EDC inks $15-million drilling contract with PNG firm

MANILA, Philippines - Energy Development Corp. (EDC) has entered into a new drilling contract with Lihir Gold Ltd. (LGL) of Papua New Guinea (PNG) worth $15 million.

In a disclosure to the Philippine Stock Exchange (PSE), EDC said the nine-month contract includes the drilling of wells and the supply of drilling services such as mud engineering, well cementing and directional drilling.

Since 1999, EDC has been providing drilling services to LGL, which sources its power requirements for its gold mine and processing facility from its existing 56-megawatt geothermal power plant in Lihir island.

In 2008, LGL, one of the leading gold producers in the Asia Pacific region, awarded a $16.11-million drilling contract to EDC as it targeted to increase its gold output to one million ounces per year and expand its geothermal power plant capacity by an additional 40 MW.

Last April, LGL reported three successive quarters of record output from its four operations, citing Lihir as the most consistent and productive.

“We believe that our excellent drilling and safety performance is one of the reasons for LGL’s record output in Lihir.

The fact that they continue to engage our drilling services is proof that LGL is more than satisfied with our services,” EDC president CEO Paul Aquino said.

The country’s biggest producer of geothermal energy, EDC is also the Philippines’ largest onshore drilling contractor with a highly experienced drilling division to man its complement of seven onshore drilling rigs.

It started exporting its drilling services in 1997 for an oil and gas drilling contract in Indonesia.

It has also sent rigs and deployed drilling consultants and rig maintenance specialists to Indonesia, Papua New Guinea and Bangladesh. EDC’s drilling revenues amounted to P726 million in 2008.

LGL sources most of its power requirements for its gold mine and processing facility from geothermal energy.

It has announced that it is ramping-up its gold output to one million ounces per year and thus needs to expand its existing 56 MW geothermal power plant by an additional 40 MW to support its expansion program.

EDC’s contracts with LGL have been its major source of drilling revenues since 1999.

The company’s drilling group is currently upgrading its rigs and other drilling equipment to bag more drilling contracts overseas.