THE marginal gas deposits found at the Cagayan Basin under Service Contract (SC) 48 has pushed one of its developers to pull out of the project.

In a disclosure to the Philippine Stock Exchange, Monte Oro Resources and Energy Inc. (More) said it has withdrawn from the farm-in agreement with Aragorn Power and Energy Corp. (Apec) to develop the said contract area.

The exploration of the area, said More, resulted in a gas discovery near the southern portion of SC 48 where PNOC installed and operated a 3-megawatt power plant. A gravity survey within what was perceived as a potential area for gas was also conducted in the southeastern portion of the Service Contract. However, the survey yielded structures that only contain marginal gas deposits.

More said the findings further suggest there is a need for further work to be carried out, including the conduct of an expensive seismic survey. Such a survey, however, may not be acceptable to residents living within the area.

“Any well drilling at this stage is not warranted,” the company added.

The service area is located in the Cagayan Basin and covers about 748,000 hectares. The basin was previously explored by several companies.

The farm-in agreement between More and Apec was signed in July 2007.

More also operates SC 52, also in the Cagayan Basin, which has drilled the Monte Oro-1 well. It joined the SC 52 consortium last year, acquiring a 70-percent stake in the contract area from EF Durkee and Associates.

The SC 52 group had projected a budget of $5.2 million for exploration activities in the 96,000-hectare Cagayan contract area.