As per the terms of the farm-in agreement, the Australian energy company will fully fund and operate the EWT and subsequent development of the historically producing offshore oil field for which it will become the operator
Sacgasco is set to increase its stake in the Cadlao oil field, offshore The Philippines to around 72.7% by entering into a farm-in agreement (FIA) with the Service Contract 6B (SC 6B) joint venture (JV).
The company, through its fully-owned subsidiary Nido Petroleum Philippines, has a stake of 9.09%.
As per the terms of the FIA, Sacgasco will fully fund and operate the extended well test (EWT) and subsequent development of the historically producing Cadlao oil field. Following the completion of the FIA, the Australian energy firm will become the operator.
The other partners in the SC 6B JV are Philodrill, the current operator with a stake of 58.18%, Oriental with 16.36%, Alcorn with 8.18%, and Forum with 8.18%.
Post-FIA, Philodrill’s stake will be 17.45%, while Oriental, Alcorn, and Forum will have their stakes reduced to 4.09%, 2.45%, and 2.45%, respectively.
Sacgasco managing director Gary Jeffery said: “Securing this farm-in gives Sacgasco the opportunity to fast-track the redevelopment of Cadlao Oil Field, as well as greater exposure to its near-term cashflow potential through an EWT.
“I am pleased that our JV partners have recognised our ability and commitment to execute quickly and to a high standard given the track record of management and in-country team.”
For more than 30 years ago, the Cadlao oil field is said to have produced 11.1 million barrels before it was shut in 1991 by its then operator. During its first production phase, the oil rates of the offshore Filipino field had reached a peak of 6,000 barrels of oil per day (bopd).
Sacgasco is of the belief that the oil field has substantial remaining potential reserves and previous wells are said to have demonstrated high productivity from the reservoir.
Presently, an assessment of reserves is in progress which is likely to be wrapped up this month before submission of an EWT proposal to the Philippine Department of Energy (DOE).
According to Sacgasco, drilling at the Cadlao field and EWT is planned for this year in a two-well drilling programme with the Nandino prospect in Service Contract 54. This will be subject to approvals from the DOE and JV partners.
The EWT is planned to see the drilling of a single well, with production equipment located on the jack up drilling rig. Oil produced from the well will be sent into a floating storage and offloading vessel (FSO) or barge for shuttling to a local refinery.
The Australian firm stated that if the EWT is successful and based on the field data obtained, a full field development could involve the drilling of up to four wells with a dedicated oil production facility.
The company may also drill, test, and produce from the nearby East Cadlao prospect from any Cadlao development.