Unconventional explorationas a way of organic growth in Upstream

Resource Pyramid2

Technical program of the joint venture in Makó trough area►Joint Technical Study prepared for►Makó and Békés basinsBased on the promising results ofthe JTS MOL-ExxonMobil decided tolaunch an exploration program onMOL 107EXPLORATIONBLOCKMOL (50%) –ExxonMobil (50%)agreementFALCON MININGPLOTRetained byFalcon (100%)►► Makó-West area and► Makó-East areaThe aim of the Makó explorationprogram is toMOL 106 EXPLORATION BLOCKMOL (50%) – ExxonMobil (50%)agreementFALCON MINING PLOTCONTRACT AREAFalcon (33%) - ExxonMobil(33.5%) - MOL (33.5%)agreement►Reduce uncertainty on HCresource distribution andproducibilityMAKÓ-WESTAREAMAKÓ-EASTAREA►define costs related toproductionMOL MAKÓ-1MINING PLOT►estimate the budget fordrilling & fracing the wellsMOL (50%) –ExxonMobil (50%)agreement►In success case, field developmentand starting of production is plannedfor 2012 - 2014Kilometers0 10 20

Project Evaluation►►Exploration Appraisal►►Reduce uncertaintyon HC resourcedistributionReservoirproducibilityDevelopment Pilot► Select developmentconcept to maximizeeconomicproductivity2-4 years 2 years30 yearsExploration AppraisalResource delineationSeismic and drilling activityStop / GoExit the projectDevelopment PilotTest / developtechnologiesStop / GoExit the project►Development – Production► Achieve / maintaineconomic productionlevels► Continuous fielddevelopment► High well density (2-3well/km 2 )Uncertainty• In-place resources• Recovery rates – efficiency• Economic viabilityDevelopment ProductionIt would require ~2000 wells to producethe hydrocarbons resources in the MakóareaApproximately 50 wells per year►Will require growth in oil fieldservices in Hungary• Production optimization5

Makó Trough work programMAKÓ WEST AREACommitted Exploration Work Program based on MOL-ExxonMobil Joint Technical StudyGoal: Prove commerciality of production• Drilling 4-6 new wells• Testing, fracturing wellsStop / GoExit the projectPilotingField Development andProduction2009201220082010MAKÓ EAST AREAInitial Work Program1. Primary focus: testing Szolnok geological formation• reentering, testing & fracturing existing wells and/or drilling optional new wells2. Secondary focus: Endrőd formation, Basal ConglomerateStop / GoExit the projectAppraisal Work Program• Drill additional wells to furtherdelineate resourceStop / GOExit the projectField development andproduction

Requirements for Petroleum Accumulationrock containing original organicmatter is a source rock:80% of the world's sedimentaryrock volume1% to 2% organic matterless than 1%, is able to undergomigration out of the sourcebed to accumulate within aporous and permeablereservoir.Source: IHRDC IPIMS.ep7

Requirements for Petroleum AccumulationMaterial originated from differentkinds of living organisms,with different kinds ofbiological molecules,kerogens will not all havethe same chemicalcompositions and will yielddifferent types andamounts of petroleum.Source: IHRDC IPIMS.ep8

Basin Centered Gas Accumulation – Makó troughConventional AccumulationsGas MaturityPotentialUnconventionalAccumulationReservoir IntervalsSource Intervals(Source: Horvath)11

Basin Centered Gas Accumulation – Makó trough► Source Intervals► Reservoir Intervals► Present Gas maturitywindow► Conventional HCaccumulation► PotentialUnconventional HCAccumulationsAlgyoField12

ExxonMobil’s Multiple Zone Stimulation TechnologyPiceance Basin,Colorado, USA

SPE – PRMS Classification systemField DevelopmentRiskDiscoveryGeological Risk

Initial assumptions on resource distribution of the Makó TroughField Development► Continuous fielddevelopment► High well density (2-3well/km 2 )It would require ~2000 wells toproduce all hydrocarbons fromMakó areaApproximately 50 wells can bedrilled in one year in ourcurrent knowledgeWells are drilled through the lifetime of the projectDiscounted payback period ofa well is 2-3 yearResources & Production►The following charts show the acreage within the Mako basin controlled by MOL►Resources of the basin>2000 MMboe (>340 Bcm)Makó BasinAcreage Under License = 2769 km 2►MOL controls approximately40% of the Mako basinacreage19.12%40.44%►Appr. the 30% of the basin’sresources could berecovered in the next 30years with 50 wells drilledper year40.44%EMMOLTXM►Will require growth in oilfield services in Hungary15

Economic valuation – main assumptions►►►Cost EstimatesSurface facilities: USD 22-28 million + USD 6-11 million/yearOPEX: USD 2-3/boeWell cost: USD 8-12 million►►►Unconventional wells vs.conventional are► Deeper► More expensive► Produce lessHigh initial productionRapid production decline toa relatively low butsustainable levelComparison of Single Producer wells in the Makó Trough AreaWell CostDepthConventionalConventionalUnconventionalUnconventional0 2 4 6 8 10 12 0 1 2 3 4 5 6USD millionkmTotal ProductionLifetimeConventionalConventionalUnconventionalUnconventional0 50 100 150 200 250 300MMcm0 5 10 15 20 25 30yearUncertaintiesGeological challenge is understandinghydrocarbon distributionTechnical challenge is the producibilityThe overall probability of success reaches a certain thresholdencouraging MOL to start exploration program16

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