Oil production off Palawan to rise in 2013

Australian firm Nido Petroleum Ltd. expects to generate strong cash flow in the second half of 2013 when the two wells to be drilled under the second phase of development of the Galoc oil field in offshore Palawan start producing oil.

In a regulatory filing, Nido Petroleum managing director Phil Byrne said that based on the estimates of field operator Galoc Production Co. (GPC), the Phase II development would “lead to the recovery of an additional 8 million barrels of crude from the field and it anticipates (that) the two new wells will increase field gross production from Phase I levels of 5,200 barrels of oil per day (bopd) to a combined field rate of 12,000 [bopd].”

The share of Nido Petroleum, which holds a 22.88-percent interest in Service Contract 14C, will thus increase to more than 2,700 bopd starting in the second half of 2013. In annual terms and on a net-to-Nido basis, the company’s annual production should increase from around 400,000 barrels to between 900,000 and 1 million barrels.

“Since Nido’s crude from Galoc is a premium product, it is easily placed into the regional markets and we are consistently achieving prices of [about] $110 a barrel. In other words, Nido should be generating very strong cashflow from the second half of 2013,” Byrne explained.

The ongoing $188-million Phase II development for the Galoc oil field will involve the drilling of two subsea wells, which will be tied back to the existing floating production, storage and offloading (FPSO) facility. There is also an option to drill a third well in the Galoc North prospect following the completion of the two development wells. Apart from increasing reserves, the development will extend the life of the Galoc oil field by another five years.

Meanwhile, Byrne disclosed that over the next three months, Nido Petroleum would embark on a three-pronged strategy, the first of which is to “maximize the production from our development opportunities and existing discoveries.”

Apart from the Galoc oil field, Nido will also be focusing on the development of the West Linapacan field also in offshore Palawan, which is covered by SC 14C2. This field earlier produced 8.5 million barrels of oil before being shut in 1996 due to low oil prices.