ANNUAL REPORT 2015 ORYX PETROLEUM 2015 ANNUAL REPORT

Transcription

1 ANNUAL REPORT 2015 ORYX PETROLEUM 2015 ANNUAL REPORT 1

2 AT A GLANCE OIL RESERVES MMbbl Dec 31, 2013 Dec 31, 2014 Dec 31, Proved Proved Plus Probable 238 Proved Plus Probable Plus Possible AFTER TAX 10% $ Million 3,393 3,456 Dec 31, 2013 Dec 31, 2014 Dec 31, Proved ,815 1,287 1,217 Proved Plus Probable Proved Plus Probable Plus Possible 2,003 STATEMENT OF FINANCIAL POSITION Dec 31, 2013 Dec 31, 2014 Dec 31, 2015 $ Million Cash and Cash Equivalents Total Assets Total Equity 2

3 CONTENTS CAPITAL EXPENDITURES $ Million STATEMENT OF LOSS $ Million A Message from our Chairman 4 Vision and Values 5 A Message from our CEO 6 Key Events 7 Our Operations 8 Kurdistan Region of Iraq 10 West Africa 14 Corporate Social Responsibility 18 Board of Directors 20 Leadership 22 Reserves & Resources Advisory 24 Management s Discussion and Analysis of Financial Condition and Results of Operations 25 Revenue Consolidated Financial Statements 57 Working Interest Sales (bbl) - 295, ,200 Net Loss Net Loss per share ($/sh) This Annual Report contains forward-looking information. By its nature, forward-looking information requires us to make assumptions and is subject to risks and uncertainties. Please refer to the Forward-Looking Information advisory on page 54 for a discussion of such risks and uncertainties and the material factors and assumptions that apply to the information set forth in this Annual Report. ORYX PETROLEUM 2015 ANNUAL REPORT 3

4 A MESSAGE FROM OUR CHAIRMAN 2015 was a difficult year for Oryx Petroleum with the company enduring both external and company/asset specific challenges. The precipitous decline in crude oil prices, the ongoing crisis in northern Iraq and Syria and resulting disruptions to local markets, together with reservoir management issues at our Demir Dagh field, limited our ability to generate cash flow and access external capital. As such we had to curtail capital expenditures and significantly reduce staffing levels. Despite the challenges, we made a number of significant achievements in In the Kurdistan Region, we commissioned our production facilities at Demir Dagh giving us some 40,000 bbl/d of processing capacity, which will support our production growth for the foreseeable future. We also secured a marketing arrangement with a regional marketer, whereby our crude oil production was trucked to the Turkish coast for onward sale to international markets. In the face of multiple challenges, the Kurdistan Region also significantly advanced the development of its energy sector in Oil exports via pipeline, which were non-existent in 2013, doubled over the past year to reach approximately 600,000 bbl/d at year end Moreover, the government of the Kurdistan Region resumed consistent monthly payments to oil producers in September 2015 and in early 2016 announced a plan to make payments equal to full entitlements under production sharing contracts. Our key focus going forward remains our operations in the Kurdistan Region, where we have had a number of positive developments in early In late February, we entered into a strategic transaction with Zeg Oil & Gas, a privately held company based in the Kurdistan Region, whereby they have become a significant shareholder and help fund the first phase of development of the Zey Gawra field. They also bring valuable engineering and construction expertise, subsurface knowledge, and local and regional relationships. This is an innovative transaction demonstrating the agility needed to navigate the current environment. In early March 2016, we commenced pipeline exports from Demir Dagh and achieved first production from the Demir Dagh Jurassic reservoir. We remain determined to realise our ambitious founding vision of building a leading independent exploration, development and production company. Our commitment to social responsibility does not change during business cycles. Oryx Petroleum continues to provide health services and infrastructure to villages in our areas of operations and to support the Kurdistan Region in its efforts to help the many refugees driven from their homes by the tragic events in Syria and northern Iraq. I would like to thank management and the board of directors for their efforts and all our shareholders, who continue to provide us with their trust and confidence. Jean Claude Gandur Chairman 4

5 VISION AND VALUES Our corporate values can be distilled into the following three elements: Our vision is simple but ambitious: to become one of the world s leading independent exploration, development and production oil companies. AMBITIOUS AGILE RESPONSIBLE quick to seize new opportunities inquisitive, curious and responsive self-motivated, tenacious and intuitive open-minded, flexible and innovative dedicated to working with local cultures for shared success versatile and resourceful in exploring fresh solutions honest, fair, open and tolerant a culture that encourages personal success committed to maintaining the highest standards of civility, decency, dignity and justice ORYX PETROLEUM 2015 ANNUAL REPORT 5

6 A MESSAGE FROM OUR CEO Oryx Petroleum entered 2015 with a high level of activity in the Hawler license area, in the Kurdistan Region of Iraq, where we began the year with the drilling of appraisal wells in the Demir Dagh field s Cretaceous reservoir, and with work to complete our permanent gathering, processing and exportation facilities and infrastructure. In March, we entered into an agreement with a regional marketer, under which they agreed to lift all of the available crude oil from Demir Dagh and transport it to the coast of Turkey for onward sale into the international market, an arrangement that worked well throughout During the third quarter, we commissioned our permanent production and processing facilities. Our new facilities provide us with 40,000 bbl/d of gross processing capacity and with direct access to the Kurdistan Export Pipeline. At the beginning of the second quarter we began curtailing production from the Cretaceous reservoir due to earlier than anticipated water production, and we spent several months producing wells intermittently and in rotation in an effort to evaluate their individual performance. We deferred the additional development of the Cretaceous reservoir while we assessed the situation and revised our development work program to include the re-completion of existing wells and the drilling of new horizontal wells. We are confident in our new plan that will require fewer wells and less capital than our previous plan but has had only a modest impact on our Proved plus Probable reserves in the Demir Dagh and Banan Cretaceous reservoirs. In late 2015 we resumed activity in Demir Dagh with the re-completion of the Demir Dagh-3 well as a producer in the Jurassic reservoir and we are currently benefiting from the contribution this well makes to our gross production. In March 2016 we commenced pipeline exports which are expected to materially improve our price realisations. In West Africa, our activity was limited in 2015 and in early 2016 but we remain very excited about our licence areas in the AGC, offshore Senegal and Guinea Bissau, in light of the success that other industry participants have had in the region. Importantly, we have taken a number of steps in recent months to strengthen our financial position. In late 2015 we reached agreement with the vendor of the Hawler license to restructure our contingent consideration obligations allowing us to better match such obligations with revenue. In early 2016, Zeg Oil & Gas, a company focused on the energy sector in the Kurdistan Region of Iraq, invested $30 million in the company and proposed a $20 million work commitment to commence the development of the Zey Gawra field. Our priority for the remainder of work in 2016 will be on developing the Zey Gawra field and maximising production from our existing Demir Dagh wells. Our objective is to attain gross (100%) production of 10,000 bbl/d by year end. As always I would like to thank our management and staff, board of directors, business partners and shareholders who helped us navigate a difficult 2015 and positioned us for a productive Vance Querio CEO 6

7 KEY EVENTS JANUARY / FEBRUARY Hawler Completed drilling and testing of the Demir Dagh-9, 10 and 11 wells MARCH Hawler AOG provided a $100 million Credit Facility; Capital expenditure plans were scaled back Entered into a Marketing / Off-Take Agreement with a regional marketer to export crude via truck from the Demir Dagh field APRIL Hawler Water management issues emerged at the Demir Dagh field in the Cretaceous reservoir SEPTEMBER Hawler Hawler Production Facilities were commissioned with gross capacity of 40,000 bbl/d; tie-in infrastructure to KRI-Turkey export pipeline was completed Received Sensitivity Letter from independent reserve evaluator assessing impact on oil reserves of lower plateau rates required to manage water production and lower expected crude oil prices DECEMBER Hawler Resumed drilling activities at the Demir Dagh field (Re-completion of the Demir Dagh-3 well in the Jurassic reservoir) and restructured contingent consideration obligations FEBRUARY 2016 Strategic Investment by Zeg Oil & Gas MARCH 2016 Hawler Commenced pipeline exports from the Demir Dagh field Achieved first production and sales from the Demir Dagh Jurassic reservoir ORYX PETROLEUM 2015 ANNUAL REPORT 7

8 OUR OPERATIONS Oryx Petroleum is an international oil exploration company focused in Africa and the Middle East. Oryx Petroleum was founded in 2010 by The Addax & Oryx Group ( AOG ) and key members of the former senior management team of Addax Petroleum, a company founded in 1994 by AOG and acquired in 2009 by Sinopec Corporation. Oryx Petroleum has interests in seven license areas within its strategic focus areas of Africa and the Middle East, namely in the Kurdistan Region and the Wasit governorate (province) of Iraq, Nigeria, the AGC administrative area offshore Senegal and Guinea Bissau, and Congo (Brazzaville). Oryx Petroleum is the operator or technical partner in five of the seven license areas. The table below summarises Oryx Petroleum s gross (working interest) oil reserves and resources, and associated net present values, as at December 31, The Corporation s oil reserves and resources and associated net present values as at December 31, 2015 are based on evaluations made by NSAI, an independent oil and gas consulting firm providing reserve and resource reports to the worldwide petroleum industry. Explanatory notes referenced by number in the below table can be found on page 24. See the Reserves & Resources Advisory on page 24. Reserves and Resources (Working Interest) Location License Proved plus Probable Oil Reserves (1) (MMbbl) ($ Million) (6) Kurdistan Region of Iraq Hawler 238 1,217 Gross Oil (2) Unrisked Risked (9) Contingent Oil Resources - Development Pending (2,3) (MMbbl) (MMbbl) ($ Million) (6) Kurdistan Region of Iraq Hawler Gross Oil (2) Unrisked Risked (9) Contingent Oil Resources - Development Unclarified (2,4) (MMbbl) (MMbbl) Kurdistan Region of Iraq Hawler Congo (Brazzaville) Haute Mer A 6 1 Total Contingent Oil Resources - Development Unclarified (8) Prospective Oil Resources (3) Gross Oil (2) Unrisked Risked (10) (MMbbl) Kurdistan Region of Iraq Hawler Wasit Province Wasit Nigeria OML AGC AGC Shallow AGC Central Congo (Brazzaville) Haute Mer A 34 0 Haute Mer B Total Prospective Resources (8) 1,

9 IRAQ Kurdistan Region License: Hawler Area: 788km 2 W.I.: 65% Operator: Oryx Petroleum Wasit Province License: Wasit Area: 3,500km 2 W.I.: 48.5% Operator: Oryx Petroleum SENEGAL / GUINEA BISSAU License: AGC Shallow Area: 1,700km 2 W.I.: 80% Operator: Oryx Petroleum License: AGC Central Area: 3,148km 2 W.I.: 80% Operator: Oryx Petroleum NIGERIA License: OML141 Area: 1,295km 2 W.I.: 38.67% Technical Partner: Oryx Petroleum CONGO (BRAZZAVILLE) License: Haute Mer A Area: 366km 2 W.I.: 20% Operator: CNOOC Ltd License: Haute Mer B Area: 402km 2 W.I.: 30% Operator: TOTAL W.I. = Working Interest, Oryx Petroleum s interest in a license area assuming the exercise of all back-in rights and options ORYX PETROLEUM 2015 ANNUAL REPORT 9

10 KURDISTAN REGION OF IRAQ Hawler: A Sizable Reserves Base to Provide Production Growth Oryx Petroleum has a 65% participating and working interest in the Hawler license area with discoveries on all four identified structures of the Hawler license area: Demir Dagh, Banan, Ain Al Safra and Zey Gawra. First production was achieved in the second quarter of Oryx Petroleum acquired its 65% working and participating interest in the Hawler license area in August The Korean National Oil Corporation has a 15% participating interest and the Kurdistan Regional Government ( KRG ) has a 20% participating interest. Oryx Petroleum is the operator of the Hawler license area. A declaration of commercial discovery was submitted to the KRG on February 25, 2014 in respect of the Demir Dagh discovery and a field development plan for the entire license area has been agreed with the KRG. Reserves and Resources (Working Interest) Location License Proved plus Probable Oil Reserves (1) (MMbbl) ($ Million) (6) Kurdistan Region of Iraq Hawler Demir Dagh Cretaceous 66 Demir Dagh Jurassic 44 Zey Gawra Cretaceous 73 Banan Cretaceous 55 Total 238 1,217 Gross Oil (2) Unrisked Risked (9) Contingent Oil Resources - Development Pending (2,3) (MMbbl) (MMbbl) ($ Million) (6) Kurdistan Region of Iraq Hawler Demir Dagh Cretaceous Banan Cretaceous Total Gross Oil (2) Unrisked Risked (9) Contingent Oil Resources - Development Unclarified (2,4,8) (MMbbl) (MMbbl) Kurdistan Region of Iraq Hawler Total Contingent Oil Resources - Development Unclarified (8) Explanatory notes referenced by number in the above table can be found on page 24. Prospective Oil Resources (3) Gross Oil (2) Unrisked Risked (10) (MMbbl) Kurdistan Region of Iraq Hawler Total Prospective Resources (8)

11 DEMIR DAGH FIELD The Demir Dagh discovery was announced in February 2013 after the conclusion of a successful test program on the Demir Dagh-2 well that flowed oil from Cretaceous and Jurassic reservoirs. Subsequent to the discovery the Demir Dagh-2 well has been re-completed and nine appraisal/ development wells have been drilled. The Demir Dagh-3 appraisal well was drilled to further appraise all reservoirs while the Demir Dagh-4 through Demir Dagh- 11 appraisal wells have been drilled to appraise only the Cretaceous reservoir. Six wells have been completed as producers. First production commenced in June 2014 from the Cretaceous reservoir and reached gross (100%) production of 10,000 bbl/d in early 2015 before higher than anticipated water production required curtailment of production. 3D and 3C seismic data covering the field has been acquired and processed and other data has been acquired and studied. The data collected and well performance observed to date in the Demir Dagh Cretaceous reservoir have provided greater confidence in understanding the field. This data and understanding has been incorporated into a re-mapping of the Demir Dagh Cretaceous structure, a revised development plan and a dynamic reservoir simulation model for the Demir Dagh Cretaceous reservoir. Importantly the revised development plan has been changed from vertical to horizontal wellbores. The horizontal Cretaceous wells in the Demir Dagh Cretaceous reservoir will be placed at strategic positions in order to minimise water production and take advantage of regional water movement. Approximately 60% of the estimated reserves attributable to Demir Dagh consist of 23 API oil in the Shiranish, Kometan and Qamchuqa formations in the Cretaceous reservoir. All wells drilled through the Cretaceous have indicated matrix porosity. The oil in this reservoir is also very low in gas and hydrogen sulphide content and has good viscosity making it easy to process. The remaining 40% of the estimated reserves at Demir Dagh consist of light oil (36 API to 43 API) from the Mus and Adaiyah formations in the Lower Jurassic reservoir, with reservoir and liquid properties more similar to other discoveries in Kurdistan. In 2016, at Demir Dagh, we have recompleted the Demir Dagh-3 well and achieved first production from the Jurassic reservoir. ORYX PETROLEUM 2015 ANNUAL REPORT 11

12 KURDISTAN REGION OF IRAQ ZEY GAWRA FIELD We announced the Zey Gawra discovery in December 2013 after completion of a successful testing program of the Zey Gawra-1 exploration well that flowed light oil from the Shiranish, Kometan and Qamchuqa formations in the Cretaceous. The estimated reserves at Zey Gawra consist entirely of light oil (35 API) in the Shiranish, Kometan and Qamchuqa formations in the Upper Cretaceous. In February 2016 we entered into an agreement with Zeg Oil & Gas, a company based in the Kurdistan Region focused on the energy sector, whereby Zeg Oil & Gas purchased common shares of Oryx Petroleum in consideration for cash and whereby it was proposed that an affiliate of Zeg Oil & Gas would be appointed as lead contractor with regards to drilling and facilities work at the Zey Gawra field. The agreements envision the construction of new, dedicated production facilities at North Khurmala with a tie-back pipeline from the Zey Gawra field and the drilling of at least two wells. The facilities and drilling are expected in the second half of Gross (100%) production capacity from Zey Gawra is expected to be approximately 6,000 bbl/d by year end BANAN FIELD We announced the Banan discovery in early March 2014 after a successful testing program that saw oil flowed from Cretaceous and Jurassic formations. We spudded the Banan-2 appraisal well in June 2014 but had to suspend drilling in August 2014 due to regional security developments. Operations remain suspended on the portion of the Banan structure west of the Zab river. 3D seismic data was acquired over the portion of the Banan structure east of the Zab river in the second half of 2014 and that seismic data was processed and interpreted in The estimated reserves at Banan are comprised entirely of medium oil (23 API) in the Shiranish, Kometan and Qamchuqa formations in the Upper Cretaceous. Estimates are based on the test results of the Banan-1 discovery well, observations and data obtained during the drilling of both Banan-1 & 2, interpretation of 3D seismic data covering a portion of the structure, and drilling results, well performance, and interpretation of data relating to the analogous Demir Dagh field. Appraisal drilling and development activities at Banan are expected to resume in AIN AL SAFRA DISCOVERY We announced the Ain Al Safra discovery in October 2013 after completing a testing program at the Ain Al Safra-1 exploration well that flowed oil from the Jurassic. We spudded the Ain Al Safra-2 appraisal well in March 2014 to further evaluate the Jurassic formations and explore the potential in the Triassic that the first exploration well was not able to assess. We suspended drilling at the Ain Al Safra-2 appraisal well in August 2014 due to regional security developments just as the well had reached its targeted total measured depth of just over 3,700 metres. The estimated contingent oil resources at Ain Al Safra consist entirely of heavy oil (18 API) in the Alan, Mus and Adaiyah formations in the Middle Jurassic. Appraisal activity is expected to resume at Ain Al Safra in

13 FACILITIES The processing facilities for crude oil produced at Demir Dagh and Banan will be based primarily at Demir Dagh with satellite facilities at Banan tied into the central facilities at Demir Dagh. Most storage, truck loading facilities and the pipeline entry point for exports from both the Banan and Demir Dagh fields will be based at Demir Dagh as well. Pursuant to the strategic investment by Zeg Oil & Gas, an affiliate of Zeg Oil & Gas is expected to construct dedicated production facilities for Zey Gawra crude oil at North Khurmala to the south of the Zey Gawra field was an active year for facilities construction. In September we commissioned the Demir Dagh production facilities representing gross (100%) capacity of 40,000 barrels per day with two trains to process Cretaceous and Jurassic crude production streams. Truck Loading Station and storage capacity were also upgraded to 40,000 bbl/d and 25,000 bbl, respectively. The 1.2 km of 16 pipeline connecting the Demir Dagh processing facilities to the Kurdistan Region of Iraq (KRI) to Turkey export pipeline has been commissioned and first exports commenced March 14, Total exports through the KRI-Turkey pipeline were approximately 600,000 bbl/d in late 2015 and the pipeline is currently being upgraded to an expected capacity of approximately 700,000 bbl/d PLANS Oryx Petroleum s forecasted capital expenditures for the Hawler license area are $58 million for The 2016 capital expenditures program includes: Re-completion of the Demir Dagh-3 well in the Jurassic reservoir and related flowlines, which work has been completed; Lease payments related to the Demir Dagh Production facilities; Construction of facilities at North Khurmala to process expected production from the Zey Gawra field; and The drilling of at least two wells at the Zey Gawra field structure. We expect our capital expenditure program to enable us to achieve gross (100%) production and sales from the Hawler license area of 10,000 bbl/d by the end of IRAQ: WASIT PROVINCE Oryx Petroleum has a 48.5% interest in contracts with the government of the Wasit Province of Iraq (the WPG Contracts ), assuming that the Wasit Provincial Government exercises certain Back-In Rights. The WPG Contracts, among other things, give the contracting group the right to acquire seismic data, nominate up to 3,500 km 2 of Contract Areas, and conduct exploration, gas marketing, development, production and decommissioning operations relating to petroleum in nominated Contract Areas. The Wasit province is under-explored, with limited drilling to date and limited 2D seismic data coverage. There are two discoveries in the west of the province under development: the Ahdab field and the Dufriyah field. The Iraq National Oil Company (INOC) acquired and interpreted 2D seismic data in the 1990s, from which it identified a number of leads in the province. Oryx Petroleum reviewed a small selection of these seismic data lines. Fifteen leads were identified in the Wasit province, from which Oryx Petroleum has chosen to develop a sub-set of five leads into prospects. The five leads to be developed into prospects are estimated to have best estimate unrisked gross (100%) prospective oil resources of 1,343 MMbbl (risked: 33 MMbbl). Due to the overall political environment in Iraq we have been unable to conduct planned activities in the license area. ORYX PETROLEUM 2015 ANNUAL REPORT 13

14 WEST AFRICA SENEGAL / GUINEA BISSAU Oryx Petroleum has interests in five license areas in three areas in West Africa: Senegal/Guinea Bissau: AGC: 80% working interests in each of the AGC Shallow and AGC Central license areas (assuming the AGC exercises its back-in rights) in the AGC administrative area offshore Senegal and Guinea Bissau. In each license area, the L Enterpise Agence de Gestion et de Coopération entre le Senegal et la Guinea- Bissau (AGC) holds a 15% carried interest and an option to acquire an additional 5% non-carried interest upon the issuance of an exploitation permit; Congo (Brazzaville): a 20% working interest in the Haute Mer A license area and a 30% working interest in the Haute Mer B license area in each case offshore Congo (Brazzaville); and Nigeria: a 38.67% working interest in the OML 141 license area offshore Nigeria. The West Africa licences are estimated to contain 31 MMbbl of best estimate unrisked gross (100%) contingent oil resources (risked: 5 MMbbl) and 1.5 billion barrels of best estimate unrisked gross (100%) prospective oil resources (risked: 33 MMbbl). AGC: AGC SHALLOW Oryx Petroleum was awarded its interest in AGC Shallow in November The license area is 1,700 km 2 in size with water depths up to 100 metres. Oryx Petroleum is the operator of the license area. Participating interests in the license area are: Oryx Petroleum (85%) and AGC (15%). The PSC includes three exploration periods of three, two and two years. The commitment during the initial three year exploration phase is the acquisition of 750 km 2 of 3D seismic data. The initial exploration phase has been extended to March The first drilling in what is now the AGC began in 1967 with three exploration wells on Dome Flore. These wells all encountered heavy oil and partially delineated the shallow water salt diapir. An additional well found light oil in the Albian sands (Lower Cretaceous). After the initial shallow discoveries of heavy (Tertiary) and light (Cretaceous) oil on Dome Flore and Dome Géa, there has been limited activity in the license area. In 1996 an independent exploration company drilled a shallow well that had heavy oil shows. The previous operator of the license area acquired 385 km 2 of 3D seismic data in In 2012 we acquired 840 km 2 of 3D seismic data over an area including three structures identified by previous operators and reprocessed and studied such data in 2013 and Based on this data we have identified two play types in three structures for potential light oil exploration: seismic amplitude prospects in the Maastrichtian 14

15 and salt diapir related structural traps in the Albian. The light oil prospects identified in the AGC Shallow are estimated to contain a total of 192 MMbbl of best estimate unrisked gross (100%) prospective oil resources (risked: 4 MMbbl) PLANS The Corporation is currently seeking farmout partners and hopes to commence exploration drilling once a partner has been confirmed. AGC: AGC CENTRAL Oryx Petroleum was awarded its interest in the AGC Central license area in October The AGC Central license area is 3,150 km 2 in size and is in water depths of 15 to 2,000 metres. Oryx Petroleum is the operator of the license area. Participating interests in the license area are: Oryx Petroleum (85%) and AGC (15%). The PSC includes three exploration periods of three, two, and two years. The commitment during the initial three year exploration phase is the acquisition of 750 km 2 of 3D seismic data. Based on available technical data Oryx Petroleum has identified a carbonate edge play type with potential Cretaceous clastic/ carbonate structures. A similar play type has recently yielded discoveries offshore Senegal. In 2015 we completed the initial identification of leads and prospects in the license area using existing technical data. The light oil prospects identified in the AGC Central license area are estimated to contain a total of 367 MMbbl of best estimate unrisked gross (100%) prospective oil resources (risked: 11 MMbbl) PLANS The acquisition of 3D seismic data is not expected to commence before ORYX PETROLEUM 2015 ANNUAL REPORT 15

16 WEST AFRICA CONGO (BRAZZAVILLE) & NIGERIA CONGO (BRAZZAVILLE): HAUTE MER A Oryx Petroleum acquired its interest in the license area in November 2012 from CNOOC Ltd. CNOOC is the operator of the license area. Participating interests in the license area are: CNOOC Ltd (45%), Oryx Petroleum (20%), CPC (20%) and SNPC (15%). The PSC has an initial exploration period of four years with the option of two three year extensions. The PSC is currently in first extension period with a commitment well required before September The Haute Mer A license area is located 80 kilometres offshore Congo (Brazzaville) and covers an area of 366 km 2 with water depths ranging from 350 metres to 1,100 metres. Two exploration wells were drilled in 2013 targeting the Elephant and Horse prospects with the testing of the Elephant exploration well in early 2014 confirming a small discovery. There was limited activity on the license area in As at December 31, 2015 the Elephant discovery was estimated to contain best estimate unrisked gross (100%) development unclarified contingent oil resources of 31 MMbbl (risked: 5 MMbbl). The identified prospects and leads on the license area are estimated to contain best estimate unrisked gross (100%) prospective oil resources of 168 MMbbl (risked: 1 MMbbl) PLANS Additional exploration drilling is not expected until The Operator is seeking an extension of the first extension period under the PSC. CONGO (BRAZZAVILLE): HAUTE MER B In April 2012, Oryx Petroleum was awarded a 30% participating and working interest in the Haute Mer B license area. Final approval of the production sharing contract by the National Assembly and President of Congo (Brazzaville) was received during the second quarter of Participating interests in the license area are: Total (34.62%), Oryx Petroleum (30%), Chevron (20.38%) and SNPC (15%). Total is the operator of the Haute Mer B license area. The Haute Mer B license area is located 58 kilometres offshore Congo (Brazzaville) and covers an area of 402 km 2 with water depths ranging from 150 metres to 1,075 metres. A large amount of 2D and 3D seismic data has been acquired during successive acquisition campaigns covering the Haute Mer B license area, but no well has yet been drilled in the license area. The PSC has an initial exploration period with options of two three year extensions. Commitments in the initial period consist of seismic acquisition and the drilling of one well. 16

17 3D seismic data was acquired and processed by the Operator in 2014 and The principal targets in the Haute Mer B license area are Cretaceous carbonate reservoirs similar to those producing light oil in neighbouring fields. Four prospects in the Cretaceous (Loubossi, Ndouma, Kaki Main and Kaki East), and four leads in the Cretaceous have been identified in the Haute Mer B license area. The identified prospects and leads collectively are estimated to have total best estimate unrisked gross (100%) prospective oil resources of 650 MMbbl (risked: 7 MMbbl). The four prospects in the Cretaceous are estimated to have total best estimate unrisked gross (100%) prospective oil resources of 547 MMbbl (risked: 6 MMbbl) PLANS Exploration drilling is not expected until NIGERIA: OML141 Oryx Petroleum acquired a 38.67% participating and working interest in the OML 141 license area through a farm-in transaction in September OML 141 is a shallow water offshore exploration area operated by an indigenous company, Emerald Energy Resources Limited, with Oryx Petroleum acting as the technical partner. The Dila-1 exploration well was drilled in 2013 and discovered insufficient quantities of oil and was deemed unsuccessful. Since the drilling of the Dila-1 well the prospects in the portions of the license area covered by 3D seismic data have been remapped. Ten of the identified prospects are estimated to contain best estimate unrisked gross (100%) prospective oil resources of 173 MMbbl (risked: 10 MMbbl) PLANS Limited activity planned for OML141 in 2016 and the timing of future activity is uncertain. ORYX PETROLEUM 2015 ANNUAL REPORT 17

18 CORPORATE SOCIAL RESPONSIBILITY Social responsibility is at the forefront of Oryx Petroleum s thinking and our everyday business practices and is a pillar to our corporate philosophy of being Ambitious, Agile and Responsible. OUR PRINCIPLES We believe that acting in a responsible manner and working closely together with our host communities not only helps us meet our social commitments but also allows us to meet and exceed our business goals. Oryx Petroleum values the principles of accountability, honesty and integrity in all aspects of our business. We are committed to achieving the highest principles of corporate citizenship by safeguarding the environment, protecting the health and safety of our workforce and the communities in which we operate, creating and delivering on opportunities to enhance benefits to society, and respecting all human rights. Fulfilling our social responsibilities is integral to creating value for our shareholders, employees, partners, host governments and host communities. LOCAL COMMUNITIES We believe in proactively engaging with local communities, host governments and civil society to secure a social license to operate. We believe that early, proactive stakeholder consultation is beneficial to both the company and the community and makes for high-impact, sustainable outcomes. We believe in working in partnership with the local communities, host government and civil societies to develop long lasting positive impacts on social development, particularly in the areas of education and health. We carry out assessments of social, economic and environmental potential positive and negative impacts of operations on the communities before establishing any major investment, new projects and potential acquisitions. Once these impacts are identified, we identify mitigation measures for negative impacts and look for methods for enhancing the socio-economic opportunities that flow from positive impacts. We aim to manage social, environmental and security risks to avoid or minimise risks to stakeholders and to Oryx Petroleum s operations. We recognise and respect local cultures and develop effective strategies and policies to support the rights of the local communities. HUMAN RIGHTS We respect and support human rights in all areas that we conduct operations and adhere to the principles of the Universal Declaration of Human Rights. 18

19 2015 ACTIVITIES Our commitment to social responsibility is backed up with tangible actions. CSR activities in 2015 were initiated on many fronts: Community Outreach Program Our team of medical professionals continued to conduct visits to the communities in the Hawler license area, particularly in the vicinity of the areas in which we operate. This program, which consists of a doctor, a dentist and a paramedic targets communities with no or limited access to medical facilities and has treated over 1,600 patients from the local communities in Scholarship Program Oryx Petroleum continued with its scholarship program for eight disadvantaged local children in Erbil which will allow these children the chance to benefit from a higher level of education. Infrastructure Projects Oryx Petroleum undertook a number of village infrastructure projects during the year in the Hawler license area. We renovated and built new potable water wells. We also constructed a water storage and distribution system, whose purpose is not only to deliver water to individual homes, but also to assist the local population in continuing agriculture activities independently; thereby helping farmers in these communities increase revenue from agriculture. We built a community meeting hall for the benefit of the residents of the local population, where social and cultural events can be held. The company also provided infrastructure assistance to the elementary schools in the local communities, and provided other support to help the communities improve their standard of living and livelihood. Local Employment We proactively recruited local people throughout the year from communities within the Hawler license area and provided employment opportunities to these citizens. By year end, the ratio of the local national workforce to the total workforce was about 83% for Oryx Petroleum and its subcontractors. We have been identifying and using local service providers and suppliers, giving them an opportunity to build their capabilities and business in different areas. Land Compensation Oryx Petroleum paid $ 950,000 in compensation for land acquisition as per the Ministry of Natural Resources ( MNR ) requirements and guidelines. ORYX PETROLEUM 2015 ANNUAL REPORT 19

20 BOARD OF DIRECTORS Oryx Petroleum s Board of Directors* is comprised of accomplished individuals with a diversity of skills and experience relevant to our operations. Richard Alexander Richard Alexander has a breadth of experience in the energy sector. From January 2013 to March 2016, Mr Alexander was a director and President and CEO of Parallel Energy Trust. From May 2006 to June 2011, he held various positions at AltaGas Ltd., including the position of President. Mr Alexander was also the Vice President, Finance and Chief Financial Officer of Niko Resources Ltd. from September 2003 to April 2006 and the Vice President, Investor Relations and Communications of Husky Energy Inc. from July 2000 to August Mr Alexander is currently a director of Pan Orient Energy Corp. and Global Water Resources Corp. Mr Alexander is a citizen of Canada and received a B.B.M. from Ryerson Polytechnical Institute in Toronto, Canada. David Codd David Codd is a retired solicitor and has over 32 years experience in the international oil industry. He was Chief Legal Officer of Addax Petroleum from February 2005 until his retirement in After qualifying with a major U.K. law firm, Mr Codd worked from 1980 to 1984 for Burmah Oil Company Ltd. In 1984 he joined Britoil PLC as Senior Legal Adviser. Following two years with ConocoPhillips Company in the U.K., in 1990 he was appointed General Counsel to Texaco s integrated operations in the U.K. From 1999 to 2001, Mr Codd was Managing Director of Texaco in the U.K., being Texaco s senior corporate representative in the U.K. with business responsibility for Texaco s regional upstream business development. Following Texaco s merger with Chevron, Mr Codd was Chairman of a start-up company engaged in project development work in the Middle East until he joined Addax Petroleum in February Mr Codd is a citizen of the United Kingdom and has an MA (Jurisprudence) and a BCL, both from Oxford University. 20

21 *Including Jean Claude Gandur Michael Ebsary Evan Hazell Gerald Macey Peter Newman Michael Ebsary helped found Oryx Petroleum in September 2010, when he was appointed Chief Executive Officer, a position he held until March Prior to this he had worked as Chief Financial Officer of Addax Petroleum for eleven years after having held various positions in project finance and treasury with Elf and Occidental Petroleum, both in France and the United Kingdom. He began his working life in multinational banking institutions in Canada and the UK. He is a graduate of Queen s University in Canada. Evan Hazell is an engineer and has experience in both the financial and energy sectors. From 1998 to 2011 Mr Hazell acted as a managing director at several financial institutions including HSBC Global Investment Bank and RBC Capital Markets. Mr Hazell was granted the designation of P.Eng from the Association of Professional Engineers and Geoscientists of Alberta in Mr Hazell is currently a director of Gran Tierra Energy Inc. and Kaisen Energy Corp. Mr Hazell is a Canadian citizen and received a B.A. (Sc) from Queen s University in Kingston, Canada, a M. Eng from the University of Calgary, Canada and an M.B.A. from the University of Michigan in Ann Arbour, U.S. Gerald Macey has over 40 years of oil and gas industry experience. In particular, from 2002 to April 2004, he served as Executive Vice President and President, International New Ventures Exploration Division, of EnCana Corporation, and from 1999 to 2002, he served as Executive Vice President, Exploration, of PanCanadian Petroleum Corporation. He is also a director and Chairman of Pan Orient Energy Corp. He was previously a director of Addax Petroleum and Gran Tierra Energy Inc. Mr Macey is a Canadian citizen and holds a Bachelor of Science degree in geotechnical science from the University of Montreal (Loyola College) and a Master of Science degree in geology from Carleton University in Ottawa. Peter Newman was a partner at Deloitte LLP in London where he led the firm s oil and gas sector practice globally from 2002 until his retirement in Prior to that, Mr Newman joined the oil and gas group at Arthur Andersen LLP in London in 1984, became a partner in 1989 and led the firm s oil sector practice across Europe, the Middle East, India and Africa. Mr Newman also worked with Mobil Corporation from 1980 to 1984 as an auditor in several countries across Europe, Africa and the Far East. Mr Newman is nonexecutive director of AOG and Chairman of its audit committee. Mr Newman is a citizen of the United Kingdom, and studied geography at the University of Oxford before qualifying as a Chartered Accountant in England. ORYX PETROLEUM 2015 ANNUAL REPORT 21

22 LEADERSHIP Jean Claude Gandur Chairman Jean Claude Gandur founded The Addax and Oryx Group in 1987 with three associates from the energy industry, and focused on Africa. With an instinctive ability to recognise new opportunities, he rapidly diversified the group s activities from oil trading, to downstream storage and distribution, before launching into upstream exploration and production in 1994, and a pioneering bioenergy project in Following the sale of Addax Petroleum in 2009, he initiated the creation of Oryx Petroleum. He has a degree in law and political science from the University of Lausanne, Switzerland. Vance Querio Chief Executive Officer Vance Querio joined Oryx Petroleum in March 2012 and served as its West Africa Regional Manager until being appointed Chief Operating Officer in April 2015, and promoted to Chief Executive Officer in March Prior to joining Oryx Petroleum, Mr Querio worked with Addax Petroleum, where he was Chairman and Managing Director for its Nigeria Business Unit, leading Addax Petroleum s operations as the largest independent oil company in Nigeria, with peak production capacity of 120,000 bbl/d. He previously provided executive management and professional engineering services for several oil industry companies and worked with Chevron for 20 years, in various positions, on projects in the Middle East, West Africa, North and South America and South East Asia. Mr Querio is a member and director of the Swiss section of the Society of Petroleum Engineers and is also a member of the Association of International Petroleum Negotiators and American Association of Petroleum Geologists. He is a graduate in petroleum engineering from Texas A&M University. 22

23 Craig Kelly Chief Financial Officer Craig Kelly helped found Oryx Petroleum in September 2010, when he was appointed Chief Financial Officer. Before joining Oryx Petroleum, he was Head of Corporate Finance for Addax Petroleum for four years. Prior to this he was a director in the Energy Group of RBC Capital Markets where he developed an expertise in advisory work for clients involved in mergers, acquisitions and financing in the energy industry. A graduate of Queen s University in Canada, he is a member of the Alberta Institute of Chartered Accountants and earned his Chartered Accountant designation while with Ernst & Young in Hong Kong, Toronto and Vancouver, Canada. Paul Shillington Chief Legal Officer and Corporate Secretary Paul Shillington joined Oryx Petroleum as Chief Legal Officer and Corporate Secretary in May Prior to this, he had spent the previous six years as an independent legal consultant, based in Paris, France and Perth, Australia, serving clients in the energy industry. His clients included ExxonMobil and Addax Petroleum. From 1999 to 2004 he was Asia Pacific legal counsel for Technip, after having commenced his legal career as a commercial and litigation lawyer in Australia with Freehill Hollingdale & Page and Phillips Fox. He is a graduate of the University of Western Australia. ORYX PETROLEUM 2015 ANNUAL REPORT 23

24 RESERVES & RESOURCES ADVISORY Oryx Petroleum s reserves and resource estimates have been prepared and evaluated in accordance with National Instrument Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook as at December 31, Proved oil reserves are those reserves which are most certain to be recovered. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved (1P) oil reserves. Probable oil reserves are those additional reserves that are less certain to be recovered than proved oil reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable (2P) oil reserves. Possible oil reserves are those additional reserves that are less certain to be recovered than probable oil reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible (3P) oil reserves. Contingent oil resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that it will be commercially viable to produce any portion of the contingent oil resources. Prospective oil resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective oil resources have both a chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources will be discovered. The risked prospective oil resources reported in this document have been risked for chance of discovery and for chance for chance of development. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources. Use of the word gross to qualify a reference to reserves, resources or production means, in respect of such reserves, resources or production, the total reserves, resources or production prior to the deductions specified in the Production Sharing Contract, Risked Exploration Contract or fiscal regime applicable to each license area. Reference to 100% indicates that the applicable reserves, resources or production are volumes attributed to the discovery or prospect as a whole and do not represent Oryx Petroleum s working interest in such reserves, resources or production. Notes 1. The oil reserves data is based upon evaluations by NSAI, with effective date as at December 31, Volumes are based on commercially recoverable volumes within the life of the production sharing contract. 2. The contingent oil resources data is based upon evaluations by NSAI, and the classification of such resources as contingent oil resources by NSAI, with effective date as December 31, 2015, as indicated. The figures shown are NSAI s best estimate using deterministic methods. Once all contingencies have been successfully addressed, the probability that the quantities of contingent oil resources actually recovered will equal or exceed the estimated amounts is 50% for the best estimate. Contingent oil resources estimates are volumetric estimates prior to economic calculations. 3. Classification of a project s maturity as Development Pending indicates that there is a high chance of development (i.e., probability that a known accumulation will be commercially developed), where resolution of the final conditions for development is being actively pursued. 4. Classification of a project s maturity as Development Unclarified indicates that evaluation of the project is incomplete and there is ongoing activity to resolve any risks or uncertainties regarding commercial development of the project. An economic evaluation has not been performed by NSAI on the contingent oil resources classified as Development Unclarified. 5. The prospective oil resources data is based upon evaluations by NSAI, and the classification of such resources as prospective oil resources by NSAI, with effective date as at December 31, The figures shown are NSAI s best estimate, using a combination of deterministic and probabilistic methods and are dependent on a petroleum discovery being made. If a discovery is made and development is undertaken, the probability that the recoverable volumes will equal or exceed the unrisked estimated amount is 50% for the best estimate. Prospective oil resources estimates are volumetric estimates prior to economic calculations. 6. After-tax net present value of related future net revenue using forecast prices and costs assumed by NSAI and a 10% discount rate as at December 31, 2014 and December 31, 2015, as indicated. Gross proved plus probable oil reserves estimates and gross development pending best estimate (2C) contingent oil resource estimates used to calculate future net revenue are estimated based on economically recoverable volumes within the development/exploitation period specified in the production sharing contract, risk exploration contract or fiscal regime applicable to each license area. The estimated values disclosed do not represent fair market value. 7. Use of the word gross to qualify a reference to reserves or resources means, in respect of such reserves or resources, the total reserves or resources prior to the deductions specified in the production sharing contract, risk exploration contract or fiscal regime applicable to each license area. 8. Individual numbers provided may not add to total due to rounding. 9. These are risked contingent resources that have been risked for chance of development. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. The 2014 NSAI Report did not risk contingent resources for chance of development. 10. These are risked prospective resources that have been risked for both chance of discovery and chance of development. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development. The 2014 NSAI Report did not risk prospective resources for chance of development. 24

25 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015 ORYX PETROLEUM 2015 ANNUAL REPORT 25

26 Intentionally blank 26

27 The following Management s Discussion and Analysis ( MD&A ) should be read in conjunction with the consolidated financial statements of Oryx Petroleum Corporation Limited ( OPCL or, the Company ) and its subsidiaries for the year ended December 31, 2015, which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). The date of this MD&A is March 16, Unless otherwise noted, all amounts are in thousands of U.S. dollars. Selected terms and abbreviations used in this MD&A are listed and described in the Glossary and Abbreviations section. This MD&A contains non-ifrs measures. Please refer to the Non-IFRS Measures section for further information. Readers should refer to the Forward-Looking Information advisory on page 54. Additional information relating to OPCL, including OPCL s Annual Information Form dated March 26, 2015, is on SEDAR at The Company will file an Annual Information Form for the year ended December 31, 2015 on or before March 31, TABLE OF CONTENTS Company Overview 28 Off-Balance Sheet Arrangements 48 Operational Highlights and Outlook 28 Commitments and Contractual Obligations 48 Financial Highlights and Outlook 29 Summary of Quarterly Results 49 Summary of Reserves and Resources 31 Selected Annual Information 50 Business Environment 33 Financial and Other Instruments 50 Operations Review 34 Transactions with Related Parties 50 Capital Expenditures 37 New Accounting Pronouncements, Policies, and Critical Estimates 51 Financial Results 41 Financial Controls 54 Liquidity and Capital Resources 45 Forward-Looking Information 54 Economic Sensitivities 47 Reserves and Resources Advisory 55 Non-IFRS Measures 47 Glossary and Abbreviations 56 Outstanding Share Data 48 ORYX PETROLEUM 2015 ANNUAL REPORT 27

28 COMPANY OVERVIEW The Company is a public company incorporated in Canada under the Canada Business Corporations Act on December 31, 2012, and is the holding company for the Oryx Petroleum group of companies (together, the Group or Oryx Petroleum ). Oryx Petroleum is an upstream oil and gas entity with operating activities focused on the Middle East and West Africa. The Group holds interests in the following License Areas: License Area Location Participating Interest Working Interest ( WI ) Role Hawler Iraq Kurdistan Region 65% 65% Operator Wasit Iraq Wasit province 75% (1) 48.5% (2)(3) Operator AGC Shallow Senegal and Guinea Bissau 85% 80% (4) Operator AGC Central Senegal and Guinea Bissau 85% 80% (4) Operator OML 141 Nigeria 38.67% 38.67% Technical partner Haute Mer A Congo (Brazzaville) 20% 20% Non-operator Haute Mer B Congo (Brazzaville) 30% 30% Non-operator Notes: (1) The 75% Participating Interest includes an interest attributable to a non-controlling third party. The Participating Interest net of the non-controlling interest is 60.6%. (2) Assuming the WPG exercises back-in rights. (3) The 48.5% Working Interest is net of a third party non-controlling interest which owns 19.17% of an indirect OPCL subsidiary which indirectly holds an interest in the Wasit License Area. (4) Assuming the AGC exercises back-in rights. OPERATIONAL HIGHLIGHTS AND OUTLOOK 2015 Highlights Gross (100%) oil production of 922,000 bbl (working interest 599,000 bbl) for the year ended December 31, 2015 versus gross (100%) oil production of 553,000 bbl (working interest 346,000 bbl) for the year ended December 31, ,500 bbl/d (working interest 1,600 bbl/d) average oil production for the year ended December 31, Production curtailed beginning in April 2015 in order to manage higher than expected water production Five wells capable of production from the Demir Dagh Cretaceous reservoir as of December 31, 2015 with gross (100%) productive capacity estimated to total 2,000 to 4,000 bbl/d Completion and commissioning of the Demir Dagh production facilities in September 2015 representing gross (100%) capacity of 40,000 bbl/d with two trains to process Cretaceous and Jurassic crude production streams Gross (working interest) proved plus probable oil reserves of 238 million barrels as at December 31, 2015 versus 271 million barrels as at December 31, 2014 Identification of a new prospect and re-mapping of previously identified prospects in the Haute Mer B License Area based on 3D seismic data acquired and processed in 2014 and update and outlook Successful re-completion of the Demir Dagh-3 well in the Jurassic reservoir in January Flowed at 1,000 bbl/d for 7 days before being shut-in due to full storage; production successfully processed through Train 2 of the Demir Dagh production facilities - Samples indicated 40 API oil with 2-4% water cut - Expected gross (100%) productive capacity of 2,000 to 3,000 bbl/d from the Jurassic Limited production and oil sales in January and February 2016 due to temporary Turkey-Iraq border closures and restrictions on export by trucking Completion of tie-in and commissioning of pipeline infrastructure to export oil via the Kurdistan Export Pipeline to Turkey in early March 2016 Commencement of pipeline export sales on March 14, Current gross (100%) production of 1,700 bbl/d from three wells with expectation to increase to full productive capacity of 4,000 bbl/d to 7,000 bbl/d in the coming weeks - Expectation that most future production will be exported via pipeline - Revenues to be based on realisations of Brent crude less a $10-$15 per barrel discount for transportation and quality differentials versus comparable discount of $26 per barrel for previous trucking exports $30 million cash investment and proposed $20 million work commitment agreed with Zeg Oil and Gas Ltd. ( Zeg Oil ) announced on March 1, 2016 (the Zeg Oil Strategic Investment ). See the Liquidity and Capital Resources section 28

29 of this MD&A for details. Implementation of re-organisation announced March, 1, 2016 to result in substantial cost savings - Vance Querio, previously Chief Operating Officer, appointed to assume Michael Ebsary s responsibilities as Chief Executive Officer effective March 16, 2016 and will retain the responsibilities of the Chief Operating Officer. - Overall headcount to be reduced from 245 as of June 30, 2015 to 104 upon expiration of notice periods. Headcount in Geneva, Switzerland to be reduced from 72 to 15 - General & administrative and technical support expenditures to be approximately 50% lower in 2016 versus 2015 with further reductions expected in 2017 Assuming the successful completion of all planned activities, the Corporation expects gross (100%) oil production from the Hawler license area to exceed 10,000 bbl/d by the end of 2016 FINANCIAL HIGHLIGHTS AND OUTLOOK Financial performance The following table contains financial performance highlights for the three and twelve months ended December 31, 2015 and December 31, The results are indicative of the early stage nature of the Group s operations particularly in the Hawler License Area and are not necessarily expected to provide an indication of future financial performance which will be dependent on a number of variable factors including: crude oil pricing volatility, and near term fluctuations in production and sales volumes. ($ thousands unless otherwise stated) Three months ended December 31, 2015 December 31, 2014 December 31, 2015 Year ended December 31, 2014 Revenue 1,533 7,808 20,467 19,616 Cash used in operating activities (7,233) (17,928) (22,029) (28,530) Operating Cash Flow (1) (5,594) 1,106 (18,255) (3,220) Operating Cash Flow (1) per basic and diluted share ($/share) (0.05) 0.01 (0.15) (0.03) Loss for the period (91,537) (1,862) (423,616) (19,010) Loss per basic and diluted share ($/share) (0.75) (0.02) (3.43) (0.17) Average sales price ($/bbl) Field production costs (2) ($/bbl) Operating expense ($/bbl) Field Netback (1) ($/bbl) (39.54) (11.56) 9.96 Oryx Petroleum Netback (1) ($/ bbl) (51.43) (13.92) Capital expenditures (3) 9,742 65, ,720 (4) 325,906 Notes: (1) Operating Cash Flow, Field Netback, and Oryx Petroleum Netback are non-ifrs measures. See the Non-IFRS Measures section of this MD&A. (2) Field production costs represent Oryx Petroleum s Working Interest share of gross production costs and exclude partner share of production costs which are being carried by Oryx Petroleum. See the Operating expense section of this MD&A. (3) Excludes license acquisition costs. Refer to the Capital Expenditures section below. (4) Capital expenditures for the year ended December 31, 2015 include a $16.7 million non-cash addition to oil and gas assets related to the Group s recognition of a finance lease asset and associated liabilities. Revenue and cash receipts Gross revenue of $1.5 million was recorded for the three months ended December 31, Included in gross revenue is $1.3 million ($19.37/bbl) realised on the sale of 68,000 bbl (Working Interest) of oil and $0.2 million related to the recovery of costs carried on behalf of partners. Oryx Petroleum recorded gross revenue of $20.5 million and has received full cash settlement for all oil sales recorded 5during the year ended December 31, Included in gross revenue is $17.2 million ($29.20/bbl) realised on the sale of 588,200 bbl (Working Interest) of oil and $3.3 million related to the recovery of costs carried on behalf of partners in the Hawler License Area. ORYX PETROLEUM 2015 ANNUAL REPORT 29

30 Loss for the period Loss for the three months ended December 31, 2015 was $91.5 million compared to $1.9 million for the three month period ended December 31, The change in loss for the period is primarily attributable to i) impairment expense of $86.6 million recorded on the Hawler and Haute Mer A License Area during the fourth quarter of 2015, ii) a negative Oryx Petroleum Netback during the fourth quarter of 2015 compared to a positive Oryx Petroleum Netback in the same period in 2014, and iii) higher interest expense primarily related to interest on the March 2015 Financing which is described in the Liquidity and Capital Resources section of this MD&A during the three months ended December 31, 2015 compared to These negative factors were partially offset by a $6.7 million gain recorded on the revaluation of warrants issued under the Loan Facility in the fourth quarter of 2015 (refer to the Financial Results section of this MD&A for further information), and higher fourth quarter 2015 income related to the revision in the fair value of the contingent consideration arising from the acquisition of OP Hawler Kurdistan Limited in Loss for the year ended December 31, 2015 of $423.6 million increased by $404.6 million compared to the year ended December 31, The increase in loss for the year is primarily attributable to i) impairment charges of $397.5 million recorded on the Hawler, Wasit, OML 141 and Haute Mer A License Areas during 2015, ii) negative Oryx Petroleum Netback recorded during 2015 compared to positive Oryx Petroleum Netback recorded during the same period in 2014, iii) an increased depletion charge during 2015, and iv) finance expenses primarily related to interest on the March 2015 Financing. These negative contributing factors were partially offset by income related to the revaluation of warrants issued under the Loan Facility, the revision in the fair value of the contingent consideration arising from the acquisition of OP Hawler Kurdistan Limited, and decreased prelicense expenses recorded during the year ended December 31, 2015 compared to the same period in Capital expenditures During the year ended December 31, 2015, the Group invested $108.7 million in capital activities. Investments were primarily related to development activity on the Hawler License Area in the amount of $105.5 million, primarily comprised of $65.6 million in facilities costs and $24.4 million in drilling costs. Facilities costs at the Hawler License Area include a $16.7 million noncash addition to oil and gas assets related to the Group s recognition of a finance lease asset together with associated liabilities. Additional expenditures of $4.7 million were incurred on the AGC Shallow and AGC Central License Areas. The remaining expenditures relate to the OML 141, Haute Mer A, Haute Mer B and Wasit License Areas. A total of $9.7 million in capital expenditure were incurred during the three months ended December 31, 2015, primarily related to development activity in the Hawler License Area with a total of $12.5 million invested. Additional expenditures of $1.6 million were incurred on the AGC Shallow, AGC Central and Haute Mer A License Areas, offset by a $4.7 million credit related to a decrease in prior cost estimates related to drilling activities in the OML 141 License Area. Financial position The following table contains highlights of the Group s financial position as at the dates indicated below. ($ thousands) December 31, 2015 December 31, 2014 Total cash and cash equivalents 54, ,870 Working Capital 29,422 50,138 Total assets 779,661 1,138,216 Total borrowings 97,120 - Total long-term liabilities 184,900 80,646 The cash and cash equivalents balance of $109.9 million as at December 31, 2014 decreased to $54.2 million at December 31, This decrease was due to $133.0 million being invested in exploration and development oil and gas assets and $22.0 million being used in operating activities, partially offset by $99.4 million net cash proceeds being received through the March 2015 Financing which is described in the Liquidity and Capital Resources section of this MD&A. Working capital decreased to $29.4 million at December 31, 2015 from $50.1 million as at December 31, The decrease was mainly due to the decrease in cash of $55.6 million, an $8.7 million decrease in trade and other receivables and other current assets, and a $5.8 million increase in the current portion of the finance lease obligation. These factors were partially offset by a $45.8 million decrease in trade and other payables, and a $2.3 million increase in inventories. During 2015, the Group received $100 million in cash pursuant to the March 2015 Financing which is described in the Liquidity and Capital Resources section of this MD&A. Adjustments to the borrowings balance at December 31, 2015 relate to deferred financing and interest charges which are described in the Company s consolidated financial statements for the year ended December 31, Contingent consideration payable to the vendor of the Hawler license area upon declaration of a second commercial discovery was restructured during the fourth quarter of 2015 such that any amounts payable will be paid in annual instalments over four years with first payment of $14 million expected in

31 2016 forecast capital expenditures The Group s re-forecasted cash capital expenditures for 2016 are $62 million, reduced from the previous budget of $90 million. The reduction reflects revised plans at the Zey Gawra field per the strategic transaction with Zeg Oil, the deferment of drilling activity at the Demir Dagh field and reduced staffing levels. The following table summarises the Group s 2016 forecasted cash capital expenditure program: Location License / Field / Activity 2016 Budget $ millions 2016 Forecast $ millions Kurdistan Region Hawler Demir Dagh Zey Gawra Total Hawler West Africa Various 7 5 Total capex Note: (1) The above table excludes license acquisition costs. Totals may not add due to rounding. At the Demir Dagh field forecasted drilling activity expenditures consist primarily of costs related to the successful recompletion of the Demir Dagh-3 well in the Jurassic reservoir. Planned re-completions and new wells envisioned when the 2016 budget was announced have been deferred. Demir Dagh forecasted facilities expenditures are comprised primarily of monthly capital lease payments for the Demir Dagh production facilities, and minor infrastructure works. Zey Gawra forecasted drilling activities consist of sidetracking the ZEG-1 discovery well and a re-entry and re-completion of the ZAB-1 discovery well drilled in the 1990s. Both wells are expected to be completed as producers. Forecasted Zey Gawra facilities expenditures are for the construction of dedicated production facilities to the south of the Zey Gawra field with gross capacity of 20,000 bbl/d and related infrastructure. Activities in West Africa in 2016 will be limited to license maintenance, data analysis, and preparation for future data acquisition and drilling activity. Financing and liquidity The Group expects cash on hand at December 31, 2015, the cash proceeds and funding related to the Zeg Oil Strategic Investment, and cash receipts from net revenues in 2016 assuming a $35 per barrel average Brent crude price and export sales exclusively through the pipeline, to fund its forecasted cash expenditures into the second quarter of The Group retains the flexibility to adjust its expenditure plans in response to positive or negative changes in the operating environment. Refer to the Liquidity and Capital Resources and Critical estimates section of this MD&A for additional discussion regarding liquidity. SUMMARY OF RESERVES AND RESOURCES The following is a summary of the Company s proved plus probable oil reserves, and contingent and prospective oil resources. The present value of future net revenue related to the provided plus probable oil reserves, and the present value of net contingent cash flow related to risked contingent oil resources categorised as development pending is also presented. The information is derived from a report dated February 17, 2016, prepared with an effective date as at December 31, 2015 by Netherland, Sewell & Associates, Inc. ( NSAI ), an independent oil and gas consulting firm. Where applicable, comparative information derived from NSAI s report as at December 31, 2014 is provided. The reserves and resources information set out in this MD&A should be read in conjunction with the advisories in the Forward-Looking Information and Reserves and Resources Advisory sections below. ORYX PETROLEUM 2015 ANNUAL REPORT 31

32 Oil reserves (1) Proved plus Probable Gross (Working Interest) Oil December 31, 2015 December 31, 2014 Reserves Future Net Revenue (2) Reserves Future Net Revenue (2) License Area Location (MMbbl) ($ million) (MMbbl) ($ million) Hawler Iraq Kurdistan Region 238 1, ,815 Total oil reserves 238 1, ,815 Notes: (1) The oil reserves data is based on evaluations by NSAI, with effective dates as at December 31, 2015 and December 31, 2014 as indicated. Volumes are based on commercially recoverable volumes within the life of the production sharing contract. (2) After-tax net present value of related future net revenue using forecast prices and costs assumed by NSAI and a 10% discount rate. Gross proved plus probable oil reserve estimates used to calculate future net revenue are estimated based on economically recoverable volumes within the development/production period specified in the production sharing contract applicable to the License Area. The estimated values disclosed do not represent fair market value. The Group s Gross (Working Interest) proved plus probable oil reserves decreased by 12% from 271 million barrels ( MMbbl ) as at December 31, 2014 to 238 MMbbl as at December 31, The decrease is primarily attributable to revisions to the Demir Dagh and Banan Cretaceous volumes and reflects the impact of revised development plans that incorporate a phased investment approach, constraints on peak production rates, use of horizontal wells, as well as lower capital costs and lower forecast Brent crude oil prices. The after-tax net present value utilising a 10% discount rate of the future net revenues attributable to the Group s Gross (Working Interest) proved plus probable oil reserves decreased to $1,217 million from $1,815 million as at December 31, The decrease reflects the impact of adjusted volumes and lower forecasted Brent crude oil prices, partially offset by the significantly lower development costs that are associated with revised development plans for the Demir Dagh and Banan Cretaceous reservoirs. Contingent oil resources (1) Unrisked Contingent Resources Best Estimate Gross (Working Interest) Oil December 31, 2015 Risked Contingent Resources Risked Net Contingent Cash Flow (2) License Area Location (MMbbl) (MMbbl) ($ million) Contingent Oil Resources Development Pending (3) Hawler Iraq Kurdistan Region Total Development pending Best Estimate Gross (1) (Working Interest) Oil December 31, 2015 Unrisked Contingent Resources Risked Contingent Resources License Area Location (MMbbl) (MMbbl) Contingent Oil Resources Development Undefined (4) Hawler Iraq Kurdistan Region Haute Mer A Congo (Brazzaville) 6 1 Total Development undefined Notes: (1) The contingent oil resource data is based on evaluations by NSAI, and the classification of such resources as contingent oil resources by NSAI, with effective date as at December 31, The figures shown are NSAI s best estimate using deterministic methods. Once all contingencies have been successfully addressed, the probability that the quantities of contingent oil resources actually recovered will equal or exceed the estimated amounts is 50% for the best estimate. Contingent oil resources estimates are volumetric estimates prior to economic calculations. (2) After-tax net present value of related net contingent cash flow using forecast prices and costs assumed by NSAI and a 10% discount rate. Gross contingent oil resource estimates used to calculate future net contingent cash flow are estimated based on economically recoverable volumes within the development/production period specified in the production sharing contract, 32

33 risk exploration contract or fiscal regime applicable to each License Area. The estimated values disclosed do not represent fair market value. (3) Classification of a project s maturity as Development Pending indicates that there is a high chance of development (i.e., probability that a known accumulation will be commercially developed), where resolution of the final conditions for development is being actively pursued. (4) Classification of a project s maturity as Development Undefined indicates that evaluation of the project is incomplete and there is ongoing activity to resolve any risks or uncertainties regarding commercial development of the project. An economic evaluation has not been performed by NSAI on the contingent oil resources classified as Development Undefined. Prospective oil resources (1) Best Estimate Gross (Working Interest) Oil December 31, 2015 Unrisked Risked (2) License Area Location (MMbbl) (MMbbl) Hawler Iraq Kurdistan Region Wasit Iraq Wasit Province Various West Africa Total oil resources (3) 1, Notes: (1) The prospective oil resource data is based on evaluations by NSAI, and the classification of such resources as prospective oil resources by NSAI, with effective date as at December 31, The figures shown are NSAI s best estimate using a combination of deterministic and probabilistic methods and are dependent on a petroleum discovery being made. If discovery is made and development is undertaken, the probability that the recoverable volumes will equal or exceed the risked estimates is 50% for the best estimate. Prospective oil resources estimates are volumetric estimates prior to economic calculations. (2) These are risked prospective resources that have been risked for both chance of discovery and chance of development. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development. (3) Individual numbers provided may not add to total due to rounding. BUSINESS ENVIRONMENT Uncertainty related to global, social, political, and economic conditions and the resulting changes in global oil supply chains and infrastructure investment have had a negative impact on world commodity markets. In particular, the price of crude oil declined substantially throughout 2015 and has remained depressed into The above referenced developments and uncertainty impact the availability and cost of capital resources. Furthermore, future oil prices, which directly impact the Group s expected cash inflows, are difficult to forecast. The Group s ability to fund the forecasted capital investments discussed in the Financial Highlights and Outlook section of this MD&A is consequently subject to significant uncertainty. See the Liquidity and Capital Resources section of the MD&A for further discussion. The political instability in the regions in which Oryx Petroleum operates and other risk factors which are disclosed in OPCL s Annual Information Form could have an adverse effect on Oryx Petroleum s performance. During 2014 and throughout 2015, militants have periodically escalated armed conflict with government forces in various regions of Iraq. The Group has implemented precautionary measures to protect employees and operations from the impacts of the conflict. These precautionary measures have permitted the Group to continue appraisal and development activities at the Demir Dagh field after a brief interruption during the third quarter of Sales during 2014 and the first quarter of 2015 were intermittently disrupted as demand in the local market was impacted by limited pipeline export capacity and fluctuating oil production from other sources of supply in the local market. With the exception of interruptions due to the closure of the international land border crossing to Turkey for part of December 2015, the Group s ability to sell oil produced from the Hawler Licence Area was substantially uninterrupted during the year ended December 31, Complexities in local, regional, and international market access dynamics discussed above remain and may impact the Group s future ability to sell its produced oil. Activities at the Banan, Zey Gawra and Ain Al Safra fields during 2014 and 2015 have been limited due to capital allocation priorities and also to security risks. There is an ongoing risk that the regional security situation could have a material adverse effect on the operating and financial performance of the Group in the short and medium term particularly. The Group s future revenues and cash flows from operating activities are dependent on the Group s ability to produce and deliver crude oil. A number of factors impact well production rates including i) natural declines, ii) fluid composition, and iii) well and production equipment performance. Consequently, production rates are subject to fluctuation over time and are difficult to predict. Commencing in April 2015, management observed variations in the productive performance of certain Demir Dagh cretaceous wells. As a result of unexpected variations in observed production rates and management s ongoing evaluation of the causes of the observed well performance, the Group has revised field development plans for the Demir Dagh field in the Hawler License Area. Furthermore, the Group s 2016 forecast ORYX PETROLEUM 2015 ANNUAL REPORT 33

34 capital plan includes drilling and facilities activity at the Zey Garwa field and the Group expects to realise revenues from this field during the fourth quarter of Positive and negative fluctuations in production rates will have a direct corresponding impact to the Group s future revenues and cash flows from operating activities. On March 14, 2016, the Group initiated deliveries of its oil production to international markets through export pipelines. Oryx Petroleum is not aware of official allocations of export pipeline capacity and is uncertain of the extent to which its production will be sold through the export pipeline rather than to regional and local third party marketers. The market on which oil produced from the Hawler Licence Area is sold affects the price realised and, consequently, Oryx Petroleum s cash flows. All of the crude oil produced during 2014 and 2015 was collected by truck from the Hawler Truck Loading Station and sold to local and regional marketers in the Kurdistan Region of Iraq. The timing and execution of the Group s capital expenditure program may also be affected by the availability of services from third party oil field contractors and the Group s ability to obtain, sustain or renew necessary government licenses and permits on a timely basis to conduct exploration and development activities. With the exception of the items discussed above, management has not identified trends or events that are expected to have a material adverse effect on the financial performance of Oryx Petroleum. OPERATIONS REVIEW Kurdistan Region of Iraq The following table summarises production and sales data for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014 and for the year ended December 31, 2015 and December 31, 2014: Three months ended Year ended December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Gross Production (bbl) 115, , , , ,000 Gross Production per day (bbl/d) 1,200 2,800 2,800 2,500 2,700 Normalised Gross Production per day (bbl/d) (1)(2) 1,500 2,900 4,100 3,000 3,900 WI Production (bbl) 75, , , , ,000 WI Production per day (bbl/d) 800 1,800 1,800 1,600 1,800 Normalised WI Production per day (bbl/d) (1)(2) 900 1,900 2,700 2,000 2,500 WI sales (bbl) 68, , , , ,000 WI sales per day (bbl/d) 700 1,800 1,300 1,600 1,500 Notes: (1) Normalised production has been calculated by only including days of actual production. Per day figures have been calculated using 79, 89, and 62 days for the three month periods ended December 31, 2015, September 30, 2015, and December 31, 2014, respectively, and 306 days for the year ended December 31, (2) Production at the Hawler License Area began on June 19, Per day figures for the year ended December 31, 2014 have been calculated on the basis of 135 days of actual production. Production and sales Gross (100%) oil production for the three months ended December 31, 2015 was 115,000 bbl representing an average rate of 1,200 bbl/d. The Group s Working Interest share of oil production during this period was 75,000 bbl representing an average rate of 800 bbl/d. The decrease in oil production rates from the Hawler License Area during the fourth quarter of 2015 compared to the three months ended December 31, 2014 was primarily due to decreased fluid and oil production rates which were required when the presence of produced water was initially observed during the second quarter of Gross (100%) oil production for the year ended December 31, 2015 was 922,000 bbl representing an average rate of 2,500 bbl/d. The Group s Working Interest share of oil production during this period was 599,000 bbl representing an average rate of 1,600 bbl/d. During the period preceding the commencement of sales through a regional sales contract in mid-march 2015, production was periodically interrupted as demand in the local market was impacted by limited pipeline export capacity and fluctuating oil production from other sources of supply in the local market. Production was suspended for a total of 40 days during the twelve months ended December 31, Regional sales were also suspended on December 19, 2015 through to the end of the year due to the closure of the international land border crossing between the Kurdistan Region of Iraq and Turkey. Normalised (100%) Gross production for the year ended December 31, 2015 was 3,000 bbl/d (Working Interest - 2,000 bbl/d). The Group realised revenue on the sale of 68,000 bbl and 588,200 bbl (Working Interest) of oil during the three and twelve months ended December 31, 2015, 34

35 respectively. Sales volumes are determined by the timing of deliveries to customers and are not necessarily correlated with production volumes during the same period. Crude oil sale prices During the three months ended March 31, 2015, the Group sold crude oil from the Hawler License Area to Local Third Party Marketers and, beginning in March 2015 and for the balance of 2015, to a Regional Third Party Marketer. During 2014, all oil was sold to Local Third Party Marketers. Sales to Local Third Party Marketers were concluded at prices negotiated with the Local Third Party Marketers and confirmed by the KRG through ministerial orders. Sales to the Regional Third Party Marketer were concluded at prices negotiated with the Regional Third Party Marketer and the KRG s Ministry of Natural Resources. The realised sales prices on sales to the Regional Third Party Marketer are referenced to the average Brent crude oil prices during specified periods occurring during contractually defined lifting cycles, discounted for crude oil quality and transport, and adjusted for actual API gravity and sulphur content outside of agreed quality specification ranges. Beginning in March 2016, the Group began exporting oil through the Kurdistan Regional Government s international export pipeline. The realised sales prices on export sales through the Kurdistan Regional Government s international export pipeline are expected to be referenced to monthly average Brent crude oil prices, discounted for crude oil quality and transport, and adjusted for actual API gravity and sulphur content outside of agreed quality specification ranges. The following table indicates average Brent crude oil prices and the Group s realised crude oil sales prices for each period indicated: Mar 31 Jun 30 Sept 30 Dec 31 Mar 31 Jun 30 Sept 30 Dec 31 Brent average price ($/bbl) Realised sales price ($/bbl) Netbacks The following table summarises the Field Netback and Oryx Petroleum Netback for the three months ended December 31, 2015 and December 31, 2014: Three months ended December 31, 2015 Three months ended December 31, 2014 ($ thousands) ($/bbl) ($ thousands) ($/bbl) Oil sales 1, , Royalties (644) (9.47) (3,196) (26.20) Field production costs (1) (3,332) (49.00) (1,445) (11.84) Current taxes (30) (0.44) (148) (1.21) Field Netback (2) (2,689) (39.54) 1, Recovery of Carried Costs , Partner share of production costs (1,024) (15.06) (444) (3.64) Oryx Petroleum Netback (2) (3,497) (51.43) 2, Notes: (1) Field production costs represent Oryx Petroleum s Working Interest share of gross production costs and exclude partner share of production costs which are being carried by Oryx Petroleum. (2) Field Netback and Oryx Petroleum Netback are non-ifrs measures. See the Non-IFRS Measures section of this MD&A. Negative Field Netback for the three months ended December 31, 2015 of $2.7 million ($39.54/bbl) incorporates field production costs of $3.3 million ($49.00/bbl). The Field Netback per barrel has decreased from a positive Field Netback of $1.8 million ($14.36/bbl) for the three months ended December 31, This variance is primarily attributable to a 64% decrease in realised sales price during the fourth quarter of 2015 in comparison with the fourth quarter of Field Netback for the three months ended December 31, 2015 was also lower due to an increase in field production costs incurred during the three months ended December 31, 2015 versus See the Operating expense section of this MD&A for further discussion regarding field production costs. ORYX PETROLEUM 2015 ANNUAL REPORT 35

36 The following table summarises the Field Netback and Oryx Petroleum Netback for the year ended December 31, 2015 and December 31, 2014: Year ended December 31, 2015 Year ended December 31, 2014 ($ thousands) ($/bbl) ($ thousands) ($/bbl) Oil sales 17, , Royalties (8,397) (14.28) (8,031) (27.22) Field production costs (1) (15,192) (25.83) (5,086) (17.24) Current taxes (390) (0.66) (373) (1.26) Field Netback (2) (6,802) (11.56) 2, Recovery of Carried Costs 3, , Partner share of production costs (4,673) (7.94) (1,565) (5.31) Oryx Petroleum Netback (2) (8,185) (13.92) 4, Notes: (1) Field production costs represent Oryx Petroleum s Working Interest share of gross production costs and exclude partner share of production costs which are being carried by Oryx Petroleum. (2) Field Netback and Oryx Petroleum Netback are non-ifrs measures. See the Non-IFRS Measures section of this MD&A. Negative Field Netback for the year ended December 31, 2015 of $6.8 million ($11.56/ bbl) incorporates field production costs of $15.2 million ($25.83/bbl). Field Netback per barrel has decreased to negative $11.56/bbl for the year ended December 31, 2015 from a positive Field Netback of $9.96/bbl during The variance is primarily attributable to a 48% decrease in realised sales price during the year ended December 31, 2015 compared to the year ended December 31, The significant increase in field production costs incurred during the year ended December 31, 2015 in comparison to the comparable period in 2014 is primarily attributable to the fact that the production and sales during 2014 represent sales for a significantly shorter period (from June 19 to December 31, 2014). Field production costs on a per barrel basis increased for the year ended December 31, 2015 compared to the year ended December 31, See the Operating expense section of this MD&A for further discussion regarding field production costs. Demir Dagh production facilities In September 2015, the Group successfully commissioned Demir Dagh production facilities which are currently in use. These facilities have a processing capacity of 40,000 bbl/d with two trains to process Cretaceous and Jurassic crude production streams. Upon commissioning of the Demir Dagh production facilities, the Group terminated the lease for and decommissioned the 20,000 bbl/d temporary production facility. The Demir Dagh production facilities have brought additional water and sulphur handling capacity which is expected to support maximum efficient oil production rates for existing and future wells. West Africa Activities in West Africa in 2016 will be limited to license maintenance, data analysis, and preparation for future data acquisition and drilling activity. 36

37 CAPITAL EXPENDITURES The following table summarises the capital expenditures incurred by activity during the three and twelve months ended December 31, 2015 and December 31, 2014: Three months ended Year ended ($ thousands) December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Middle East Exploration drilling 21 3, ,240 Appraisal and development drilling 5,323 25,255 24, ,272 Facilities 3,269 22,817 65,570 (1) 88,140 Seismic acquisition (358) 3,182 1,529 16,425 Studies, and support 4,245 5,557 14,382 24,790 Sub-Total Middle East 12,500 60, , ,867 West Africa Exploration drilling (4,689) (2) (63) (3,795) (2) 16,089 Seismic acquisition (55) ,277 Studies, license, and support 1,985 4,594 6,083 12,918 Sub-Total West Africa (2,759) 4,831 3,131 33,284 Corporate (321) (3) 1,755 Total capital expenditures 9,742 65, , ,906 Notes: (1) Capital expenditures for the year ended December 31, 2015 includes a $16.7 million non-cash addition to oil and gas assets related to the Group s recognition of a finance lease asset and associated liabilities. (2) Credits relate to a reduction in estimates of expenditures incurred in prior periods. (3) Credits relate to actual expenditures incurred at values below those estimated in prior periods. (4) The above table excludes license acquisition costs. The following table summarises the capital expenditures incurred by License Area during the three and twelve months ended December 31, 2015 compared to the same periods in 2014: Three months ended Year ended ($ thousands) December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Middle East Hawler 12,500 60, , ,885 Wasit Sub-Total Middle East 12,500 60, , ,867 West Africa AGC Shallow 483 1,533 2,485 6,433 AGC Central , OML 141 (4,690) (1) 520 (4,043) (1) 2,644 Haute Mer A ,294 16,636 Haute Mer B 362 2,151 1,224 7,377 Sub-Total West Africa (2,759) 4,831 3,131 33,284 Corporate (321) (2) 1,755 Total capital expenditures 9,742 65, , ,906 ORYX PETROLEUM 2015 ANNUAL REPORT 37

38 Notes: (1) Credits relate to a reduction in estimates of expenditures incurred in prior periods. (2) Credits relate to actual expenditures incurred at values below those estimated in prior periods. (3) The above table excludes license acquisition costs. Middle East During the year ended December 31, 2015, the Group invested $65.6 million, including a $16.7 million non-cash addition to finance lease assets, in Hawler License Area production facilities and related infrastructure. The facilities were commissioned during the third quarter of Hawler License Area drilling costs for the year amounted to $24.4 million. Drilling expenditures for the year were primarily related to the Demir Dagh-10 and Demir Dagh-7 wells and the re-completion activities on the Demir Dagh-3 ( DD-3 ) well. The remainder of the capital investments in the Middle East for the year ended December 31, 2015 relate to the Hawler License Area 3D seismic program, to studies, and support costs directly attributable to capital projects. Investments of $3.3 million in Hawler License Area production facilities and drilling expenditures of $5.3 million relating to the re-completion of the DD-3 well comprise the majority of the $12.5 million in capital expenditures relating to the Hawler License Area in the fourth quarter of The remainder of the capital investments in the Middle East for the fourth quarter of 2015 relate to studies and support costs directly attributable to capital projects. West Africa Capital expenditures for West Africa for the three and twelve months ended December 31, 2015 include a $4.7 million recovery of drilling expenditures relating to the OML 141 License Area. This credit relates to downward revisions in estimates of expenditures incurred in prior periods. Exploration drilling costs in West Africa for the year ended December 31, 2015 also include $4.7 million relating primarily to the investment in site preparation and well planning activities for the AGC Shallow and AGC Central License Areas and support costs directly attributable to capital projects. Cost Pools Cost Pools for each License Area, which are available for recovery through future oil sales from such License Area, as at December 31, 2015, are detailed in the table below: Oryx Petroleum share of recoverable costs License Area Location Gross Cost Pool Participating Interest Cost Pool Carried Costs Recovered through cost oil Total Cost Pool available (1) ($ million) ($ million) ($ million) ($ million) ($ million) Hawler Iraq Kurdistan Region (2) (18.6) Wasit Iraq Wasit province OML 141 Nigeria AGC Shallow Senegal and Guinea Bissau AGC Central Senegal and Guinea Bissau Haute Mer A Congo (Brazzaville) Haute Mer B Congo (Brazzaville) , (18.6) Note: (1) Cost Pool balances are subject to audit by relevant government entities. (2) Carried costs include $84.8 million in expenditures related to a commitment to carry $300 million on behalf of a partner for the Hawler License Area development. 38