Nido's Proved Reserves in Philippines' Galoc Field Increases 60%
Nido Petroleum noted that Gaffney Cline and Associates (GCA) have completed their independent review of the Galoc oil field, updating the reserves certification with the information obtained during the development drilling and well testing.
This review has resulted in a material uplift across all three categories of reserves -- proved, probable and possible. Reserves at the "proved" level, which represents the 90% confidence level, have increased by 64% which provides confidence in a stronger, longer-term production profile for the field.
Joanne Williams, Nido’s Deputy Managing Director said, "The data acquired during the drilling of the pilot well and the two horizontal production wells were very encouraging and we are now very pleased that GCA has confirmed our expectations of the Galoc oil field's productive potential. Not only has the low side moved significantly closer to the previous 2P best estimate of the potential in the Galoc 3 and Galoc 4 areas, but the increase in the 3P reserves (which is included in the Phase 2 development) has highlighted the upside potential
of the field available through further drilling."
High Reserves Value per Barrel
The petroleum fiscal regime in the Philippines is one of the best in Asia offering a favorable contractor take and numerous other fiscal incentives. These include a generous cost recovery mechanism allowing the contractor to recoup past costs prior to Government allocations. Given that the Galoc oil field development has a large cost recovery pool the resulting production will realise very high profitability metrics per barrel of oil produced, which
will be among the highest in the industry.
Nido's Chief Executive Officer, Jocot de Dios said, "When it comes to value and cashflow, no barrel of oil reserves is the same as any other -- there is more "bang" for the reserves "buck" in the Philippines and this is one of the reasons why Nido chose to focus its interests here. Galoc is expected to pay back Nido's investment in only a few months, and especially in the following 12 to 24 months, the cashflow returns from Galoc will be
2008 Certification Update
In mid-2006, Nido commissioned GCA to undertake an independent reserves certification of the Galoc oil field to support Nido’s investment decision. There was significant uncertainty in the reserves at that time as the field was not fully appraised. Since the 2006 update, there has been considerable new information gathered from the field, most importantly from the pilot hole and the two development wells.
The pilot hole was drilled in the south of the field through to the oil-water contact. The pilot hole was fully wireline logged (and pressure tested) and enabled recovery of reservoir rock cores and reservoir fluid samples to surface for detailed testing and analysis.
Development Wells Drilled
Galoc-3 and Galoc-4 were both drilled as long, horizontal production wells (1,300 and 1,600m long, respectively) through the middle of the oil column and targeting the best reservoir. Logging while drilling (LWD) was conducted and the wells were both flowed to surface to clean out the drilling fluid, gather oil assay samples and generate indications of flow potential.
Phase 2 Development Decision
Forthcoming Galoc production is critical to calibrate and confirm the modelling completed recently by GCA. After sufficient production history has been gathered from the Galoc 3 and 4 wells, these models and reserves will be updated once again. Nido’s final investment decision on a Phase 2 development of Galoc will be dependent upon this modelling exercise.
- Philippines' Galoc Phase 3 Oil Field Development Plan for Start-up in 2019 (Aug 17)
- Partners Nearer to Further Development of Galoc Oil Field Offshore Palawan (Jul 14)
- Otto Energy Completes Sale of Galoc Production Co. Stake to Nido for $106M (Feb 17)
Company: Gaffney, Cline & Associates Inc. more info
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