Hawkeye oil well in Northern Palawan not commercially viable, says operator

The operator of Service Contract 55 in Northern Palawan has declared Hawkeye-1 exploratory well not commercially viable for gas and petroleum production after weeks of drilling.

In a disclosure to the Australia Stock Exchange, Otto Energy said it would now focus on other oil and gas prospects.

According to Otto Energy, the drilling results showed there were hydrocarbons, mainly gas and logged indications of hydrocarbons.

“The Hawkeye-1 exploration well has proven the existence of hydrocarbons in SC 55. The hydrocarbon size discovered is however at the very low end of expectations and is not economic to develop,” Otto Energy director and CEO Matthew Allen said.

Publicly-listed Trans-Asia Petroleum Corp. of the Phinma Group was also informed by the operator there was fluorescence, which usually indicates oil, observed in drill cutting returns obtained from the same depth interval.

“While the volume of hydrocarbons inferred from the well results is not of economic significance, Hawkeye-1 proved the presence of a petroleum system in the contract area,” the disclosure said.

Trans- Asia Petroleum holds a 6.82 pecrent participating interest in SC 55 through its subsidiary, Palawan55 Exploration & Production Corp.

Other partners in the SC are Century Red Pte. Ltd. with 15 percent and Pryce Gases Inc., the latest addition to the group, with 10 percent.

The Hawkeye well was believed to have significant oil prospect, with an estimated 480 million barrels of oil identified on 2D seismic originally acquired by Otto in 2007 and further defined with the 600-km 3D seismic acquisition in late 2009.

Given this new development, Otto Energy will now evaluate the implications of the Hawkeye-1 to Cinco and other prospects and leads in the block.

“Otto will now incorporate the results from the well into our understanding of the other prospects, including Cinco, in the licence which potentially share the same charge source,” Allen said.

SC 55 is located near the Malampaya gas field in offshore Palawan. It includes the Cinco Well.

In terms of potential resource, the Department of Energy estimates that SC 55 has some 2.2 trillion cubic feet of gas.