Nido Petroleum bullish on Phl Indonesia prospects

MANILA, Philippines -  Nido Petroleum an Australia-listed oil and gas company, is banking on favorable prospects for its projects  this year,  including an exploration venture in the Philippines.

In its 2014 outlook published yesterday, Nido managing director Phil Byrne said the company is looking forward to positive results for its projects in Indonesia and the Philippines.

“We are very excited about 2014. We have underlying production from the Galoc field produce of about over $50-million net free cash flow which will underpin our work program through 2014,” he said.

He said the focus is four well drillings, which will form Nido’s cornerstone of activities for 2014.

 â€œWe got three wells in Indonesia and one well in Philippines,” he said, referring to Service Contract 63 in Northwest Palawan.

He said Nido hopes to start the drilling program for the four wells within this month.

For SC 63, Nido has signed a farm-in agreement with Dragon Oil, a United Arab Emirates (UAE)-based company.

Under the agreement signed last month, 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 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.