Gas2Grid Limited reported Friday that the Philippine Department of Energy (DOE) has formally recognized Malolos-1, which is located in Service Contract (SC) 44 onshore Cebu, Philippines, as an oil discovery and approved an extension of SC 44 in order to conduct oil production with the aim of establishing a commercial oil field. The approval has been issued after a formal application was submitted by Gas2Grid Limited and under the terms and conditions of the Service Contract and takes effect from Jan. 28, for a period of 12 months.
Forward plans involve longer period oil production testing to establish commerciality. In order to complete a longer term testing a beam pump and oil storage will be required onsite. We consider that the longer term testing will also enable an independent expert to certify and convert some of the Contingent Resource of oil in place into Proven, Probable and Possible oil reserves. Planning is underway to commence testing in February, subject to equipment availability. The estimated cost of this work is $500,000-$1 million.
Gas2Grid Limited successfully perforated and flow tested two oil bearing sandstones in Malolos-1 at depths of 7,280-7,308 feet (2,219-2,227.5 meters) and 7,152-7,207 feet (2,178-2,195.4 meters). Oil was produced on short term test at indicative production rates of between 100 to 200 barrels of oil per day (bopd). Oil from the lower sandstone also flowed to just below surface. The two oil bearing sandstones that have tested oil are located within the eastern limb of the Malolos anticline where they are steeply dipping (60 degree). Previously drilled wells, Malolos-1 and Malolos-4, recorded oil bearing sandstones over a 1,627 foot (496 meter) vertical interval. The recent oil test production rates (between 100-200 bopd) confirm Malolos-1 as an oil discovery well. These results have now been integrated with all other available technical data that indicate a possibly much larger Malolos oil field than initially assessed. We are confident that further testing of Malolos-1 will result in commercial oil production from this much larger field.
Initial assessment of the oil volume potential within the Malolos oil field is a “Contingent Resource” oil in place in the two oil productive sandstones in the range of between a “Low Estimate” (1C) of 4 million barrels and a “High Estimate” (3C) of 42 million barrels, with a “Best Estimate” (2C) of 12 million barrels of “Total Oil Initially in Place”.
A technical summary of all observations, measurements and testing in Malolos-1 follows:
The Company’s preferred funding for the complete appraisal and development work is by a farmout of SC 44, reducing its current 100 percent interest. Farmout efforts are progressing.
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