Otto Energy Ltd. announced Thursday it has issued Maersk Drilling with formal notice in respect of the mobilization of the Maersk Venturer (UDW drillship) to the Hawkeye-1 exploration well location in Service Contract (SC) 55, offshore Palawan Basin in the Philippines. Mobilization to the drilling location will commence July 31 and is expected to take around 1 to 2 days, with drilling operations to commence upon arrival of the rig on location.
FARM-OUT PROCESS CONTINUES
Otto continues to field interest regarding potential Hawkeye-1 well farm-in opportunities. Otto notes a recent Philippines Stock Exchange announcement and associated press reporting of an offer by Pryce Gases Inc. (Pryce), an liquefied petroleum gas (LPG) distributor whose parent company, Pryce Corporation is listed on the Philippines Stock Exchange, to farm-in for a 10 percent working interest in SC55 and the Hawkeye-1 exploration well. Negotiations are incomplete and the current offer by Pryce is not capable of acceptance. Otto is fully funded for the drilling of Hawkeye-1.
The expression of interest from the Philippine National Oil Company – Exploration Company (PNOC-EC) to farm-in for a 15 percent interest in SC55 is still valid and approvals from the Office of the President are required before this transaction can be finalized.
Service Contract 55 (SC55), offshore Palawan Basin in the Philippines, contains a number of distinct exploration play types that provide material opportunities, including the carbonate gas/condensate trend that has the potential for an oil charge; and turbidite clastic prospects. SC55 is not located in a region of the South China Sea regarded as disputed territory.
The Hawkeye prospect was identified on 2D seismic originally acquired by Otto in 2007 and further defined with the 373 square miles (600 square kilometers) 3D seismic acquisition in late 2009. Hawkeye contains:
- ‘Best Estimate’ STOIIP (stock tank oil initially in place) of around 480 million barrels of oil; and
- ‘Best Estimate’ Net Prospective Resource of 74 million barrels of oil
Hawkeye is planned as a vertical exploration well to test the clastic late Miocene Pagasa formation. Hawkeye is a thrusted, four way closure with direct amplitude support evidenced on high quality 3D seismic acquired in 2010. Otto plans an exploration well to target the crest of the Hawkeye structure and evaluate results. The well will be plugged and abandoned upon completion of drilling.
Otto has operated upstream oil and gas exploration and production assets in the Philippines for over 10 years and regards the fiscal terms as amongst the best in Asia, offering protection from low oil price
JOINT VENTURE PARTNERS
- Otto Energy Investments Ltd. (Operator) (Wholly owned subsidiary of Otto Energy Ltd.) – 33.18 percent participating interest
- Otto Energy Philippines Inc. (Wholly owned subsidiary of Otto Energy Ltd.) – 45.00 percent participating interest
- Red Emperor Resources NL – 15.00 percent participating interest
- Palawan55 Exploration and Production Company (Wholly owned subsidiary of Trans-Asia Petroleum Corporation) – 6.82 percent participating interest
Note: Philippine National Oil Company – Exploration Company (PNOC-EC) has expressed interest to farm-in for a 15 percent working interest in SC55. The farm-in is subject to approval by the Office of the President of the Philippines, which is currently being sought. Approval of this PNOC-EC farm-in would lower Otto Energy Ltd.’s participating interest in the well to 63.18 percent.