MANILA, Philippines - Nido Petroleum Ltd, an oil and gas company listed at the Australian Stock Exchange, said it has mobilized a jack-up rig for the drilling of the Baragatan well in Service Contract 63 in Northern Palawan.
In a disclosure to the Australian bourse, Nido said the UMW Naga 5 jack-up rig commenced mobilization from Singapore to the Baragatan location in SC 63 and is expected to arrive in 12 days.
Nido’s joint venture partners for the project are PNOC-Exploration Corp. and Dragon Oil Plc.
In January, Nido entered into a farm-out agreement with United Arab Emirates (UAE)-based Dragon Oil for the project.
Under the two-phase deal, Dragon Oil will acquire a 40 percent participating interest in SC 63 from Nido’s 50 percent participating interest in the service contract.
To earn its 40 percent interest from Nido, Dragon Oil will pay on behalf of Nido, 56 percent of the cost of the Baragatan-1 exploration well based on a $25 million cost cap.
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For the second stage of the farm-out agreement, Nido will seek to secure an additional 10 percent participating interest in SC 63 from PNOC-Exploration Corp., the exploration arm of state-owned Philippine National Oil Co. (PNOC).
Thus, Nido will then have a 20 percent working interest in SC 63 and will then contribute $2.0 million towards the cost of the Baragatan well, based on an estimated cost of $25 million.
During the Baragatan-1 drilling operations, Nido will remain as technical operator and PNOC-EC as operator of the service contract.
In this period, Dragon Oil will be responsible for overall drilling management and eventually, following the drilling of the Baragatan-1 well, will have the right to become operator of the Service Contract.
The Baragatan prospect is part of SC 63 and has a projected oil-in-place of 676 million barrels. The upside is 977 million barrels while recoverable volume is placed at 115 million barrels with a ceiling of 166 million barrels.