MANILA, Philippines - Upstream oil firm Otto Energy Ltd. will start exploration works in an onshore oil and gas field in Eastern Visayas which could yield as much as 59 million barrels of oil and gas resource, the company told the Australian bourse.
Otto Energy said the Service Contract (SC) 51 North joint venture has approved the work plan and budget to drill the Duhat prospect in mid-2013.
“The decision follows a targeted seismic program in 2012 that confirms the robustness of the large anticline that was poorly defined on previous seismic data,” the firm said.
Otto Energy, through wholly-owned subsidiary NorAsian Energy Ltd., owns 80 percent of the 332,000-hectare SC 51 located in onshore Leyte.
The remaining shares are held by Trans-Asia Oil and Energy Development Corp., Alcorn Gold Resources Corp. and PetroEnergy Resources Corp.
The SC 51 work program is one of three exploration events planned by Otto Energy next year.
The exploration project will be funded by current cash reserves and revenues, Otto Energy said, without disclosing the capital expenditures.
“With low onshore drilling costs and a host of follow up potential, SC-51 North has the ability to transform Otto Energy and its partners into significant onshore producers of crude in a short timeframe,” the company said.
Early this year, the SC 51 consortium acquired 150 kilometers of new high quality 2D seismic data for the project.
“With the excellent fiscal terms in place in the Philippines, even a modest oil discovery at Duhat is likely to be commercially viable,” Otto Energy said.
It added that depending on the scale of the discovery, oil can be produced and transported either by truck or pipeline to barges at the nearby San Isidro wharf.
In September, Otto Energy bought Swan Oil & Gas Ltd.’s 40-percent share in SC 51 for A$1.25 million.
The government, for its part, is encouraging investors to look at prospects in the Philippines.
Compared with its peers in the region, the country’s upstream oil and gas industry is relatively small.
This has been generally attributed to the high cost of development along deep seas and the quality of reserves that have been discovered.
The Philippines produces only 6,000 barrels of oil per day (bopd), way below the demand of around 300,000 bopd, data from the Department on Energy showed.