Nido Petroleum advised that on December 11, 2009 the Service Contract 54 Block A (SC 54A) Joint Venture partners provided their Final Investment Decision (FID) approval for the development of the Tindalo oil field. Nido operates SC 54A with a 50% interest.
Key Project Metrics:
Tindalo Development Concept:
Impact on Nido
Nido's President and CEO, Mr. Jocot de Dios, said, "The development team has done a stellar job in bringing the field from discovery to FID in just over a year -- this is the same team that completed the SC 54A exploration drilling campaign in 2008 and brought it in on time and budget, and most importantly, without an HSE incident. I have every faith in their ability to execute the Tindalo development in a similarly professional and successful manner."
Mr. de Dios went on to say, "This FID decision paves the way for Nido’s net production to more than double, or even triple, and add to Nido's existing Galoc oil field cash flow which will undoubtedly have a significant impact on the Company's balance sheet. We thank the Philippine Department of Energy for their continued support -- with this project and a host of other exploration activities coming on line, the coming year bodes well for Nido, our partners in the Venture and the Philippine oil patch."
The Tindalo oil field was discovered by the Tindalo-1 exploration well in October 2008 and plugged and suspended as a possible future producer. The well is located in around 100 meters of water and targeted a pinnacle reef structure similar to the nearby, producing Nido and Matinloc oil fields and intersected 124-144+ meters of oil column in Miocene carbonate reservoir.
The field will be developed using a leased, jackup rig to re-enter and complete the suspended Tindalo-1 well for production. An electric submersible pump will also be installed as part of the well completion to assist in maintaining production rates throughout the life of the field.
In the event of extreme weather, production will be suspended and the transfer hose disconnected from the FSO. The FSO will then be able to move off location and seek shelter, if necessary. Due to the robust nature of the design, the disconnection process can be made in a range of sea and weather states with much less risk of damage to any of the facilities than alternative development concepts.
Commenting on this, Nido Deputy Managing Director, Ms. Joanne Williams, said, "Throughout the development planning process, we have applied our knowledge and experience of the Palawan conditions with careful consideration. The jackup and FSO solution is a pragmatic approach to a very real weather issue which is available to us in SC54A because of the shallow waters."
In-field operations are scheduled to commence in early 2Q 2010 with first oil around a month from commencement. An initial oil production rate of around 7,000-15,000 barrels of oil per day is expected (3,500-7,500 bopd net to Nido.) Current estimates are that the project will require a capital investment of less than US$20 million from the Joint Venture to achieve first oil and will cost around US$250,000 per day to operate.
Nido Deputy Managing Director, Ms. Joanne Williams, said, "I'm excited to move the Tindalo project forward into the execution phase -- as well as being Nido's first operated development, we plan that it will be the first of many in SC54A. We expect the development to cost less than US$4/bbl and be in production around 18 months from the discovery of the Tindalo oil field which compares very favourably with industry standards."
Ms. Williams continued, "Over the past 3 months Nido has mobilized the project team to our operations office in Manila where approvals have been secured for the Plan of Development and the Extended Well Test and a number of purchase orders for long lead items have already been placed. This has given us a big head start. Other major equipment and services contracts will be placed in the coming weeks. In particular, we intend to sign term lease contracts for the jackup rig, FSO and production processing equipment."
Nido will provide further updates on the progress of the project upon the achievement of major milestones towards first oil.
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