Otto Energy quits northern Leyte oil project

Australia's Otto Energy Ltd. has decided to pull out of an oil drilling and exploration project in northern Leyte – covered by Service Contract (SC) 51 – after post-drilling analysis showed the prospect was not safe for further tests.

 

In a statement on its website, Otto Energy said the decision to withdraw came after wholly-owned subsidiary Otto Energy Investments Limited (OEIL) finalized a detailed analysis of the Duhat-2 well drill results in San Isidro, Leyte. 

 

OEIL concluded a well cannot be safely drilled at the Duhat-2 well location given the shallow pressures and indications of weak low rock above the zone of pressure.

 

In July 2013, the company decided to terminate further exploration in the Duhat 2 well after risks   were identified in the location.

 

Otto Energy CEO Matthew Allen said safety and environmental concerns are the company's top priorities.

 

"The Duhat-2 well presented a series of very unexpected and potentially dangerous challenges to our drilling team, which were successfully and safely addressed as a result of comprehensive pre-drill planning and preparation," he said.

 

"These potentially dangerous challenges could be expected during future drilling activities in the block," he added.

 

OEIL also noted a well cannot be drilled along the lines of good industry practice elsewhere in the area and no other drillable prospects have been identified according to available seismic data. 

 

"In addition to safety concerns, OEIL has also further reviewed the prospectivity of the SC51 North block and elected to withdraw," Matthew said.

 

"OEIL sees no further defined exploration targets within this license," he added.

 

Otto Energy is the lead operator and holder of 80 percent of the SC 51. The remaining 20 percent is held by Trans-Asia Oil and Energy Development Corp., Alcorn Gold Resources Corp. and PetroEnergy Resources Corp.

 

The Department of Energy said the other stakeholders will have to review their next move. “The remaining partners will have to evaluate if they will continue drilling or not," Energy Undersecretary Ramon Oca told GMA News Online.

 

If the remaining partners decide to continue, Oca said they have the option to take in the 80 percent interest of Otto or have a farm-in agreement to cover the drilling. – VS, GMA News