OTTO Energy Ltd. of Australia has rejected an offer of Pryce Gases Inc. (PGI), a distributor of liquefied petroleum gas (LPG), to purchase a 10-percent participating interest in Service Contract (SC) 55.
“Otto notes an offer by Pryce Gases Inc., an LPG distributor whose parent company, Pryce Corp. is listed on the Philippines Stock Exchange, to farm-in for a 10-percent working interest in SC55 and the Hawkeye-1 exploration well. Negotiations are incomplete and the current offer by Pryce is not capable of acceptance,” Otto said on Thursday.
The SC55 consortium is composed of Otto Energy Philippines, 45 percent; Otto Energy Investments Ltd., 33.18 percent; PNOC-Exploration Corp. (PNOC-EC), 15 percent; and Palawan55 Exploration and Production Corp., 6.82 percent.
“Otto is fully funded for the drilling of Hawkeye-1. The expression of interest from PNOC-EC to farm-in for a 15-percent interest in SC55 is still valid and approvals from the Office of the President are required before this transaction can be finalized,” Otto added.
SC55 covers southwest Palawan. Otto Energy, operator of SC55, is set to undertake drilling activities this month. It has tapped Maersk Drilling to drill the Hawkeye-1 exploratory well in SC 55.
The commencement of the drilling window will be between July 17 and August 15 this year. Drilling operations will be completed in about 23 days.
The drilling of Hawkeye well is estimated to cost anywhere between $30 million to $35 million.
“If the well encounters oil and/or gas, more detailed evaluation will be undertaken and the total well cost may increase by $2 million to $3 million,” Otto said earlier.