Viking Energy takes lead in SC 54A

MANILA, Philippines - The consortium behind Service Contract (SC) 54A has assigned a controlling stake to a British oil exploration firm for the drilling of three wells in the northwest Palawan basin.

Commercial production of the first well is expected in mid-2013, bringing the joint venture partners a fresh cash flow.

In a disclosure to the Canadian bourse, miner TVI Pacific Inc. said its wholly-owned subsidiary TG World BVI Corp. and joint venture partners signed a memorandum of agreement with Viking Energy Holdings 2 Ltd. “to develop three oil fields in SC 54A.”

“The participants will collectively assign a 60 percent equity interest in SC 54A in return for Viking assuming operatorship and carrying the participants in three oil field developments up until first oil [production],” TVI said.

To date, Nido Petroleum Philippines Pty Ltd. holds 42.4 percent of the consortium and is the project operator of the 862-square kilometer SC 54A. It is followed by Yilgarn Petroleum Philippines Pty Ltd. (30.1 percent), Trafigura Ventures III B.V. (15 percent) and TG World BVI Corp. (12.5 percent).

Under the agreement, Viking will be the majority owner (60 percent), followed by Nido (16.96 percent), Yilgarn (12.04 percent), Trafigura Ventures III B.V. (six percent) and TG World BVI Corp. (five percent).

“Viking will finance all required capital expenditure associated with bringing the Yakal, Tindalo, and Nido 1X1 undeveloped oil fields into production. This will include the drilling of one well in each field,” TVI said.

“Viking will receive a preferential proportion of the net cash flow generated from SC 54A until such time as it has recovered in full its capital expenditure in the project,” TVI said.

London-based Viking Energy is a private exploration and production firm focusing on the development of offshore oil and gas fields in Africa and Asia.

To date, it has stakes in two oil fields that will be with a production capacity of 24,000 barrels per day next year that will generate more than $500 million in the next five years.

“Viking anticipates bringing the Yakal and Tindalo discoveries into production first, followed by Nido 1X1 at a later stage,” TVI said.

Commercial production at the first field is expected in the second quarter next year, subject to relevant approvals from third parties and the government, and the availability of rig and production facilities.

“The signing of this agreement is a key step for TVI to realize cash flow from its interest in SC 54A,” said TVI chief executive Cliff James.

James added that the deal provides a low-risk approach for TVI to participate in the development of the oil assets.

To date, TVI produces copper and zinc concentrates from its Canatuan mine in Zamboanga del Norte. It is also pre-developing its Balabag gold and silver project in the Zamboanga Peninsula.