MANILA, Philippines - Australian upstream oil firm Otto Energy Ltd. has secured almost $40 million from a private bank to partly finance the second phase of an oil production field in Northwest Palawan.
“Otto has entered into a binding agreement with BNP Paribas to provide $37.4 million in project financing for its share of capital expenditure committed to the Galoc Phase 2 development,” the company said.
In September, the consortium behind Galoc finalized a decision to pursue a $188-million expansion.
Galoc Phase 2 targets to more than double the output to 12,000 barrels of oil per day (bopd) from 5,600 bopd.
“Otto’s share of the $188-million capital expenditure for Galoc Phase 2 is now fully funded through a combination of this project financing and cash flows generated from production from Phase 1 of the field,” the oil firm said.
The Galoc project is one of only two regularly-producing oil fields in the country, the other one being the Malampaya deep water project in Palawan.
BNP Paribas extended the three-year loan to Otto, with principal repayment to start in the first quarter 2014. Otto can also prepay its debts.
“The first drawdown of the facility will be in the first quarter of 2013, consistent with projections set in August 2012 ahead of the final investment decision taken by Otto,” the upstream oil firm said.
BNP Paribas is one of the top global lenders for oil and gas projects.
Otto said the financing facility highlights the good prospects of the Galoc project.
Remaining recoverable volumes of the Galoc oil field is estimated at 8.9 million barrels on a proven basis and 13.4 million barrels on a proven and probable basis, up 156 percent and 134 percent, respectively, from previous data.
Galoc lies within Service Contract 14, some 60 kilometers offshore Palawan. The Galoc reservoir lies 2,200 meters below the sea floor, with its first production on Oct. 9, 2008.
Specifically, Phase 2 development includes the drilling of two subsea wells, tied back to the existing floating production, storage and offloading (FPSO) facility.
Galoc’s operations stopped in December as the project operator installed the FPSO. It resumed production in April.