The UK North Sea is a key producing area. our assets include a 43.2% operated interest in the Buzzard field and facilities, a 41.9% operated interest in the Scott field and production platform, a 71.8% operated interest in the Telford field, interests in several satellite discoveries and more than 750,000 net undeveloped exploration acres. We are a significant regional player with concentrated assets, infrastructure and exploration potential for future growth. our North Sea properties have high-margin reserves and production, diversify our global portfolio by adding strong assets in a stable jurisdiction, and complement our other longer cycle-time projects.

Strategy
Our UK strategy is to grow and sustain our existing North Sea production and identify new production hubs with exploration and exploitation opportunities near existing infrastructure. We have a number of exploitation opportunities in our existing fields and smaller undeveloped discoveries near infrastructure. most of our unexplored acreage is near Scott/Telford, Buzzard or Ettrick. As a result, new discoveries can be tied-in quickly.

Ettrick
We are progressing development of the Ettrick field and first oil is expected this summer. The FPSO is currently being commissioned and expected to be on location shortly. Development of the field includes five subsea production wells and three water injectors tied back to a leased FPSO; however, we are developing Ettrick as a new production hub and we expect to tie in new discoveries. We are reviewing our recent exploration success at Blackbird as a potential tie-back to the Ettrick FPSO. The FPSO is designed to handle 30,000 bbls/d of oil, 35 mmcf/d of gas and to re-inject 55,000 bbls/d of water. We operate Ettrick with an 80% working interest.

Fiscal Terms
In the UK, new discoveries pay no royalties and result in cash netbacks that are higher than our company average. Scott is subject to Petroleum Revenue Tax (PRT), although no PRT is payable until available oil allowances have been fully utilized, which isn’t expected before 2010. Once payable, PRT is levied at 50% of cash flow after capital expenditures, operating costs and an oil allowance. PRT is applicable to fields receiving development consent prior to March 1993. Buzzard, Ettrick, Farragon, Duart and Telford are not subject to PRT. PRT is deductible for corporate income tax purposes. The UK corporate income tax rate on oil and gas activities is 30% of taxable income and is also subject to a 20% supplemental charge.