Strategy in the UK North Sea

The UK North Sea is characterized as a mature basin by most in the industry. However, the UK Offshore Operators Association believes there are around 28 billion barrels worth of reserves still to recover. In addition, the UK Department of Trade and Industry have estimated that more than 300 oil fields are lying dormant in the north sea.

At the same time, current license holders (predominantly major oil companies) have reduced investment to pursue opportunities in other parts of the world. As the majors have increased their portfolio sizes, opportunities in the UK are now deemed too small for them.

This background provides a significant opportunity for a company such as Mosaic which is ideally positioned to take advantage of the opportunities now left by the majors. There are a number of clear reasons for the focus of Mosaic to be placed on the UK sector. These are as follows:

• Relatively attractive and stable fiscal regime;
• Infrastructure for commercialization is available and has capacity for added volumes;
• North Sea’s physical characteristics are well known and amenable to current technology;
• Significantly increased interest in exploration activity by mid-sized players should result in a number of development farm-in opportunities in the near future;
• Vendors are receptive to creative participation agreements to simulate business.

Funding Objectives

Mosaic’s proposed 25-50% stake in block 49/29b and Company overheads is in the region of $50M. Funding will be sought separately for further development opportunities and these will be appraised jointly by Mosaic and its funding partner(s).