Australian-listed Otto Energy has received regulatory clearance for the first of two deepwater exploration wells offshore the Philippines.

The company is in the process of taking over from BHP Billiton as operator of Service Contract Area 55 offshore Palawan Island in the Philippines, where the Cinco-1 well is due to be drilled, after BHP decided to exit the licence (see DI, 11 November 2013, page 8).

Otto reports that final regulatory approval, a Strategic Environmental Plan Clearance, required to drill the Cinco-1 exploration well has now been received from the Palawan Council for Sustainable Development.

The company says it is now to seek confirmation from the Philippines Department of Energy for a revised 2014 work programme, which includes drilling Cinco-1.

Cinco is regarded as an analogue to the Shell-operated deepwater Malampaya gas and condensate field which started producing in 2000, and the prospect was identified using data from a 1,800 sq km 3-D seismic programme undertaken in 2010 by BHP Billiton. Currently Otto indicates a best estimate of gas in place for Cinco of 1.3 Tcf plus 45 MMbbl of condensate. Also Otto says there is potential for an oil charge at Cinco but this is still to be quantified.

Another well is planned for SC55 on the Hawkeye-1 prospect, located in 1,690 m (5,543 ft) of water, with a top reservoir thought to lie at a depth of 2,732 m (8,960 ft).

Otto gives an oil in place estimate for Hawkeye of 480 MMbbl of oil and net prospective resources of 89 MMbbl.
In the coming months the Australian-based explorer says it will start preparing plans for drilling, including procurement of equipment for its exploration programme. At the same time the company says it will start a new farm-out process to try and introduce another partner to participate in SC55.

Once the DOE formally reassigns 60% equity from BHP back to Otto – increasing Otto’s equity to 93.18% - BHP will be obligated to pay US $3 million plus a further $24.5 million to Otto on drilling of the first exploration well in SC55.

In Service Contract Area 73 – operated by Otto with a 100% stake – the company is also to reprocess 3,000 km of 2D data as part of a minimum $500,000 commitment over an initial 18 month exploration period. The SC 73 area covers a total of 8,409 sq km with water depths ranging from 100-1,300 m (328-4,264 ft) in the Mindoro-Cuyo basin off Palawan Island.