Hague and London Oil BV (HALO) is reviewing the possibility of divesting its non-operating interest in SC 54A, located in Northwest Palawan Basin, to better focus on their operations in Europe. The service contract is currently suspended under force majeure, until 5 August 2020.     On 9 August 2017, the joint venture received three years extension from the Department of Energy (DOE) for the exploration license for the block. The suspension is related to a territorial dispute related to international arbitration at the West Philippines Sea. No activity beyond care and maintenance is allowed at the licensed block unless the dispute is settled before the suspension duration end.   The SC 54A contains several oil fields such as Yakal (2008), Tindalo (2008) and Nido 1 (1976). The Nido 1 is the first offshore oil discovery in the Philippines and although it proved to be non-commercial at the time, acted as a catalyst for a new cycle of increased exploration interest in the basin. Tindalo field was abandoned after four tested intervals were found to produce formation water, following a workover on the well. The commerciality of the Yakal 1 discovery is yet to be proven.  Current right holders of the block are Nido Petroleum Philippines Pty Ltd (42.4%, operator), Yilgarn Petroleum Philippines Pty Ltd, (30.1%), Hague and London Oil BV (15 %) and TG World Corp (12.5%).    Background Information    The Philippines DOE has previously approved a moratorium for SC 54 for three years to give the partners sufficient time to evaluate existing 3D seismic and the prior small discoveries in the block. At the end of the moratorium period, the joint venture can elect to enter Exploration sub-phase 7, which carries a one-well commitment by 2018. If the joint venture continues into production period, the three years moratorium period will be automatically deducted from the production period.    On 27 October 2014, Wessex Exploration PLC completed the acquisition of Hague and London Oil BV (HALO), in turn holding 15% interest in SC 54-A. Through 2014, HALO acquired the 15% interest on the SC 54A block formerly owned by Trafigura Ventures III BV.    As of April 2013, Nido Petroleum was still seeking farm-in partners for SC 54A block. The block interest was held by Nido Petroleum Philippines Pty Ltd (42.4%, operator), Kairiki Energy Limited, through its wholly-owned subsidiary Yilgarn Petroleum Philippines Pty Ltd, (30.1%), Trafigura Ventures III BV (15%) and TG World Corp (12.5%).    On 4 March 2013 Nido Petroleum announced the termination of negotiations with Viking Energy Holdings 2 Ltd regarding a potential farm-in to SC 54A. The block contains undeveloped oil fields Tindalo, Nido 1X1 and Yakal. Nido and the SC 54A partners will continue working with the operating consortium of adjacent SC 14 towards a possible development of Nido 1X1 via the Nido A platform, located in SC 14.     On 1 June 2012, Nido together with its partners announced the signing of a Memorandum of Agreement (MoA) with Viking Energy Holdings 2 Ltd, outlining key commercial terms upon which a farm-in agreement will subsequently be negotiated. According to the MoA, Viking will be assigned a 60% operating stake in exchange for carrying the existing rightholders in the development of the Yakal, Tindalo and Nido 1 oil fields in the block. At the time of the announcement, the MoA was still subject to negotiation and signing of a formal agreement between the parties. Once the deal with Viking pushes through and given official approval, interest sharing in SC 54A will be Viking Energy (60%, operator), Nido Petroleum (16.96%), Yilgarn Petroleum (12.04%), Trafigura (6%) and TG World (5%).    On 25 March 2010, the DOE approved the farm-out agreements of Kairiki Energy and Nido Petroleum with TG World Energy Corp for 12.5% participating interest in the SC54A block. In early March 2010, Kairiki Energy and Nido Petroleum signed separate farm-out agreements with TG World Energy Corp (4.9% interest ) upon commencement of production at the Tindalo oil field and as subsequent crude oil cargoes from the field are lifted. Under the agreement with Nido Petroleum, TG World acquired 7.6% interest.     In November 2009, Kairiki Energy and Nido Petroleum farmed-out of 15% interest in SC54A block to Trafigura Ventures III BV.     The partition of SC 54 into SC 54-A (inboard portion) and SC 54-B (outboard portion) was approved by the DOE on 17 June 2009. This partition was intended to allow development of the shallow water block and promote exploration in the deep water block. SC 54-A contains marginal discoveries Tindalo, Nido 1 and Yakal 1.    On 30 September 2008, Nido completed operations in the Yakal 1 oil discovery in SC 54. Yakal 1 encountered an oil column of 66m to 78m in the Nido Limestone Formation at a depth of 1,733m to 1,839m. Yakal 1 was drilled to a TD of 1,969.5m and is situated in water depth of around 115m.    On 16 January 2008, Nido completed acquisition of 194km of 2D seismic data over the Signal Head oil discovery area in its newly renegotiated SC 54 block area. The survey commenced on 12 January 2008, using the CGGVeritas "Pacific Titan" S/S.    On 11 January 2008, Nido announced that the company renegotiated with the Philippines government a new block outline for the SC 54 block. The new block outline was to include the Signal Head oil discovery (deemed uneconomical during the time of drill) made by Phil Oil & Geotherm Energy Ltd in 1978. The total block size remained the same at 5,376 sq km with the company relinquishing 120 sq km in the less prospective southeastern portion of the block to make up for the gain of the Signal Head.    On 30 October 2007, Nido completed shooting a 165 sq km 3D seismic survey over the block. The survey commenced on 30 September 2007 using the CGGVeritas "Pacific Titan" S/V. The survey focused on the Princesa lead and it was tied into a previous 640 sq km 3D seismic survey which was concluded on 10 January 2007.    On 20 March 2006, Nido announced that it accepted an offer from Australian company Yilgarn Gold Ltd to farm-in to SC 54. Yilgarn would earn 40% interest upon completion of two stages. First, Yilgarn would fund the acquisition and processing of seismic data on a 4:3 promote basis, based on estimated costs of US$ 6 million for the programme. Second, Yilgarn would fund the drilling of a well on a 2:1 promote basis, based on estimated well costs of US$ 15 million. The farm-in offer was conditional upon Yilgarn obtaining financing for the seismic programme, relevant approvals, conducting a due diligence and executing a formal farm-in agreement with Nido.    SC 54 was awarded to Nido (100%) in August 2005. The company committed to a US$ 220,000 G&G study during the first (six month) sub-phase, after which it had the option to enter the second sub-phase of one year, during which a single exploration well (at a minimum cost of US$ 6 million) is required. Further G&G studies and post-drill analysis were required for the third sub-phase (six months), while the fourth sub-phase (12 months) required another well, at a minimum cost of US$ 6 million. The fifth sub-phase (12 months) involved additional post-drill analysis and G&G studies, while the sixth and seventh sub-phases (18 months and 12 months respectively) carry commitments of one well each, at a minimum cost of US$ 6 million per well.    The Nido 1 discovery was made in 1976 by Cities Services. The well was targeting Oligo-Miocene reefal buildups along the Northwest Palawan shelf. This was the first offshore oil discovery in the Philippines and although it proved to be non-commercial at the time, acted as a catalyst for a new cycle of increased exploration interest in the basin.
Philippines Hague and London Oil BV potentially divesting its non-operating interest in SC 54A