Oil India (USA), Inc. The Atrium at Sugar Creek, 101 Southwestern Blvd., Suite # 136, Sugar Land, Texas 77478

Ref: OILUSA/GC/693/2017 Date: 21st September, 2017

D (HR&BD) / D (O) / D (E&D) / D (F) / CMD

Through: GM (BD)

Sub: Monthly report of Oil India (USA), Inc. for the month of August, 2017

1. Reference above please find attached the monthly report for the month of August 2017,

pertaining to Oil India (USA), Inc.

2. For your information and record please.

(G. K. Sharma)

Country Manager

Attached: Detailed Report

OIL USA’s Monthly Report, August 2017

1.0 Preamble

Hon’ble US Secretary of Energy, Mr. Rick Perry, has recently enquired Dr. Renu Khator,

chancellor of the University of Houston (UH) System and the president of the UH, about the

ongoing collaboration work between Oil India Limited (OIL) and UH. Probably, the information

of this collaborative work was passed on to Mr. Perry by US DOE (Department of Energy). In

reply, Dr. Khator apprised Mr. Perry the success of the Phase-1 work, and looking forward to

Phase-2 to increase effectiveness of resources in India and also to bring cutting edge

technology on Carbon Capture, Utilization, and Storage (CCUS) and implementation of CO2-

EOR in OIL’s matured oil fields. The above was informed by Dr. Ramanan Krishnamoorti, Vice

Chancellor for Research & Technology Transfer and Chief Energy Officer, UH.

Status on ongoing Technology Collaboration between Oil India Limited and US/India

Entities…..

The latest developments on co-operation of Oil India Limited (OIL) with various agencies from

USA towards the Company’s effort at enhancement of oil and gas production are as follows:

Oil India Limited (OIL) and University of Houston (UH) entered into an Industry-

Academia partnership with an ultimate objective of research, development, deployment

and training in activities related to exploration and production of oil and gas. Specifically,

the University has taken up OIL’s Makum-North Hapjan field to develop improvement

ideas in terms of reservoir management and rejuvenation of that field. UH is further

assisting in building OIL’s EOR capabilities in reservoir characterization, project

workflow, labs, software, manpower etc. along with training and upgradation of CoEES

facilities.

Phase-1 (6 months duration) has been successfully completed and subsequently the

findings and recommendations on Makum-North Hapjan field and EOR studies has been

submitted and presented. The process for Phase-2 has also been initiated and this

phase will carry forward the preliminary studies of Phase-1 to an advanced level with

further detailed studies and planning for implementation.

Furthermore, on behalf of the National Carbon Capture Centre USA, a US Department

of Energy (DOE) facility, M/s. Southern Company Services, Inc. has signed a MoU with

the University of Houston which would facilitate possible future collaboration and

assistance to OIL for Carbon Dioxide- EOR. Preliminary discussions were held with OIL

on learning and sharing of knowledge on CCUS (Carbon Capture, Utilization & Storage)

research.

NRG visit to Assam: A team from NRG Energy Inc., who are the lead developer of the

recent successful commissioning of the Petra Nova (a 50/50 joint venture between NRG

and JX Nippon Oil & Gas Exploration), Carbon Capture and Enhanced Oil Recovery

Project near Houston USA, visited OIL to assist in the investigation and evaluation of

potential carbon dioxide (CO2) sources near Duliajan to utilise in Carbon Dioxide-EOR

project in oilfields of Oil India. The Petra Nova project in USA captures carbon dioxide

from the flue gas of a coal-fired power plant and pipes the CO2 through a 120 km pipeline

to an oil field (West Ranch field, discovered in 1938), where it is used for an EOR project.

The West Ranch Field covers approximately 11,500 acres, and the target zone for CO2

injection is roughly 4,000 acres. Petra Nova Carbon Capture, operational since

February, 2017, is the world's largest post-combustion CO2 capture system presently in

operation. Mr. David Greeson, Vice President, NRG Energy Inc., (who visited Duliajan)

informed that the West Ranch oil field (current operator is Hilcorp Energy), has seen

increase in oil production from 300 bbl. to 4,000 bbl. since implementation of CO2-EOR

from February’17.

Mr. Greeson has submitted a report to OIL on the team’s assessment on the availability

of carbon dioxide from industries in the vicinity of OIL’s operational area. Subject to the

economic feasibility the report mentions that a technically viable supply of CO2 is

available for an initial pilot project.

During Phase-2, UH will help OIL to identify a suitable reservoir/oil field to implement

CO2-EOR through a pilot project to determine viability of such kind of project. It is

worthwhile to mention here that if successful, this will be first of its kind in India with

regards to CO2-EOR implementation for production enhancement from a matured oil

field. In US, CO2-EOR has been established as a proven technology and can

conservatively be expected to produce an incremental 10-15% of the original oil the

reservoir contained when it was discovered.

In order to augment oil production by increasing recovery factors in India’s matured

oilfields, Government has initiated deliberations on formulating an EOR policy for the

country towards an effort to incentivize EOR activities in line with international practices.

It is believed that support from the proposed Policy would help OIL in overcoming

constraints in implementation of its planned EOR programme.

IIT Guwahati & UH: Efforts have also been initiated by OIL USA to explore possibilities

of collaboration between IIT Guwahati (IITG) and the University of Houston. Hon’ble

Minister of State (I/C) for Petroleum and Natural Gas (PNG) had also suggested on

looking into collaboration between the UH and the IITG.

Recently, the Govt. of India has launched Visiting Advanced Joint Research (VAJRA)

Faculty Scheme whose purpose is to initiate research collaboration between the Indian

academicians and overseas scientists. Based on initiative from OIL USA, IITG has

already submitted a proposal to Science & Education Research Board (SERB), Govt. of

India to collaborate in the field of Enhanced Oil Recovery (EOR) with University of

Houston. If it is approved by SERB, then the experts from UH will visit/interact and

conduct workshop (for 30 days) under this program at IITG in the field of EOR. Dr.

Anupam Ray, Consul General of India, Houston has assured UH to extend all help to

get it approved by Govt. of India. It has been envisaged that this program will directly

benefit OIL in future, in the field of collaborative work with IITG.

2.0 OIL USA’s Niobrara JV at a Glance

Oil India Limited (OIL) acquired 20% interest in Carrizo Oil & Gas Inc. (Carrizo) shale assets in

Niobrara play of the Denver–Julesburg (D-J) Basin in Colorado, USA. The Purchase and

Participation Agreement (PPA) with Carrizo was signed on 4th October, 2012 and the acquisition

became effective from 1st October, 2012.

Oil India (USA), Inc. was formed as a Subsidiary of Oil India Ltd. and registered in Texas, US.

Subsidiary office in Houston started functioning from July, 2013.

Total net acreage under OIL USA in Niobrara JV, Colorado is about 11,500 net acres.

There are four partners in this Asset (including Carrizo and OIL) and their working interests (WI)

are: Carrizo - 60%, OIL - 20%, IOCL - 10% and Haimo Oil &

Gas LLC - 10%.

Oil percentage is around 78%, other produce are Gas &

NGL.

Niobrara formation consists of three chalk (reservoir) zones,

A, B, and C with inter-bedded marls and shale that serve as

the source rock for the reservoir zones.

Popularly referred as Niobrara A, B, and C benches.

B bench depth ranges from 5,000 ft. to 7,000 ft.

B bench is the main target zone and thickness varies from

85-115 ft.

This brittle chalk is highly fractured in some areas.

Developed using horizontal drilling technology & by

multistage hydraulic fracturing.

The average lateral length is 4500’ (1370m). The wells are

completed with 3 stage casings and average frac stages: 15 stages per well.

Initially, during 2010-11, drilling was completed within 15-17 days. Presently, the same well

has been drilled within 8-9 days.

Niobrara Shale formation is situated in NE Colorado and parts of Kansas, Wyoming and

Nebraska.

Age: Late Cretaceous.

Organic matter is Type –II kerogen

Lithology: Interbedded calcareous shale, shaly limestone, chalk and marls.

Fine grained nature results in little porosity and permeability.

Production dependent on fractures (both natural and induced).

TOC ranges from 1.5 - 10%

Median Porosity: 7% - 12%, Permeability: 0.1 - 3 mD.

3.0 Operational Details of Niobrara JV:

Carrizo Gross Oil production for the Niobrara JV:

The Gross Oil production in the month of August 2017 was 63,952.0 Bbls which is 5% less than the

production in the month of July 2017.

Carrizo Gross Gas production for the Niobrara JV:

The Gross Gas production in the month of August 2017 was 211,346.0 Mcf which is 0.1% less than the

production in the month of July 2017.

The Subsidiary (OIL USA) production share of Oil in WI/NRI (Working Interest/Net Revenue

Interest):

OIL USA total oil production in the month of August 2017 was 7,092.3 Bbls (WI) / 5,673.8 Bbls (NRI),

which is 4.2% less than the production in the month of July 2017.

The Subsidiary (OIL USA) production share of Gas in WI/NRI:

OIL USA total gas production in the month of August 2017 was 23.5 MMcf (WI) / 18.8 MMcf (NRI),

which is 1.4% less than the production in the month of July 2017.

The Subsidiary (OIL USA) production in terms of BOE/day (WI/NRI):

OIL USA production in BOE for the month of August 2017 was 11,016.2 BOE (WI) / 8,812.9 BOE

(NRI), which is 3.5% less than the production in the month of July 2017.

Monthly production of Whiting Oil & Gas Corporation

Since production data of Whiting is available till June 2017, looking at the production trend, it could

safely be assumed that the production share of OIL USA for the month of August’17 would be close to

800 Bbl (WI) for oil and 3300 Mcf (WI) for gas.

0

2000

4000

6000

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

Oil Bbl 1429 1223 1279 1122 952 820

Gas - Mcf 4613 4058 4391 3875 3567 3402

Whiting production (WI)

Monthly production of Noble Energy Inc.

Since production data of Noble is available till June 2017, looking at the production trend, it could safely

be presumed that the production share of OIL USA for the month of August would be closed to 880 Bbl

(WI) for oil and 2100 Mcf (WI) for gas.

4.0 Revenue and Accounts (Status as on 31st August, 2017)

The monthly JIBs and net revenue earning from April 2015 to July 2017 is given as follows:

i) The total amount paid on Cash Calls, JIBs to operators & non-operator partners till August, 2017

is US$ 91.3 Million. The break-up is as follows:

Cash Calls & JIBS to Carrizo - US$ 73.6 Million.

Noble Energy JIB - US$ 7.5 Million.

Whiting Oil & Gas JIB- US$ 10.2 Million.

ii) Total revenue received by Subsidiary till August, 2017 is US$ 55.67 Million (cash receipt after

Severance Tax), which is about 60.9% of total amount paid against Cash Calls and JIBs and

recovered within 4.9 years. The break-up of revenue received from various operators are as

follows:

0

1000

2000

3000

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

OIL - Bbl 996 829 929 882 945 887

Gas-Mcf 2338 2135 2278 2227 2256 2156

OIL USA's share of Noble production (WI)

-

500,000

1,000,000

1,500,000

2,000,000

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Monthly Revenue vis-á-vis JIB

Monthly JIB Monthly Revenue

Carrizo - US$ 46.8 Million.

Noble Energy - US$ 5.1 Million.

Whiting Oil & Gas - US$ 3.8 Million.

iii) Total reinvestment in the JV from revenue generated by Subsidiary till the month of August, 2017

is about US$ 46.35 Million.

iv) Total Acquisition Cost till date is US$ 66.05 Million, the break-up of which are as follows –

Niobrara JV Initial Acquisition Cost - US$ 55.00 Million

Subsequent AMI Acquisition Cost - US$ 11.05 Million

v) Additionally, OIL USA has incurred US$ 3.02 Million on payment of interest on Bank Loan, US$

1.13 Million on General & Administrative Expenses, US$ 2.06 Million for employee benefits,

additional Severance Tax of US$ 0.30 Million and Interest paid to parent company US$ 0.21

Million, till August, 2017.

vi) Share Capital is US$ 111.10 Million. The short term credit line has been paid off in the month of

March, 2017.