Otto eyes new SC55 partner by mid-2014

Australia’s Otto Energy Ltd., which has taken control of the oil and gas venture in Service Contract 55 (SC 55) off Palawan, hopes to find a new exploration partner by mid-year.

The former operator of SC 55 BHP Billiton Petroleum (Philippines) Corp. left the venture last year, citing difficulties in securing permits at the local government level.

Otto Energy wants a partner with deepwater experience to drill the Hawkeye-1 exploration well in SC 55, the Australian company said in a regulatory filing.

“Several suitable companies with Southeast Asia operations have commenced technical due diligence reviews of the available data. Completion of the farm-out process is anticipated to be completed and a new partner secured by mid-2014,” Otto said in its report.

As operator of the service contract, Otto has lodged its budget and Sub-Phase 4 work program, which includes the drilling of the Hawkeye-1 well, with the Department of Energy (DOE).

Otto said it started drill planning preparations, including well design and procurement reviews.

“Otto has also invited expressions of interest from rig owners … to ensure Hawkeye-1 is drilled within the required timeframe,” the company said.

Meanwhile, production continued throughout the first quarter following the successful completion of Galoc Phase II commissioning in December 2013. There were four cargo liftings for the quarter, all sold to South Korean refineries, Otto said.

Earlier, the DOE approved the reassignment of 60-percent equity in SC 55 from BHP Billiton to Otto Energy, bringing Otto Energy’s interest in the service contract to 93.18 percent.

Last Jan. 21, Otto Energy announced that it had executed agreements with BHPB to terminate the farm-out agreement for SC 55. Under the agreements, BHP Billiton would have to pay $3 million to Otto Energy following the DOE’s approval.

BHP Billiton will also need to settle another $24.5 million to Otto Energy upon drilling the first exploration well in SC 55, which is touted to be the country’s next Malampaya field.  Riza T. Olchondra