MANILA, Philippines - Nido Petroleum Philippines Ltd., an Australia-listed oil and gas company, has secured a new investor for its oil exploration project in Northwest Palawan.
In a disclosure to the Australian Stock Exchange, Nido said it has entered into a farm-out agreement with United Arab Emirates (UAE)-based Dragon Oil for Service Contract 63 in Northwest Palawan.
Under the two-phased deal, Dragon Oil will acquire a 40 percent participating interest in SC 63 from Nido’s current 50 percent participating interest in the service contract.
To earn its 40 percent interest from Nido, Dragon Oil will pay on behalf of Nido 56 percent of the cost of the Baragatan-1 exploration well based on a $25-million cost cap.
For the second stage of the farm-out agreement, Nido will seek to secure an additional 10 percent participating interest in SC 63 from PNOC-Exploration Corp., the exploration arm of state-owned Philippine National Oil Co. (PNOC).
Thus, Nido will then have a 20 percent working interest in SC 63 and will then contribute $2 million towards the cost of the Baragatan well, based on an estimated cost of $25 million.
During the Baragatan-1 drilling operations, Nido will remain as technical operator and PNOC-EC as operator of the service contract.
In this period, Dragon Oil will be responsible for overall drilling management and eventually, following the drilling of the Baragatan-1 well, Dragon Oil will have the right to become operator of the service contract.
The so-called Baragatan prospect is part of SC 63 and has a projected oil-in-place of 676 million barrels. The upside is 977 million barrels while recoverable volume is placed at 115 million barrels with a ceiling of 166 million barrels.
Nido and PNOC-EC welcomed the entry of Dragon Oil, an independent oil and gas exploration company, which has projects in Tunisia, Iraq, Afghanistan and Egypt.
“On behalf of the SC 63 operator, PNOC-EC, I am extremely pleased to welcome Dragon Oil as a partner into the service contract and the drilling of the Baragatan-1 exploration well, in the first half of the year. Dragon Oil brings a wealth of exploration, development and operating experience to the SC 63 joint venture through their expanding portfolio, in particular through their world-class Turkmenistan producing asset. I look forward to working with Dragon Oil in SC 63 as Nido Petroleum moves ahead with its plans to drill at least four exploration wells in its Philippine and Indonesian acreage in 2014,†Nido’s managing director Phil Byrne said.