1. PD/st0601_4.PPT "Progressing Partnerships Operators-DTI" Why are we concerned? Short term activity is improving but basin is mature, finds are smaller exploration levels low and managers risk adverse many prospects and discoveries not material to all licensees little incentive to turnover inactive licence holdings barriers to new players commercial behaviours learnt in different setting

2. PD/st0601_4.PPT "Progressing Partnerships Operators-DTI" These conditions allow: deep rooted, persistent, misalignments within partnerships and between partnerships low expectations of what can be achieved protracted negotiation and completion of transactions and ample opportunity for collapse loss of momentum quality second and third tier operators avoiding the UKCS

3. PD/st0601_4.PPT "Progressing Partnerships Operators-DTI" Evolution If left the UKCS will evolve and better practices will develop but without pressure this evolution will be slow and wasteful economic oil will be left in the ground Low oil price was driving this evolution faster, see it as the job of this workgroup to keep the pressure up.

4. PD/st0601_4.PPT "Progressing Partnerships Operators-DTI" The DTI wants to see licences in the hands of those best able to maximise the wealth creation. Specifically our targets for the workgroup are: Eliminate pre-emption Binding code of practice for negotiation and settlement Licences relinquished after 4 years without drilling/development approval.

5. PD/st0601_4.PPT "Progressing Partnerships Operators-DTI" Accelerating evolution DTI has a number of ways to help industry towards these targets: reward good performance by the use of discretionary licence powers reward good performance by the award of new licences reward good performance by extending licence terms of producing fields use mc powers to require exploration drilling and development activity only where licensees have failed to perform revise licence regime