DOE approves transfer of 70% interest in Palawan oil search to Pitkin Petroleum

MANILA, Philippines - The Department of Energy (DOE) has approved the transfer of 70 percent interest in Service Contract 6A off Northwest Palawan from Philodrill Corp. and its joint venture partners to Pitkin UK-based Petroleum Plc.

In their respective reports to the Philippine Stock Exchange (PSE), Philodrill Anglo-Philippine Holding Corp. and Trans-Asia Oil and Energy Development Corp. said the DoE likewise gave its go-signal for the appointment of Pitkin as operator of SC 6A or the Octon black in accordance with the deed of assignment and assumption.

Based on the disclosures, a new work program will be set in place, in which a budget of $4 million will be used for the acquisition, processing and interpretation of 500 square kilometers of 3D (three-dimensional) seismic data.

The farming-out parties will be carried free not only in the 3D seismic program, but also in the drilling of two exploration wells in the block. Apart from Philodrill, Trans-Asia Oil and Anglo-Philippine, the other farming-out parties were Philex Petroleum Corp., PetroEnergy Resources Corp., Forum Energy Philippines Corp. and Alcorn Gold Resources Corp.

The companies did not disclose how the remaining 30 percent will be divided.

They said this in accordance with the farm-in agreement and deed of assignment and assumption both dated July 11, 2011 between and among the parties.

In July this year, Pitkin acquired its stake in SC 6A from Philodrill Alcorn Gold, Anglo Philippine Holdings Forum Energy, PetroEnergy Resources Philex Petroleum and Trans-Asia Oil.

Based on the agreement, Pitkin has the option to drill up to two wells in the block at its own cost. The deal, however, is still subject to the approval of the Department of Energy.

Pitkin had said it intends to update existing seismic studies in SC 6A, which were last updated in the 1990s before proceeding with further drilling activities.

Based on DOE data, Octon has both oil and gas prospects. In particular, it is projected to contain three million barrels of oil and 34 billion cubic feet of natural gas reserves.

The petroleum block had also been subject to around eight drilling campaigns before and had produced oil in the 1980s.