OTTO Energy Ltd. is set to start its $35-million natural gas-oil well drilling work in offshore Palawan next month.
In a regulatory filing in Australia, Otto said it had given Maersk Drilling the formal notice to mobilize its ultra-deep water drill ship Maersk Venturer to the Hawkeye-1 prospect under Service Contract 55 (SC55).
“Mobilization to the drilling location will commence on July 31, 2015 and is expected to take 1 to 2 days, with drilling operations to start upon the arrival of the rig on location,” Otto said.
The energy exploration and development company said it was continuing its search for suitable partners for SC55 in general and in the Hawkeye-1 exploration in particular.
Otto affirmed a recent announcement of Pryce Gases Inc., an LPG distributor and a unit of Pryce Corp., that it was negotiating for a 10-percent working interest in SC55 and the Hawkeye-1 exploration well.
The Australian exploration firm said it had also received an expression of interest from Philippine National Oil Company-Exploration Co. in a farm-in arrangement for a 15-percent interest.
Otto said the parties were awaiting the required approvals from the Office of the President in Manila before closing the transaction.
The cost of the initial well is between $30 million and $35 million, Otto said in an earlier regulatory filing. Otto is racing to discover a resource that can replace the Malampaya gas operation (which may be depleted in 2024 unless drilled anew).
Citing initial surveys in SC55, Director Rufino B. Bomasang said SC55’s gas resources could be enough to replace Malampaya and still fuel other gas-fired power plants. In addition, an oil prospect has also been identified that could be the country’s largest oil accumulation.
Otto seems bullish on SC55, after recently disposing of its stake in the producing Galoc oil field as part of efforts to fund the new exploration project.
“Given that Malampaya is projected to be depleted in the next decade, looking for the next Malampaya should be a national priority,” Bomasang said.
Should the well encounter hydrocarbons, more detailed evaluation, including well logging, will be undertaken. This will increase the overall cost by $2 million to $3 million, Otto said, saying it was fully funded for such a situation.