"We're a small company, but we won't be small for much longer," Nido managing director Dave Whitby told EnergyReview.net.

Nido has confirmed it has applied for a large exploration permit contiguous with its existing offshore acreage position in the Philippines Palawan Basin.

"No formal notification has been received from the Department of Energy in Manila indicating that Nido has been successful in its bid," Whitby said. But he conceded that the Philippines press was reporting that contracts were about to be signed.

He said the permit covered 511,700 hectares with water depths ranging from 30 to 2000 metres.

Its geology was well understood by Nido, which was already operating in the area immediately north of the permit and in a small area inside the permit, he said.

Analagous play fairways included the Baram Delta in Brunei and Sabah and offshore Mauritania, according to Whitby.

There were already several prospects and leads in the permit, including Coron North, which had been prepared for drilling last year before Nido had been forced to relinquish that area when it was unable to find farmin partners.

Whitby said Nido had applied for the permit on its own, and if was awarded the lease it would look for farmin partners.

There were already several discoveries in the permit, including the Nido field, which had been excised and included in SC-14 where Nido was currently operating.

Meanwhile, at SC-14, progress has finally been made at the Galoc oil field, where a farmin has been arranged after several months of work by Perth junior Nido Petroleum.

"Five of the six Filipino partners in the Galoc Production Area of Service Contract 14 have approved the Galoc farm-in agreement," Whitby told the ASX yesterday.

"Oriental Petroleum and Minerals Corp with a 30.29% working interest in the Galoc structure has yet to sign the farm-in agreement pending receipt and verification of original signed and executed supporting documents. This unique request has been addressed with the appropriate documents being couriered to Manila this week."

Since late last year, two start-up companies – Perth-based Cape Energy and London-based Team Oil – have been trying to farm into the Philippines block, but have been stymied by financial problems.

But a white knight has appeared in the form of Dutch private petroleum company Vitol, according to Nido managing director Dave Whitby.

“Vitol will being taking up the lion’s share of equity in Galoc Production Company [GPC], which was set up by Cape and Team to handle their responsibilities and interests at Galoc,” Whitby told EnergyReview.net.

“Vitol will assume the leadership role in GPC, and it will arrange project funding, manage the development program and operate the field. It will also offload and market the crude from Galoc.”

In addition, Vitol will arrange the debt component of Nido’s project financing, allowing Nido to take advantage of the Dutch company’s excellent credit rating, Whitby said.

Nido will not be relinquishing any of its 22.279% stake in Galoc. GPC will take three-quarters of the 77.721% share held by the six Filipino partners, taking up a 58.291% slice of the Galoc block.

But the farmin does not include the rest of the SC-14 permit where interests will remain unchanged. Nido and its Filipino partners already have two producing fields - Matinloc and Nido - in SC-14.

Industry estimates suggest Galoc is a field of at least 20 million and possibly up to 50 million barrels. Whitby said the area is covered by very good seismic data.

But the Galoc reservior near the well bore was damaged during previous drilling, which meant remediation work and a carefully designed drilling program were needed.

Otherwise, the reservoir was intact and Whitby said he was confident the company’s drilling strategy would turn it into a good producer.

The SC-14 Filipino partners are diversified companies that were keen to see the right partners brought on board so Galoc could be developed, according to Whitby.

"The development concept is low-cost, straightforward and fit-for-purpose,” he said.

“It is designed to maximise production rates and work around the near-well bore damage, and will include a staged development, focusing on the region around the Galoc-1 well. It will initially comprise two producing wells with long-reach horizontal sections tied back to a leased floating production and offloading facility moored in 300 metres of water.”

Initial production rates are expected to be between 7,500 and 10,000 barrels of oil per day per well, according to Whitby.

“Once Galoc is on production, Nido will have significant proven and probable reserves, production and positive cashflow,” he said.

“In addition, the strong relationship we have forged with Vitol puts us in good standing to work together in order to jointly pursue other opportunities.”

However, Vitol was very unlikely to farm into the nearby permit that Nido had applied for, as it was not interested in exploration plays.