MANILA, Philippines - Otto Energy Ltd. has become the majority stakeholder of Galoc Production Co. (GPC), the operator of Service Contract 14C in Palawan, after acquiring the 68.62 percent stake of the Vitol Group for $18.7 million.
In a report to the Australian Stock Exchange, Otto chief executive officer Matthew Allen said the acquisition was “an attractively priced, low-risk opportunity.”
“The acquisition represents an increase in Otto’s share of revenue from Galoc, as well as to better leverage the expertise within the group through assuming operatorship,” Allen said.
Otto will now own GPC’s 59.84 percent stake in SC 14C, increasing its original stake of 31.38 percent.
The move will hasten the development of the second phase of the oil-producing field located in northwest Palawan. The field produces around 6,800 barrels of oil per day.
“Revenue from Galoc continues to provide a valuable source of funds for reinvestment and this is set to grow as we move towards a Phase 2 expansion of the project,” he said, adding that it will fund its acquisition of Vitol’s stake from its existing cash reserves.
Otto’s share in SC 14C, however, will drop to 33 percent after it concludes the sale of its 26.84 percent stake to Singapore energy investment company Risco Energy Pte Ltd.
Risco is an energy investment company, which has extensive coal seam methane interests in Indonesia, through a major shareholding in Ephindo Energy of Indonesia. It also operates oil and gas producing assets in the US and is actively growing its Southeast Asia portfolio.
The other SC 14 shareholders are: Nido Petroleum Phils. Pty Ltd. holding 22.8 percent; The Philodrill Corp., 7.21 percent; Oriental Petroleum & Minerals Corp./Linapacan Oil & Gas Power Corp., 7.79 percent; and Forum Energy Philipppines Corp., 2.28 percent.
The SC14C joint venture recently approved the upgrade to the mooring and riser system for the Galoc FPSO (floating, production, storage and offloading vessel).
The Galoc field has produced over seven million barrels of oil to date, and has delivered 23 shipments to refinery customers. The second phase of the field’s development is aimed at increasing oil production from the field and securing additional oil reserves.
The field is estimated to contain some 10 to 15 million barrels of oil.
Allen added that the final investment approval for a Phase 2 development of Galoc will be targeted for early 2012, subject to satisfactory results from a planned 3D seismic acquisition.