Nido Petroleum to Spud Philippines Exploration Well

Nido Petroleum has decided to enter the second sub-phase of Service Contract (SC) 54 in the offshore Northwest Palawan Basin in the Philippines. The decision commits Nido to a firm exploration well with a minimum expenditure of US$6,000,000. Sub-phase 2 will commence on February 5, 2006 and extends for a 12 month period.

SC 54 is held 100% by Nido and comprises approximately 500,000 hectares. The area is immediately adjacent to Nido's SC 14 and 6B service contracts and the recently applied for Area 1. Aside from conventional plays targeting Nido Limestone reservoirs in structural closures and reefal build-ups, the area provides access to the highly prospective Miocene turbidite play fairway.

The primary drilling target in the area is the Coron North structure. The prospect is mapped as a large 4-way dip closed structure with the primary reservoir target being the Nido Limestone. Paul Quaife, Nido's Head of Exploration, said "The Coron North prospect is an excellent drilling target. It is rare that such a large structure with a proven play type, on trend with a large gas field and oil leg (Malampaya) and adjacent to an oil column (Coron 1) has remained un-drilled". Over the last four months, Nido has been actively pursuing a partner in the drilling of a well on Coron North. To that end, confidentiality agreements, data packs and presentations have been requested by and distributed to a group of highly credentialed international companies. These negotiations are well advanced and encouraging.

Nido recognizes the availability of drilling rigs is a problem facing the industry worldwide. David Whitby, Nido's Managing Director, said "To address this, Nido has two initiatives underway. First, we are working with a world class company, the Peak Group which has significant expertise in the planning, drilling and management of both single and multi well projects worldwide. The second initiative, coordinated by the Head of the Philippine National Oil Company, is a co-operative strategy between the operators in the Philippines to source rigs to drill their individual wells".

In addition to conventional prospectivity, SC 54 has significant upside in the Miocene turbidite play. The reservoir type is considered analogous to the recent oil discoveries made by Hardman and Woodside in similarly aged reservoirs in offshore Mauritania and by Murphy in offshore Sabah. Nido is currently evaluating this play type. Additional seismic may be required to mature these leads to drillable status.

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