Shell Philippines withdraws 45% stake in Nido oil exploration project

MANILA, Philippines—Shell Philippines Exploration BV has relinquished its 45-percent stake in Service Contract 54B, effective December 30, 2011, according to the block operator Nido Petroleum Ltd.

Following the withdrawal of SPEX from the service contract, Nido Petroleum will increase its stake to 60 percent from 33 percent, while another partner, Yilgarn Petroleum Philippines Pty. Ltd. will also raise its interest to 40 percent from 22 percent.

Nido Petroleum, however, did not cite in its regulatory filing the reason why SPEX pulled out of the service contract.

It should be recalled that in 2011, the SC 54B consortium encountered failure in the drilling of the Gindara-1 well as it was found “water bearing.” The consortium plugged and abandoned the Gindara-1 well in July 2011.

The Gindara prospect, which was earlier estimated to contain as much as 1 billion barrels of oil equivalent, was deemed comparable in scale to the nearby Malampaya field, which SPEX currently operates.

Nido Petroleum, however, remains optimistic of SC 54B as it prepares to mature the Pawikan lead, covered by the same service contract.

“We remain optimistic on the prospectivity of the block especially by the potential exploration upside identified in the large Pawikan lead to the south of the Gindara-1 location and only 10 kilometers from the producing Nido ‘A’ and ‘B’ fields (SC 14A),” said Nido Petroleum chief executive officer JV Emmanuel de Dios.

De Dios said the recently acquired 430 full-fold line km. of new 2D seismic data over the Pawikan lead was designed to mature this area to a “prospect status” and a potential future drilling opportunity. Preliminary seismic data from the Pawikan survey was found encouraging, he added.

“Importantly, there are no drilling commitments required in SC 54B before the expiry of the service contract in August 2013, so the timing of the drilling of a Pawikan well, should the joint venture decide on this, would be at the SC 54B partners’ discretion,” De Dios further explained.

Prospective resource oil-in-place estimate for the Pawikan lead was earlier approximated at 2 billion barrels of oil.