OTTO Energy Investments Ltd. has successfully sought from the Department of Energy (DOE) a two-year moratorium under Service Contract (SC) 55, which covers southwest Palawan.
“Otto Energy Ltd. is pleased to advise it has received approval from the Philippines’s Department of Energy for a two-year moratorium until December 23, 2017, on required work activity under SC 55,” said Otto, operator of SC 55.
During the moratorium period, the consortium will conduct specialized geophysical studies in the area surrounding the Hawkeye prospect, which encountered gas shows when it was drilled last year.
“The joint venture will undertake a specialized geophysical study in the interim period to determine if further drilling activity is warranted in SC 55,” Otto said.
In August 2015 the consortium decided to abandon the project. Four months later, Otto asked the DOE for a two-year moratorium.
Otto undertook the drilling of the Hawkeye-1 exploration well in 2015, delivering the well on time and under budget. The volume of gas discovered in the Hawkeye-1 well was below a level that would be economic to develop, it said.
Otto holds a 68.18-percent share in the consortium. Other members include PNOC-Exploration Corp., 15 percent; Trans Asia’s Palawan55 Exploration and Production Corp., 6.82 percent; and Pryce Gases Inc. with 10 percent.
Otto indicated to the remaining joint-venture partners that it will not continue with further activity in SC 55 and will assign its working interest to the remaining joint-venture partners. Documentation to give effect to this assignment is being finalized.
“Whilst disappointing that SC 55 has not delivered the significant discovery being sought, Otto managed to undertake this large exploration program without exposing its balance sheet to the risk of the exploration outcome,” Otto Managing Director Matthew Allen said.
