Otto Energy Ltd (Otto) reported Tuesday that it has executed a binding contract with Maersk Drilling to secure the Maersk Venturer (UDW drillship) for the Hawkeye-1 exploration well in Service Contract (SC) 55 offshore Palawan, the Philippines.
The Gross Prospective Resource Best Estimate for the Hawkeye Prospect is 112 million barrels of oil (MMbo) or (74 MMbo net to Otto). Success at Hawkeye will unlock a significant new hydrocarbon play in the deep water Southern Palawan region with material follow up potential already mapped on 3D seismic.
The Maersk Venturer is one of the most modern and advanced drill ships in the world and Otto is pleased to have secured a rig of this capability to drill the Hawkeye-1 exploration well.
The window for commencement of mobilization to the Hawkeye-1 drilling location will be between July 17 and Aug. 15. Key services and equipment will continue to be mobilized and secured by Otto in the period leading up to this date.
The well is expected to take around 23 days to drill from rig arrival until release. The majority of services have been contracted and total expected cost remains within guidance of $30 to $35 million (dry-hole well cost estimate). Should the well encounter hydrocarbons, more detailed evaluation, including well logging, will be undertaken and which would increase the overall cost by around $2-3 million. Otto is fully funded for such a circumstance.
As a result of the $24.5 million committed by BHP Billiton and the farm-down to Red Emperor Resources NL, Otto will be free-carried for the drilling of Hawkeye-1 whilst retaining a significant 78.18 percent working interest. Further, Otto has received an expression of interest from the Philippine National Oil Company – Exploration Company to farm-in for a 15 percent interest and the parties are currently awaiting required approvals from the Office of the President in order to close this transaction.
Matthew Allen, Otto’s CEO said: “Final preparations for the drilling of the Hawkeye-1 exploration well are considerably advanced. This is a very exciting time for Otto as we undertake this important and potentially high impact, drilling event on behalf of the Philippines Department of Energy and our joint venture partners. With a significant free carried interest, Hawkeye-1’s success would be transformational for Otto”.
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