PHILIPPINES – SC6 CADLAO
Raisama, through its subsidiary Peak Oil & Gas, has entered into a Farm-in Agreement with Blade Petroleum Limited and others under which Peak Oil & Gas (Philippines) acquires up to 50% undivided participating interest in SC6 Cadlao and Operatorship of the block.
Located in the NW Palawan Basin in the Philippines, the Cadlao oil field has independently certified (2P) reserves of 6.05 mmbbl and an expected average gross field production rate of over 11,400 bopd for the first six months of production (5,700 bopd net to Raisama).
With an IRR of more than 100%, the field pays back the investment capital within the first two months of production and provides positive net cash flow of more than $90 million to Raisama in the first year of production.
Plans to drill and produce the remaining reserves in the Cadlao oil field are well advanced, with production scheduled to commence in 2012.
Exploration History:
Petroleum exploration started in the west Palawan Basin in the mid-1960’s. Drilling commenced in the 1970’s and the first oil discovery was made by Philippines Cities Service Inc. in 1976 with the drilling of Nido-1. This well produced oil from a reefal build-up of Miocene age and was soon followed by a number of other discoveries of a similar nature. These included the Matinloc and Cadlao fields.
The Cadlao oil field was originally discovered by Amoco in 1977 and subsequently developed for production using a floating production, storage & offloading (FPSO) facility in 1981. Two wells produced an aggregate of around 11 mmbbl of premium (47° API) crude oil by natural flow over the ensuing eleven years.
The field was shut-in and
decommissioned by Amoco in 1991 when, in a low oil price environment (around
US$19/bbl), costs of operating the FPSO exceeded revenues from production.
The Cadlao permit acreage, Service Contract 6 (Cadlao) (SC6 Cadlao), was secured by Blade Petroleum Limited from local interests in 2007/ 2008. Blade assumed operatorship and acquired and remapped the 3D seismic, recorded earlier by Western Geco, to define significant up-dip structural potential of the field to host un-developed oil reserves. Cadlao is located adjacent to discovered, but as yet undeveloped oil fields, and exploration prospects which may offer future upside opportunities once the Cadlao Redevelopment Project is activated.
Fig 1: Cadlao oil field 3D Seismic Map – showing original development wells (Cadlao 1A and 3 and proposed redevelopment wells Cadlao 4, 5 and 6)
Fig 2: Cadlao oil field schematic showing the location of Peak’s proposed redevelopment wells Cadlao-4 and Cadlao-5
Exploration Geology:
Given the number of oil and gas fields in the Palawan Basin area it is clear that there is an active petroleum system at work. It is thought likely that the oil found at Cadlao is sourced from Eocene and Miocene shales which are reported to be organically rich and capable of producing oil and gas.
The Nido limestone of Miocene age has been the main objective in the search for oil ever since the first oil discovery at Nido-1 in 1976. The reefal facies is the main reservoir with porosities of up to 22%. This reservoir has porosities of 17% in Cadlao-3 and 18% in Cadlao-1. The platform limestone often has good vugular and intercrystalline porosity. It is also apparent that there is fracture porosity and permeability present at Cadlao. Fracture permeability tends to make a large difference to the flow rates of wells intersecting the fractures.
The early to middle Miocene fine-grained sediments of the Pagasa Shale overlying the Nido limestone act as an effective regional seal. This is the seal seen at Cadlao. The trap at Cadlao is formed by the reef encased below the seal. This is a common trap type in the Palawan Basin, with a number of other fields exhibiting similar characteristics.
Fig 3: Cadlao Project – Philippines NW Palawan Basin
Upside Potential:
The Company will consider a variety of strategies for extracting additional value from the Cadlao field, including:
Optimised development solution:
Ongoing engineering work will investigate the feasibility of integrating Phases 1 & 2. If feasible, this approach could result in lower operational costs but would require additional development capital, expected to be sourced through the debt markets. As such, a decision on this will be deferred until just prior to FID.
Extended field life:
Field life can be extended by reducing back-end operating costs. Depending on field performance and economic parameters, the FSO may be demobilised and replaced by a lower cost tanker barge solution for the storage and offloading of crude. Reduced field operating costs allow recovery of additional reserves currently located in the tail of the production curve.
Exploration, appraisal and development:
Depending on field performance and economic parameters,the jack-up rig may be mobilised to drill one or more additional development, appraisal or exploration wells targeting nearby prospects which, if successful, would be tied into the production infrastructure. A number of possible prospects are drillable from the platform location and two further prospects are within tie-back distance.
There remains significant upside potential from other exploration targets in SC6 Bonita and from nearby small oil fields which could be tied in as satellite developments in the future.
