Nido presented its quarterly report for the three months ending December 31, 2010.
- Operational Highlights - Galoc and Tindalo Operations
- Oil production from the Galoc oilfield was down 35.6% from the previous quarter due to weather related downtime.
- Uptime for Galoc for the quarter was 61% but remained at 84% for the entire year.
- Over 6.27 million barrels (gross) of oil have been produced from the Galoc field since start up to the end of the quarter.
- A cargo of 239,964 bbl of oil gross (54,901bbl net to Nido) was lifted during the quarter.
- Tindalo 1ST1 abandonment commenced in December following confirmation that water influx into the sidetrack would prevent economic oil production.
- A gross cargo of approximately 74,000 barrels of Tindalo oil will be sold to a Singaporean buyer in the January quarter including the crude produced in the December quarter.
- Development and Exploration
- SC 54B - Shell Philippines Exploration farmed in to the block last October, agreeing to pay 75% of drilling costs and US $2.5 million past seismic costs to earn a 45% participating interest. Gindara is scheduled to be drilled in an April to June 2011 window using a rig contracted from Shell. Nido has been asked to be the operator for the campaign.
- SC 58 - Independent geochemical review of the sea-bed coring results confirms the evidence for widespread micro-seepage of mature hydrocarbons across the central and most prospective parts of the Block, an area which contains the block's leading prospects.
- SC 63 - Interpretation of the Kawayan 3D seismic survey has identified multiple play types in both the Miocene fold and thrust belt and the deeper pre-Nido sequences.
- Financial Highlights
- Cash on hand at the end of the quarter of A$24.2 million, (A$10.5 million as at September 30, 2010).
President's Comments on the Quarter
The last quarter of 2010 yielded two significant events for Nido that kept all hands fully engaged. Last October, Shell Philippines Exploration B.V. signed a Farmin Agreement with Nido and its joint venture partner in SC 54B to pave the way for the drilling of the Gindara prospect, one of Nido's leading prospects. On the other hand, as the year wound to a close, the SC 54A Joint Venture decided to plug and abandon the Tindalo oil field following disappointing test results. Galoc production, on the other hand, resumed after a brief shutdown and continued to produce at a rate of about 8,000 bopd (gross) whilst online within a strengthening oil price environment.
After a brief shutdown in October last year, the Galoc oil field resumed production on November 24, 2010 and ended the year with an average uptime of 84%, up from 63.5% in 2009. Total oil produced during the quarter was 442,819 bbl (gross, 101,315 bbl net to Nido). A total of eight liftings were made in 2010 resulting in 2.6million barrels gross (0.6million barrels net to Nido) being sold for the year. The last quarter of 2010 saw average production of 4,813 bopd.
The Galoc Joint Venture continues to assess a possible Phase 2 development aimed to access additional oil in the reservoir and increase oil production. A new prospect, the Galoc North prospect, is also being assessed within the context of a Phase 2 development. At the end of the year, a total of 6.27 million barrels of oil had been produced.
Despite working over the Tindalo short radius sidetrack in the face of continued water production, continued uneconomic oil flow rates led to a joint venture decision to plug and abandon the field. At the end of the year, the SC 54A Joint Venture was deciding whether to pursue a Yakal development (a decision was subsequently made at the start of 2011 to demobilize the rig and associated project equipment). In any event, Nido, as operator of SC 54A, will undertake a complete review of the Tindalo development with the view to applying the lessons learned from this campaign to any future inboard developments that the Joint Venture may wish to pursue.
In SC 58, the independent geochemical review of the sea-bed coring results confirmed the evidence for widespread micro-seepage of mature hydrocarbons over the central and most prospective part of SC 58. This is a significant step in further de-risking the deepwater block where no wells have been drilled to date. Integration of these encouraging results is continuing and will continue into the next quarter. It is to be noted that the Company's leading prospects in this block are located in the central portion of the acreage.
Following Shell's farm-in to SC 54B, the focus of attention is now on drilling planning for the Gindara-1 well and this has been a major activity over the latter weeks of the quarter. Substantial progress has been made on all fronts with the majority of the detailed subsurface work being completed during November and December. During the next quarter, the drilling program will be completed and submitted to the DOE for approval. Approval of the farmin remained pending with the DOE at the end of the year and is expected to be received soon.
In SC 63, steady progress has been made on the detailed seismic interpretation of the Kawayan 3D seismic following the results of the independent structural review.
Following the farmout to Shell of working interest in SC 54B, Nido undertook a private placement to sophisticated investors in October of last year. This private placement was followed by a Share Purchase Plan to the Company's shareholders. A combined total of $28 million net of fees was raised as a result of the placement and share purchase plan with the proceeds earmarked for the Gindara drilling and other corporate activities.
With the successful farmout to Shell in SC 54B and the positive results of the seabed coring campaign in SC 58, the Company has detected renewed interest from companies exploring opportunities to farmin to the Company's remaining blocks. Currently engaged in due diligence discussions with a number of companies, Nido intends to pursue further farmout opportunities in the New Year.
While the year ended as busy as ever for the Company we are expecting an even busier next few months with the combined activities of the Gindara drilling campaign, assessment of other inboard and Galoc Phase 2 opportunities and farmout initiatives.