Australia-listed Otto Energy Investments Ltd. (Otto) said on Tuesday it will start drilling for oil and gas offshore in southwest Palawan in July.
It said in a statement it has signed a contract with Maersk Drilling for the Maersk Venturer ultra-deep water ship to drill the Hawkeye-1 exploration well Service Contract 55.
“Success at Hawkeye will unlock a significant new hydrocarbon play in the deep water of Southern Palawan region with material follow up potential already mapped on 3D seismic,” Otto said.
The Maersk Venturer is one of the most modern drill ships in the world. The schedule to start the Hawkeye-1 drilling will be between July 17 and August 15, 2015.
The gross estimate for the Hawkeye Prospect is 112 million barrels of oil (mmbo) wherein 74mmbo is net to Otto.
Otto Chief Executive Officer (CEO) Matthew Allen said final preparations for the drilling of the Hawkeye-1 exploration well are considerably advanced.
“This is a very exciting time for Otto as we undertake this important and potentially high impact drilling event on behalf of the Philippines Department of Energy and our joint venture partners. With a significant free carried interest, Hawkeye-1’s success would be transformational for Otto,” Allen said.
The well is expected to take around 23 days to drill from rig arrival until release. The majority of services have been contracted and total expected cost is $30 million to $35 million (dry-hole well cost estimate).
Should the well encounter hydrocarbons, Otto said, more detailed evaluation, including well logging, will be undertaken, which would increase the overall cost by around $2 million to $3 million.
“Otto is fully funded for such a circumstance,” the firm said.
As a result of the $24.5 million committed by BHP Billiton and the farm-down to Red Emperor Resources NL, Otto will be free-carried for the drilling of Hawkeye-1 while retaining a significant 78.18 percent working interest.
Otto has received an expression of interest from the Philippine National Oil Company – Exploration Company (PNOC-EC) to farm-in for a 15 percent interest and the parties are currently awaiting required approvals from the Office of the President in order to close this transaction.