Otto Energy Ltd (Otto) reported Friday that PNOC Exploration Company (PNOC-EC) has expressed an interest in farming into deepwater block Service Contract (SC) 55, located in the southwest of the Palawan Basin offshore the Philippines, for a 15 percent working interest.
The commercial terms of the farm-in have been agreed and will be finalized in a Farm-in Agreement to be entered into by Otto and PNOC-EC. The farm-in is only subject to approval by the Office of the President of the Philippines.
In addition to PNOC-EC, Otto continues to engage with other potential farm-in partners in the lead up to the drilling of the Hawkeye-1 exploration well, which is anticipated to take place during 3Q 2015.
Otto has entered into commitments for long lead items required to drill Hawkeye-1, including well heads and casing. The equipment required is currently available in Southeast Asia and can be sourced prior to the anticipated drilling window.
Otto is also seeking expressions of interest for drilling rigs suitable to drill Hawkeye-1. Final commitment to a drilling rig will be considered subject to suitable commercial terms being negotiated and completion of the farm-out program.
Hawkeye is a high impact opportunity, well defined on modern high quality 3D seismic and demonstrating an amplitude response consistent with a significant oil prospect. Hawkeye has a Best Estimate Oil In Place volume of 480 million barrels and Best Estimate recoverable volume of 74 million barrels net to Otto, post farm-down to PNOC-EC. There is further material upside contained in other identified prospects and leads in SC55.
Matthew Allen, Otto’s CEO said: “Otto Energy is very pleased to welcome a partner of the quality of PNOC Exploration Company into SC55. PNOC-EC bring substantial experience in the Philippines oil and gas industry to the SC55 joint venture. We look forward to progressing the high impact exploration program with the Hawkeye-1 well in SC55 with PNOC-EC and our joint venture partners. Otto notes that the cost of this upcoming exploration program is likely to be considerably reduced as weaker oil prices impact on rig and contractor rates”.
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