Petroleum exploration giant BHP Billiton has completed the farm-in agreements that will pave the way for its entry into the Service Contract 55 consortium.
The completion of these agreements will allow BHP Billion to own a 60-percent stake in and become the operator of SC 55, while Australian firm Otto Energy Ltd. will hold a 33.18-percent interest. Local firm Trans-Asia Oil and Energy Development Corp. holds the remaining 6.82 percent participating interest in the service contract.
In a regulatory filing, Otto Energy explained that the execution of the final documents followed the previously announced decision by BHP Billiton to exercise its farm-in option in SC 55.
“With the execution of these final farm-in agreements, Otto will receive a final payment relating to back costs associated with SC55 of $7.3 million, of which $5 million has already been received,” said Otto Energy chief executive officer Gregor McNab.
Otto Energy is set to submit the required assignment documents to the Department of Energy for the approval of the transfer of its participating interest to BHP Billiton.
“2012 is an exciting year for Otto shareholders as we prepare for drilling of the Cinco prospect in SC55 in offshore Palawan in the Philippines in the second quarter,” McNab said.
“More importantly for Otto shareholders, there is a depth of opportunity beyond this first well in our acreage portfolio that provides ongoing exploration and development potential,” he added.
BHP Billiton is expected to lead the drilling of an offshore deepwater exploration well within the SC 55, which reportedly contains an estimated 1.8 trillion cubic feet of gas and 567 million barrels of oil. The priority is to drill a well within the Cinco prospect.
BHP Billiton is expected to use a fifth generation rig, the Transocean Deepwater Expedition.
Otto Energy said the SC 55 area “has seen little historical offshore exploration drilling, and no deepwater offshore drilling has occurred to date. This is an exciting new frontier that has significant scale and potential sitting between proven oil and gas fields.”—Amy R. Remo