Australia's oil and gas exploration company Red Emperor Resources NL (Red Emperor or the Company) provided Thursday the following commentary for the fourth quarter ending Dec. 31, 2015.
Philippines (SC 55)
Red Emperor advised during the December quarter that its Joint Venture (JV) partner and Operator, Otto Energy Limited requested that a two-year moratorium be granted by the Philippines Department of Energy over Service Contract (SC) 55 located offshore Palawan Basin in the Philippines. The JV fulfilled the work obligation under the current exploration Sub-Phase by drilling the Hawkeye-1 exploratory well in August 2015. Although the well did not encounter gas in commercial quantities, it proved the presence of an active petroleum system in the contract area, which hosts the “Cinco Prospect” as well as several other leads.
The consortium intends to undertake further technical studies during the moratorium period, including a Quantitative Interpretation (QI) Study. QI is a relatively recent geophysical technique that is designed to gain a better understanding of existing and potential petroleum reservoirs. The Joint Venture expects a response from the Department of Energy with respect to its moratorium request in 1Q 2016.
Subsequent to the end of the quarter, Red Emperor was advised by Otto Energy of its intention to exit the Joint Venture as part of its strategy to focus on its North American assets. As a result, Red Emperor would have the option to either maintain its 15 percent participating interest in SC 55 or be assigned a percentage of Otto Energy’s interest on a pro-rata basis. In this instance, Red Emperor’s participating interest could be increased by up to 22.5 percent to 37.5 percent. Red Emperor is considering its options and will advise the market accordingly.
Red Emperor, a 20 percent shareholder of Strait Oil and Gas Limited (Strait), a Gibraltarian company with a valid Production Sharing Contract (PSC) across Block VIa in the Republic of Georgia, continues to be advised of ongoing negotiations with a potential purchaser of the PSC. Red Emperor understands that delays in reaching agreement with the potential purchaser have been due to volatility in the oil and gas price and political instability in the region. Strait is still hopeful of a conclusion to the negotiations before the end of 1Q 2016.
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