MANILA, Philippines — Phinma Petroleum and Geothermal Inc. (PPGI) has decided to give up its interest in an oil drilling and exploration project in northern Leyte.
In a disclosure to the Philippine Stock Exchange yesterday, PPGI said it notified the Department of Energy (DOE) of its withdrawal from Service Contract (SC) 51.
Following its withdrawal, the company will recognize a loss of P32.7 million for the write off of its share in the expenditures incurred to date under SC 51.
“This is equivalent to 22 percent of the company’s total assets as of March 31, 2018,” the firm said.
In a text message, PPGI executive vice president and chief operating officer Raymundo Reyes Jr. said pulling out from SC 51 “was a business decision.”
He declined to expound on the details behind the decision.
In its annual report, PPGI said the Filipino partners in SC 51 submitted a deed of undertaking to assume the outstanding training fund obligation of the former operator, Australian firm Otto Energy Ltd.
This was a condition of the DOE before giving approval of the transfer of interests to the Filipino partners. Transfer of interests is now pending with the agency.
In 2014, Otto Energy withdrew from SC 51 after a post-drilling analysis by wholly-owned subsidiary Otto Energy Investments Limited (OEIL) showed further drilling at the Duhat-2 well was not safe due to risks such as shallow pressures and indications of weak low rock above the zone of pressure.
The SC 51 consortium started drilling on the Duhat-2 exploration well in July 2013 but was immediately abandoned and plugged for safety reasons.
At that time, the SC 51 consortium was composed of Otto Energy as the lead operator with 80 percent, PPGI with a 6.67-percent participating interest and PetroEnergy Resources Corp. with 4.01-percent participating interest. Cosco Capital is also a member of the consortium.
PPGI still has other oil and gas exploration projects. It is working with its partners to get more developments done within the year.
A new work program for SC 6 Block A in offshore northwest Palawan intended to drill wells was earlier submitted to the DOE.
The proposed work program is composed of seismic interpretation and mapping and integration of quantitative inversion results that will serve as input to preliminary well design and costs estimates.
PPGI has a 7.78 percent interest in SC 6 Block A. Its partners include Pitkin Petroleum, Philodrill Corp., PetroEnergy Resources, Philex Petroleum, Forum Energy Philippines, Anglo-Philippine Holding and Alcorn Gold Resources.
Meanwhile, more studies will be done in SC 55 in west Palawan after subsidiary Palawan55 Exploration & Production Corp., was cleared to assume its proportionate share in the outstanding training fund obligation of former operator, Otto Energy, and to undertake specialized geophysical studies that will reassess the prospectivity of the block in light of the gas discovery in Hawkeye-1 well.
In 2015, former operator Otto Energy said the Hawkeye-1 well was not commercially viable for gas and petroleum production.
Prior to the DOE approval, Palawan55 holds a 6.82 percent participating interest in SC 55 with other partners Century Red Pte. Ltd. with 15 percent and Pryce Gases Inc. (10 percent).