THE Department of Energy has granted the Australian oil drilling company, Otto Energy Ltd., a two-year moratorium until 23 December 2017 for the Service Contract 55 that involves the exploration, development and exploitation of petroleum resources in some 9,880 square kilometers of offshore area near southwestern Palawan.
In 2015, Otto undertook drilling of the Hawkeye-1 exploration well and delivered the well on time and under budget. However, the volume of gas discovered in the well was, according to Otto, below a level that would be economic to develop.
Otto has since indicated to its joint venture partners that it will not continue with further activity in SC55 but will assign its working interest to them. According to Otto’s managing director, Matthew Allen, the company is moving away from high-cost frontier explorations and is repositioning itself in petroleum provinces that offer the opportunity for significant returns in the “lower-for-longer” oil price environment.
At the same time, Otto’s joint venture partners for SC 55 will now undertake a specialized geophysical study to determine if further drilling activity is warranted under contract.
The Hawkeye well is estimated to hold 480 million barrels of oil and the best estimate of net prospect resource is 47 million barrels of oil.
Also within SC 55 is the Cinco prospect that is estimated to contain up to 2.9 trillion cubic feet of gas and requires investment from large oil and gas companies. Assigning the exploration of Cinco is now in process.