPDS® survey was to substantiate the results from a prior gas seismic tomography survey conducted in the West Medvezhye license area of the client. The survey area included Well 103 which was drilled in the center of the survey area in 2006 and revealed the presence of hydrocarbons. The acoustic recordings acquired in the field were processed at the Head Office of GeoDynamics Research in Italy, allowing state-of-the-art quality control, signal processing and filtering. The processed results show two areas displaying relatively high Low Frequencies Energy (RHI = Reservoir Hydrocarbon Indicator) values which have been highlighted in Figure with Well 103 being at the edge of one of the two areas. These two areas represent interesting exploration targets according to the GeoDynamics Spectrometric IPDS® technique. The present survey therefore indicates areas with higher prospectivity and areas with lower prospectivity within the limits of the anomaly measured during the geochemical survey completed in 2006. 4/14
  • 5. 2. Data Acquisition 2.1 Description of Acquisition From the base camp at the border of the survey area tracked vehicles were used to reach the measurement points due to the surface conditions. The measurements took place along profiles which were agreed with the client (Figure 4). Daylight lasted four hours a day. Therefore, in general, three setups per day were achieved (6 data points). Each measurement setup consisted of three Recording Stations. Two of them were Kinemetrics Quanterra Q330 24 bit ADC and one station Kinemetrics K2 24 bit. All the Seismometers were GeoDynamics Seismometers SM-3Kv verticals with electromagnetic sensor that measured simultaneously at 500 m from each other, as presented on the Figure 1. Before the acquisition campaign started, all the Seismometers were tested in a low temperature laboratory at the Physics department of University of Trento to guarantee their functioning [as per internal report “GDR Report - Test at Low Temperature on GDR Seismometers SM-3kv”]. The working performance of the Seismometers at -37 °C was flawless. All ADC converters have temperature limits down to -40 C°, so the acquisition team did not have any particular technical problem with the GDR Equipment. Figure 1: Acquisition setup Mobile and independent measurement units were used. These units are suited for the extreme weather conditions and working environment of this survey. Each measurement point was located with a Garmin GPS unit. Synchronization of the measurements was also achieved by accurate GPS timing of each recorder in a continue loop modality. 5/14
  • 6. The third recorder and seismometer couple was used as a reference unit and measured continuously on Well 103 throughout the entire measurement day. To avoid additional unwanted artificial noise, measurements started after all crew members and vehicles had reached a distance of at least 500m from each measurement point. Figure 2: Seismometer placement Figure 3: Shows examples of the units used, with the Seismometer coupled to the frozen ground 6/14
  • 7. Figure 4: Data point map 7/14
  • 8. 2.2 Field Acquisition and Quality Check After each measurement, the recordings were checked directly in the field to control the reliability and quality of the data. No significant artificial noise source was recorded in this remote area, as evidenced also by inspection of the spectrograms and PSDs of the measurements. As an example of the calibration measurement points, at CAGE 12 and CAGE 13 no artificial noise was recorded and the PSD and Spectrogram were clean. At the beginning, in the middle and at the end of the survey calibration measurements were performed to calibrate sensors and recorders. In general, calibration is also used to verify that the coupling with the ground was optimal and consistent. The analysis was made by using coherence methods, as it is necessary that the Seismometers are equally calibrated, i.e. they produce the same response when they are close to each other. The Seismometers are calibrated within 5% which is within our calibration limits. 3. Processing Techniques The total number of measurements was 84. These included 38 calibrations and 4 reference measurements. The total number of useful data points measured was 42 (this number did not include calibrations or reference measurements). The total number of measurements processed was 38. The survey was conducted in an area of the West Medvezhye license area where a prior gas seismic tomography exploration identified an anomaly. To better define and localize the measured anomaly, several data points (Figure 4) were measured outside the limits of the anomaly. The data received from the field crew was reviewed by staff at GeoDynamics Research offices in Rovereto, both in the time domain and in the frequency domain to ensure that all recordings used were of acceptable quality. This was especially important because of the very low temperatures (-36°C to -8°C) at which the Seismometers and recorders were used. No significant problems were encountered and no artificial noise had a negative impact on the data analysis. The objective of the Geospectra IPDS® approach is to process passive seismic data, using different types of signal analysis methodology, to identify and isolate particularities, related to hydrocarbon reservoirs. The objective of the passive seismic data pre-processing in the time and frequency domain is to clean the signals from potential human noise, and then find out as clearly as possible, using particular methodologies of analysis, the earth seismic background. We include the Oceanic Peak at 0.25 Hz, as we use it as a reference during all the steps of the processing. 8/14
  • 9. 4. First Results Result of the data processing is the creation of the RHI map (Reservoir Hydrocarbon Indicator). Results are reviewed by reference to all the processing procedures adopted by GeoDynamics and applied to many fields in different parts of the world. The only difference is in the order of filtering and windowing of the signals to reflect the background noise of particular areas where the signals were acquired. Figure 5: Iso-Energy Spectrometric map measured in terms of RHI values. Values at the rim of survey are the result of only one measurement. 9/14
  • 10. All the Iso-Energy curves in the RHI map are created from the Low Frequencies Energy. The Iso-Energy map from the passive acoustic spectroscopy shows then 3 types of Area: • very low (Yellow), • low (Light Red) and • potential exploration targets (Red) 5. Discussion of Results Most surveys conducted by GeoDynamics Research have revealed a positive correlation between hydrocarbon presence and the RHI values measured. The positive correlation appears to be linked to the cumulative thickness of hydrocarbons from all hydrocarbon bearing reservoirs. Red Areas thus contain potential exploration targets. Any parameter that influences hydrocarbon content and distribution will be expected to influence the RHI indicator. These parameters include structure, stratigraphy and as well as porosity and permeability. The combination of these factors will determine the distribution of hydrocarbons in the subsurface. The RHI map might reveal structural elements, but only where these have a major influence on the distribution of hydrocarbons in the subsurface. By analyzing the Spectrographic map and making a path between the measurement locations we can analyze all the Power Spectral Densities (PSD) inside the Hydrocarbon potential Areas. We can also see from the analysis that all the PSDs have similar characteristics. High RHI values in certain areas are related then to an increase in the Energy content of the measured signal with respect to the same frequency window from measurements displaying lower RHI values. This means that RHI values are always relative to the local acquisition, and should not be considered as an absolute indicator. The low number of data points collected in the West Medvezhye survey does not allow us to achieve the necessary resolution and, therefore, we have had to increase the uncertainty in some areas as shown in the yellow zones. The uncertainty could also be connected with actual lower hydrocarbon potential. Values at the rim of the survey area which result from only one measurement should be considered less reliable, as the case for example of the acquisition point CAGE28A to the west of the measured area, shown in the Figure 6. To have more resolution on the Spectrographic map and avoid systematic errors that may have occurred during the survey and to improve the processing in the border area of the survey, a greater number of data points could be collected on a subsequent survey for West Medvezhye. 10/14
  • 11. Figure 6: Iso-Energy RHI map with measurement points. Values at the rim of survey are the result of only one measurement and thus less reliable. 11/14
  • 12. Figure 7: Iso-Energy Spectrographic map with measurement points. Red Areas as potential exploration target 12/14
  • 13. Figure 8: 3D Iso-Energy Spectrographic map with measurement points. RHI values are on Z. Red Spot is the most interesting potential exploration area 6. Conclusions and Recommendations The Iso-Energy Spectrometric map (RHI map) is the final result of the Passive Seismic Interferometry Geospectra IPDS® processing technique. • Areas with higher values of RHI represent areas with higher likelihood of hydrocarbon accumulations. • Two areas have been highlighted in red in Figure 7 and they represent potential exploration targets. • The location of Well 103 is placed at the limits of one of these areas. • Only where there is consistent well control would it be possible to derive a direct correlation with hydrocarbon column thickness. One well is not sufficient to determine a reliable correlation. 13/14
  • 14. The surrounding measurements play an important role to close the Iso-Energy curves (Figure 7). Without additional measurements we are not able to close the Iso-Energy paths completely. Consequently, we have had to make extrapolations which may not always be consistent. • In order to improve the resolution, it would be advantageous to take additional measurements in our next survey campaign, and thus reduce the uncertainty which is always present. • The Iso-Energy map generally gives an estimation in terms of quantity, but in this case we are not able to provide a reliable estimation of the NPZ (Net Pay Zone), due to insufficient data to make a correlation. It is important to remark that any Passive Spectroscopy IPDS® survey should be used as a complementary approach to existing exploration methods and should not be expected to produce 100% correlations with hydrocarbon accumulations. 14/14