State-run PNOC Exploration Corp. (PNOC-EC) is in advanced discussions to participate in drilling for oil and gas production in northwest Palawan under service contract (SC) 6B.
PNOC-EC told a Congressional hearing last week the resource area is set for drilling this year and production by next year.
PNOC-EC in June sent a letter of intent to Sacgasco Ltd., via wholly- owned subsidiary, Nido Petroleum Philippines Pty Ltd. for a farm-in at SC 6B, including the drilling of Cadlao 4 oil filed as the first stage of redevelopment.
In the proposed agreement, PNOC-EC acquires from Nido Petroleum an undivided 20 percent participating interest in SC 6B for the drilling and extended well testing of the Cadlao 4 well.
PNOC-EC will pay to Nido Petroleum $3.34 million for a binding farm-in agreement and an additional $10.01 million to be paid in cash calls as drilling begins.
In January, Nido Petroleum told the Environmental Management Bureau (EMB) it was preparing to explore new wells in shallow waters of SC 6B estimated to hold 2 to 20 million barrels of oil each.
It estimated the required capital expense for up to four wells is $8 million per well.
The company also said it is pursuing smaller, lower-risk pinnacle reef plays in the shallower waters of SC 6B.
