The Board of Red Emperor Resources NL (Red Emperor or the Company) is pleased to announce that it has signed a Farmin Agreement (Agreement) with Otto Energy Philippines Inc. (a wholly owned subsidiary of Otto Energy Ltd, ASX: OEL) to farm in to the highly prospective offshore Philippines Block, SC55.
Highlights
· Red Emperor to earn a 15% working interest in offshore Philippines Block, SC55, by participating in the upcoming Hawkeye-1 exploration well that will test the significant hydrocarbon potential of the Southern Palawan Basin.
· Hawkeye-1 is expected to be drilled early in Q3 2015 and is targeting a structure assessed to contain in excess of 100MMbbls of Gross Best Estimate Prospective Resources (~15MMbbls net to RMP).
· Independent report from Jordon & Pay Exploration Consultants describes the prospect as a "robust, attractive exploration target with a good geological chance of success" (32%), with the operator indicating Gross Prospective Resource of up to 401MMbbls (High Case
- 51MMbbls net to RMP).
· The Hawkeye prospect is covered by extensive and high quality 3D seismic, which indicates the strong chance of a gas cap sitting above a sizeable oil leg (>100m).
· Commercial success in the Hawkeye well would unlock a significant region for exploration, the heart of which is covered by Block SC55.
· A further drill ready gas target (Cinco) also exists within Block SC55, assessed by the Operator to have Gross Best Estimate Prospective Resources of 1.6Tcf (208 Bcf net RMP) of recoverable gas.
· Red Emperor to complete A$2.13m placement leaving the Company fully funded to participate in the Hawkeye-1 exploration well and other potential opportunities.
Service Contract 55 (SC55) is located in the southwest Palawan Basin, covers an area of 9,880km2 and was awarded to Otto Energy Investments Ltd (formerly NorAsian Energy Ltd) in 2005.
It is a deep-water block in the middle of a proven regional oil and gas fairway that extends from the productive offshore Borneo region in the southwest to the offshore Philippine production assets northwest of Palawan.
Exploration and Development
SC55 contains a number of distinct exploration play types including the Hawkeye turbidite clastic prospect and the material Cinco carbonate gas/condensate prospect, as well as a number of follow-up leads. The permit provides a material opportunity and a series of possible drill targets in an exploration campaign that will be undertaken during the remaining term of the service contract.
The Hawkeye prospect was identified on 2D seismic originally acquired by Otto in 2007 and further defined with the 600km2 3D seismic acquisition in late 2009. Hawkeye contains a 'Best Estimate' STOIIP of ~480 MMbbls of oil and a 'Best Estimate' Gross Prospective Resource of 112 MMbbls (RMP net 14.3 MMbbls) of oil according to the Operator, Otto Energy.
The Cinco gas/carbonate prospect was identified as part of a 1,800km2 3D seismic program undertaken by BHPB in 2010 that focused on a trend of carbonate prospects and leads, with Cinco being analogous to the Malampaya producing gas/condensate field in the Philippines. Cinco contains a 'Best Estimate' GIIP of 2.4 Tcf with a 'Best Estimate' Gross Prospective Resource of 1.6 Tcf of gas and 57 MMbbls of associated condensate (RMP net 208 Bcf) and 7.3 MMbbls). The Net Prospective Resources exclude Government Share of profit oil.
The arithmetically aggregated gas/condensate prospect and lead inventory including Cinco, contains a 'Best Estimate' GIIP of ~17 Tcf with a 'Best Estimate' Gross Prospective Resource of over 11 Tcf of gas (RMP net 1.5 Tcf) and 403 MMbbls (RMP net 51 MMbbls) of condensate.
Hawkeye Prospect
The Hawkeye prospect is interpreted to be a large, relatively undeformed Miocene aged toe thrust, analogous to offset discoveries in Malaysia. The Miocene turbidite reservoir is likely to be tested by a well sitting in approximately 1,690m of water. The prospect was first identified on 2D seismic data, which was later followed up by a 3D seismic acquisition in early 2010. The 3D data has further matured the prospect to drillable status. Hawkeye is a well imaged, toe thrust structure of more than 500m vertical relief, 50km2 area with attendant Direct Hydrocarbon Indicators. Multiple flat spots are evident with an associated oil column consistent with detailed rock property analysis.
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