Frontier Oil seeks 2-year moratorium on SC 50

Frontier Oil Corp. is seeking a two-year moratorium on its obligations under Service Contract 50 in North Palawan, Trans-Asia Petroleum Corp. said in its annual report.

“They (Frontier Oil) are appealing because the DOE (Department of Energy) wants to terminate the contract,” TransAsia Petroleum executive vice president Raymundo Reyes said.

Trans-Asia Petroleum, a subsidiary of Trans-Asia Oil and Energy Development Corp. (soon to be renamed Phinma Energy Corp.), owns a 10 percent participating interest in SC 50.

Officials of Frontier Oil were not immediately available for comment.

Information on Trans-Asia Petroleum’s annual report showed Frontier Oil earlier applied for force majeure after drilling contractor UMW Offshore Drilling Sdn. of Malaysia unilaterally terminated its rig contract.

UMW Offshore was tapped in September 2014 in a $20-million deal.

Reyes said drilling at SC 50 coincided with the steep drop of oil prices so Frontier Oil wanted to negotiate lower rates but the drilling rig contractor opted to terminate the contract.

“It’s under arbitration in Singapore. There will be a resolution soon,” he said.

On Frontier Oil’s request, this was denied by the DOE which ruled that the contract effectively expired in March 2015.

“Frontier Oil contested the DOE’s position and engaged the DOE in discussions aimed at a mutually acceptable resolution of the issue,” Trans-Asia said.

SC 50 contains the Calauit field, which is estimated to contain 10 million to 13.2 million barrels of oil.

Its other project is SC 52 in Cagayan Valley, which is estimated to contain contingent gas resource of as much as 231.91 billion cubic feet.

Frontier Oil has been planning an initial public offering (IPO) since 2013 but has decided to withdraw its plans to go public in 2014 to wait for more favorable market conditions as it explores alternative listing possibility in another stock exchange.