Spex, Nido Petroleum firm up farm-in deal

MANILA, Philippines - Shell Philippines Exploration BV (Spex) has firmed up a farm-in agreement with Nido Petroleum Philippines Ltd. in Service Contract 54-B near the Malampaya project in Northwest Palawan.

In a report, Nido said it has secured the approval of the Department of Energy for the deal.

Nido said the DOE approved the farm-in last Jan. 25 and is “the last in a number of conditions precedent provided under the terms and conditions of the farm-in agreement.”

SC 54B will be 33 percent owned by Nido as the operator; Kairiki Energy Ltd. (formerly Yilgarn Petroleum), 22 percent; and Spex, 45 percent.

Nido also said in its Gindara-1 exploration well, Spex and the joint venture partners have agreed to substitute the deepwater Noble ‘Phoenix’ drill-ship originally proposed to drill the Gindara-1 well with the ‘Atwood Falcon’ semi-submersible rig.

The Gindara 1 is located 50 kilometers immediately south of the Spex–operated Malampaya gas field in SC 38, the largest discovery made in the Philippines to date and currently on production.

The Falcon is currently operating for Shell in Malaysia and is expected to mobilize to the Gindara-1 location between mid-April and end-May 2011, following a short period of planned maintenance in Labuan.

According to Nido president Jocot de Dios, the Falcon drilled two wells for Shell in the Philippines last year and is fully capable to drill the Gindara prospect.

“Planning for the Gindara-1 is well advanced. Long lead items (casing/wellhead materials) are expected to be delivered in to Nido’s Batangas shore-base in the next few weeks and the Manila-based drilling team is now fully resourced and operational,” De Dios said.

Earlier, the Nido executive said the farm-in agreement will allow the SC 54B partners to quickly drill the Gindara prospect targeted from March to May.

Based on the deal, Spex, a member of the Royal Dutch Group, will contribute 75 percent of the Gindara-1 exploration well cost up to a maximum well cost of $24 million; pay $2.5 million towards past seismic costs; and pay its pro-rata share of the 2010 and 2011 work program and budget from the date of signing.

Royal Shell currently operates in more than 90 countries and territories with businesses including production; oil product marketing and production, and chemicals and renewable energy projects.

In the Philippines, the Shell Group’s operation dates back to over 96 years, to when it opened its first trading office in 1914.