MANILA, Philippines - A unit of listed Pryce Corp. signed a farm-in option agreement with Otto Energy Philippines Inc. to earn a 10 percent working interest in Service Contract 55 in offshore Palawan.
In a disclosure to the Philippine Stock Exchange, Pryce Corp. said its sole subsidiary Pryce Gases Inc. acquired a 10 percent participating interest in the service contract for $3.22 million (roughly P146.67 million).
Its entry ensures that Otto Phlippines is fully funded for the drilling of Hawkeye-1 next month.
The acquisition will entitle the firm to 10 percent of the earnings and the cost recovery pool.
Otto Philippines, a subsidiary of Otto Energy Ltd. will have a 68.18 percent participating interest in SC 55 after the acquisition.
“Otto welcomes Pryce Gases to the SC 55 joint venture. Along with our existing joint venture partners, TransAsia Oil and Energy Development Corp. and Red Emperor Resources, the SC55 joint venture looks forward to delivering the highly important Hawkeye-1 exploration well on behalf of the Philippine Department of Energy,” Otto managing director and CEO Matthew Allen said in a statement.
Pryce Gases’ entry in the joint venture further raises the Filipino stake in SC 55 to 16.82 percent.
The other local firm in the joint venture is Palawan55 Exploration and Production Corp., a subsidiary of Trans-Asia Petroleum Corp. of the Phinma Group. It holds a 6.82 percent participating interest in the service contract.
“This entitles the joint venture to the Filipino Participation Incentive Allowance of 7.5 percent of gross proceeds from petroleum production for petroleum service contractors with a minimum of 15 percent Filipino participation,” Pryce said.
BHP Billiton and Red Emperor Resources NL, which hold a 15 percent working interest in SC 55, had already committed $24.5 million when it sealed a farm-in option with Otto last March.
The SC 55 joint venture is now in final preparations to start drilling by early August, which is seen to take approximately two to three weeks.
“The start of drilling at the Hakwye-1 exploration well is a very exciting time for Otto and we look forward to reporting the results of the well in the coming short period of time,” Allen said.
SC 55 is located near the Malampaya gas field in offshore Palawan. It includes the Cinco Well.
In terms of potential resource, the Department of Energy estimates that SC 55 has some 2.2 trillion cubic feet of gas.