Gas2Grid Limited reported Wednesday that following the award of a Two Year Technical Moratorium by the Philippine Department of Energy, it has commenced the Malolos Oil Field technical program to establish the best completion technology to fully appraise and develop the oil field. The Two Year Technical Moratorium provides security of tenure over Service Contract 44 located onshore Cebu in the Philippines until Jan. 28, 2017 and within that time the Company aims to demonstrate the field commerciality and apply for a 25 year production term.
In conjunction with the work program, the Company has already met with selected companies to consider farming in the Service Contract 44 by funding the oil field appraisal and development. Further meetings with additional companies are planned.
Two Year Technical Moratorium – Work Commitments
The Two Year Technical Moratorium has been granted by the Philippine Department of Energy with the work commitments outlined below. The Company aims to complete this program as early as possible to achieve field commerciality by bringing forward the Year 2 program, subject to funding.
Year 1 (Jan. 28 – Jan. 27, 2016) – $100,000
Year 2 (Jan. 28, 2016 – Jan. 27, 2018) – $1 million
The Company’s preference is to fund the full appraisal and development of the Malolos Oil Field by securing a farmin partner. Farmout presentations commenced before Christmas, initially targeting oil companies located in South-East Asia. The farmout efforts will be expanded over the next few months.
The Malolos Oil Field still represents an attractive investment opportunity despite the recent oil price drop and the immediate effect that it has had on the oil industry worldwide. The Malolos Oil Field has a 20.4 million barrel “Best Estimate (P50) Contingent Resource” of good quality, low sulphur crude oil that is located onshore close to transportation in a country with excellent fiscal terms. All that point to low development and operating costs which should leave a healthy profit margin, even at the current low oil price.
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