The board of Red Emperor Resources NL said May 5 that Otto Energy Ltd., its joint-venture partner in Block SC55 in the Palawan Basin offshore Philippines, executed a binding contract with Maersk Drilling to secure a drillship.

The companies will secure the Maersk Venturer ultradeepwater drillship to drill the Hawkeye-1 exploration well.

The Hawkeye prospect was identified on 2-D seismic in 2007 and further defined with a 600 sq km 3-D seismic in late 2009. It could hold about 480 MMbbl of oil.

The companies’ drilling window will be between July 17 and August 15. The companies will secure key services and equipment, and prior to this window, Maersk Venturer will be at the drilling location. The well will take about 23 days to drill, Red Emperor said. Most of the services are already contracted.

Final costs are being completed, and the total will range between US$30 million and $35 million. This cost is a dry hole estimate - if the well hits hydrocarbons, well logging and other evaluation will take place. The well cost exposure is capped at about US$5.6 million.

SC55 is in a 9,880 sq km area in the middle of a proven oil and gas fairway stretching from the productive offshore Borneo region in the southwest to the offshore Philippine production assets northwest of Palawan.

Offshore