The joint venture holding Service Contract 72 plans to drill two exploratory wells in the gas-rich Recto Bank in northwest Palawan by June.
FEC Resources Inc. said was preparing its share in the drilling costs for SC 72. FEC is a subsidiary of listed PXP Energy Corp.
The principal investment of FEC is a 6.8-percent stake in the UK company Forum Energy Ltd. whose principal asset is a 70-percent interest in SC 72 .
The company said FEL was making reparations to drill two exploratory wells in SC 72 by June “as required to keep SC 72 in good standing.”
The area contains the Sampaguita gas discovery, which has an estimated reserve of 3.4 trillion cubic feet and a potential upside to 20 TCF.
FEL submitted a funding request for additional pre-drilling costs to its larger shareholders where FEC’s share is $198,620.
The pre-drilling costs are to be provided to FEL via non-interest bearing loans.
FEC said it agreed to pay its further share of the pre-drilling costs from loans it will receive from PXP. FEC already advanced $224,200 to FEL for pre-drilling funding.
“Shareholders should be aware that the drilling of two wells will require a significant amount of funding by those involved in SC 72, including FEL and this could result in FEL being diluted in SC 72 or FEC being diluted in FEL or both in the event FEL or FEC respectively is unable to fund its share of such funding for any reason whatsoever including inability to comply with the payment terms set above,” FEC director and chief executive Daniel Carlos said.
The Department of Energy earlier welcomed the SC 72 exploratory drilling this year that would help secure the country’s future power needs.
“That is a good development, and we will continue even at Malampaya. We are doing the validation drilling, so we will know how much more stock of gas we can withdraw from Malampaya,” Energy Secretary Alfonso Cusi said.
The Malampaya gas project in northwest Palawan is the country’s biggest natural gas producing asset, but its production is expected to start to be depleted by 2024.
