BASIC Energy Corp. is all set to complete a joint development deal with Trans-Asia Oil and Energy Development Corp. on a geothermal power project with a potential capacity of at least 20 megawatts (MW). The Department of Energy (DOE) has sent a letter to Basic Energy signifying its approval of the agreement between the two parties.
The two companies proposed to partner on developing Basic Energy’s geothermal service contract area in Mabini, Batangas.
Basic Energy, as the operator of the service contract, plans to drill the first well by the second quarter of next year.
The approved arrangement calls for a 75-25 equity and project cost participation between Basic Energy and Trans-Asia, respectively.
Under the terms of the agreement, Trans-Asia will shoulder 25-percent undivided participating interest in the rights, interests, privileges, duties and obligations in and under Geothermal Service Contract No. 8, Basic Energy said.
Basic Energy said Trans-Asia had decided to share in the cost of the first exploration well committed under sub-phase 3 of the geothermal service contract after undertaking due diligence on the project, including geophysical work.
“This validated previous prospective estimates that the project could generate between 20 MW and 60 MW of energy,” Basic Energy said.
Earlier this year, Trans-Asia increased its participating interest in Geothermal Service Contract No. 8 to 25 percent from the 10 percent it originally acquired in 2013. Trans-Asia said in a disclosure that it had already signed a farm-in agreement and a deed of assignment with Basic Energy providing for its acquisition of such stake.
“As part of its farm-in obligation, Trans-Asia completed a comprehensive gravity geophysical program in the area of interest,” said Trans-Asia, the power generation arm of the Phinma Group.
In 2013, Trans-Asia signed an agreement for a 10-percent stake in Basic’s geothermal service contract, with the option to increase it to up to 40 percent.