Otto Energy Philippines Inc. signed a farm-in agreement with Red Emperor Resources NL for a 15% working interest in SC55, offshore the Philippines.
The Maersk Venturer. From Otto.
SC55 covers 9880sq km and is a deepwater block in the middle of a proven regional oil and gas fairway that extends from the productive Borneo offshore region in the southwest, to the offshore Philippine production assets northwest of Palawan.
Otto says it is fully funded for Hawkeye with Red Emperor’s 15%, US$24.5 million in funding from BHP Billiton and PNOC-EC’s expressed interest in 15% stake of SC55.
Red Emperor’s interest agreement includes participating in the drilling of the Hawkeye-1 exploration well.
3D seismic identified Hawkeye as a large turbidite clastic prospect with gross prospective resource best estimate for the well being 112 MMbbl. Otto says that success at Hawkeye will unlock a significant new hydrocarbon play in the deepwater Southern Palawan with material follow-up potential in the carbonate leads and prospects, with gross prospective resource estimate of approximately 11 Tcf and about 400 MMbbl of condensate.
According to Otto, Red Emperor has the right to earn a 15% interest in SC55 in consideration for paying 15% of the well costs for the drilling and testing of Hawkeye-1. Red Emperor’s well cost exposure is capped at $5.625 million, beyond which Red Emperor has the option to reduce equity from the 15% working interest level.
The deal is subject to approval by the Office of the President of the Philippines.
Otto also signed a letter of intent with Maersk Drilling to secure the Maersk Venturer ultra deepwater drillship to drill the Hawkeye-1 well. The contract is expected to be finalized in the coming weeks. Drilling of Hawkeye-1 is expected to begin in 3Q 2015.
The Maersk Venturer is one of the newest drillships in the world and is can operate in up to 3600m of water, with dual drilling derricks, high capacity mud pumps and bed space for 230 personnel. The drillship was commissioned in 2014 and was built at the Samsung Heavy Industries yard in Korea.
“Otto would like to welcome Red Emperor to the SC55 joint venture. Along with our existing joint venture partner, TransAsia Oil and Energy Development Corporation and PNOC-EC, the SC55 joint venture looks forward to delivering the highly important Hawkeye-1 exploration well on behalf of the Philippine Department of Energy,” says Matthew Allen, Otto CEO. “Securing a drillship of the capability of the Maersk Venturer for the drilling of Hawkeye-1 in 3Q 2015 is a major event for Otto.”
Assuming no further acquisitions or divestments take place, Otto Philippines holds 45% interest, OEIL holds 33.18%, Red Emperor 15%, and Palawan 55 E&P Co. 6.82%.
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