MANILA, Philippines - BHP Billiton, the world’s biggest mining company, will take a controlling stake in Service Contract 55 in offshore Palawan.
In a disclosure to the Philippine Stock Exchange (PSE), lead operator Otto Energy Ltd. said BHP Billiton has exercised the option to farm-in to SC 55.
“Subject to joint venture and regulatory approval, BHP Billiton will earn up to 60 percent participating interest and assume operatorship of the block by reimbursing Otto’s past costs and funding one offshore deepwater well by 2012, with an option to drill a second well in a subsequent phase by 2013,” Otto Energy said.
Otto Energy said it intends to retain a 33.18 percent interest in SC 55 following BHP Billiton’s farm-in.
The farm-in option by BHP Billiton was granted in January 2010, and Otto has worked over the past 16 months to acquire, process and interpret approximately 1,800 square kilometers of 3D seismic data in the block.
The extensive 3D seismic data indicates the presence of an active petroleum system coupled with a series of large to very large Nido carbonate structures that supplement the Hawkeye prospect.
Otto Energy managing director Paul Moore said they are looking forward to continuing to work with BHP Billiton in Service Contract 55 as they move into the drilling phase of exploration activities.
“The past 16 months has been a very busy period for Otto as we have acquired, processed and interpreted a large volume of seismic data to identify a portfolio of significant oil and gas prospects. We have benefited from the cooperation shown by our joint venture partner, Trans-Asia, and also BHP Billiton.”
“We now look forward to participating in this exciting offshore deepwater exploration program which will provide exposure for Otto Energy’s shareholders to material exploration in highly prospective, large structure opportunities,” Moore added.
Otto Energy said it will submit the required documents to the joint venture partner and the Department of Energy for approval of the transfer of participating interest to BHP Billiton.
Otto Energy is the parent company of NorAsian Energy Ltd. and the partner of Trans-Asia Oil and Development Corp. of Phinma Group in SC 55.
Under a participating agreement signed in 2005, NorAsian Energy will free-carry Trans-Asia’s 15 percent participating interest in SC 55 through the first exploratory well in the block.
“Otto Energy has recently completed the acquisition of 600 square kilometers of 3D seismic in SC 55 and is pleased to be working with BHP Billiton to acquire and process up to an additional 2,000 square kilometers of new 3D seismic in the service contract. Together these seismic surveys will allow Otto to establish a comprehensive subsurface understanding of the offshore Palawan permit area and prospects inventory for future drilling campaigns,” the Otto official said.
SC 55 covers an area of 9,000 square kilometers and is located in offshore Palawan. It is located on a regional oil and gas fairway that extends from the productive Borneo offshore region in the southwest to the offshore Philippines production assets northwest of Palawan.
SC 55 covers the Marantao and Hawk-eye prospects.