Otto Energy and partner Red Emperor received approval from the Philippines Department of Energy for a two-year moratorium on required work activity under Service Contract 55, offshore the Philippines following failed attempts to find commercial discovery at Hawkeye.
During the moratorium period, which expires on 23 December 2017, the joint venture will conduct specialized geophysical studies in the area surrounding the Hawkeye prospect, to determine if further drilling activity is warranted in SC 55. Although the Hawkeye well did not encounter gas in commercial quantities, it proved the presence of an active petroleum system in the contract area which hosts the Cinco Prospect as well as several other leads.
SC 55 is a deepwater block located in the southwest Palawan Basin and covers an area of 9880sq km. The license was awarded to Otto in 2005.
In January, Australia’s Otto Energy announced its intention to exit the Block SC 55 as part of its strategy to focus on its North American assets. Red Emperor said it intends to have its full, proportionate interest be assigned and as a result its working interest will increase from 15% to 37.5%.
Otto has indicated to the remaining joint venture partners that it will not continue with further activity in SC55 and will assign its working interest to the remaining joint venture partners, Otto confirmed today (17 June). Documentation to give effect to this assignment is being finalized.
“Otto is would like to thank the Philippines Department of Energy for the support that it has given over the 10 years that Otto has operated in the Philippines. Whilst disappointing that SC55 has not delivered the significant discovery that was being sought, Otto has managed to undertake this large exploration program without exposing its balance sheet to the risk of the exploration outcome. Otto has repositioned itself strategically in petroleum provinces that offer the opportunity for significant returns in the 'lower-for-longer' oil price environment. Otto has moved away from high-cost frontier exploration into mature petroleum provinces with proven hydrocarbon plays," Matthew Allen, Otto managing director said.
In conjunction with Red Emperor’s commitment to SC 55, the board continues to review and evaluate new opportunities it believes could compliment the current assets in the portfolio.
Map of Hawkeye, from Otto.
Read more:
Otto to bail on the Philippines
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