Via its wholly owned subsidiary, NorAsian Energy, Otto said the semi-submersible rig, belonging to Bare Boat Charter (BBC), was currently under construction and due to be delivered to the field in SC50 by mid-October next year.
Otto managing director Jaap Poll described the rig contract as “an important step forward” for the company.
“We’ve been frustrated, along with the rest of the industry, about the current rig shortage,” he told PetroleumNews.net.
“The contract could put us in a front row position in the Philippines, as there’s an opportunity to earn a part equity in other projects that could use this rig.”
He said the tight rig market had made it almost impossible for small and mid-size companies to secure rigs and production units on flexible long-term contracts.
“The joint venture requires a mix of exploration drilling and production facilities to meet its diverse requirements,” Poll said.
“Such flexibility is essential for NorAsian’s drilling and production plans and the BBC now provides the company with that flexibility.”
The MPSS, which Poll estimated was worth about $120 million, will have an initial production capacity of 15,000 barrels of fluid per day, increasing up to 45,000bbl of fluid per day to accommodate output from up to three wells.
“Chartering the MPSS for up to three years or more provides certainty of being able to put the Calauit 1B well on an extended production test, fully develop the Calauit oil field with two additional wells and to be in a position to drill and test its other exploration prospects in a range of water depths,” Poll said.
Once the rig is on location, Otto intends to re-enter the Calauit 1B well and drill a sidetrack well horizontally in the top of the reservoir. First production is expected within one month of re-entry.
BBC will receive the $11.5 million in six periodic payments over the next 12 months, in which Otto’s total share is $4.1 million.
An independent report by Dr Andrew Wadsley estimates the Calauit oil field contains 39.5 million barrels of in-place oil, of which 6.44MMbbl are certified as recoverable.
Revised farm-in, share placement
As part of its efforts to fund the rig contract, Otto has revised its farm-in agreement with Canadian-based Vital Resources, which will increase its working interest to 35% in SC50 by funding 60% of the $20 million of costs estimated to bring Calauit into production.
In addition, Vital has agreed to pay a $825,000 entry fee to participate in the project.
In order to pay BBC the first $2.25 million payment next month, Otto will place 15 million shares with 7.5 million attaching 20c listed options to mostly American and Asian investors.
