Hawkeye-1 was drilled to the planned total depth of 2920m, intersecting the top reservoir at 2710m.

Hydrocarbons were logged between 2710m and 2737m in the target Miocene Pagasa formation reservoir of variable quality and cutting returns provided indications of fluorescence, suggesting the presence of liquids.

The reservoir below 2737m appears to be good quality, but water bearing.

The well will be plugged and abandoned as expected, with Hawkeye saying the $US30 million deepwater well was completed ahead of schedule and under budget.

"The Hawkeye-1 exploration well has proven the existence of hydrocarbons in SC55," Otto managing director Matthew Allen said.

"The hydrocarbon size discovered is, however, at the very low end of expectations and is not economic to develop. Otto will now incorporate the results from the well into our understanding of the other prospects, including Cinco, in the licence which potentially share the same charge source."

Cinco has best estimate prospective resources of 1.6 trillion cubic feet.

Hawkeye-1 will now be plugged and abandoned.

The first deepwater well in the Palawan Sub-basin was always a risky roll of the dice, but Otto was carried by its partners, and will now need to decide if it wants to continue funding its operations in the Philippines, or if it would prefer to switch its focus to its assets on Alaska's North Slope and in Tanzania's East African Rift System.

The Hawkeye prospect was identified on 2D seismic in 2007 and further defined with a 600sq.km 3D seismic acquisition in late 2009.

Hawkeye contained a best estimate gross prospective resource of 112 million barrels.

ASX-listed explorer Red Emperor Resources was also in the well, earning 15% of SC55 by funding $US5.6 million.