Gas2Grid Limited is pleased to advise of progress on the Malolos-1 extended oil production testing to be carried out to confirm the commerciality of the Malolos Oil Field. The Philippine Department of Energy (“DOE”) has extended Service Contract 44 (“SC 44”) for a 12 month period starting on the 29th January, 2014 in order to conduct the tests.
Following the Company’s application in February to commence the field operations, the written approval of DOE is expected by the end of this month. The operations are now expected to commence in April with all equipment delivered on site. The Company is funding the extended oil production testing from existing cash reserves which were raised last year.
Company Directors recently held meetings in the Philippines as part of the required process for the production testing. These meetings included:
? The Governor of Cebu, Hilare Davide III
? Department of Energy Visayas Office management in Cebu City
? Department of Energy Head Office management in Manila
The Company also held meetings with potential buyers of the oil that will be produced.
On the 29th January, 2014 the Company reported a “Contingent Resource” of oil in the two productive sandstones for the Malolos Oil Field between a “Low Estimate” (1C) of 6.8 million barrels and a “High Estimate” (3C) of 68.1 million barrels, with a “Best Estimate” (2C) of 20.4 million barrels of “Total Oil Initially in Place”. This Contingent Resource is in addition to the Unrisked Prospective Resources released to the ASX on the 29th January, 2014.
The extended oil production testing program aims to gather sufficient technical information to confirm commerciality of the Malolos Oil Field to justify the Department of Energy awarding a 25 year production period leading to full field appraisal and development. Proving commercial production at Malolos Oil Field will have a very significant impact on the value of the Company and will benefit the Philippine economy.
The “Unrisked Prospective Resource”* (in accordance with Clause 7.3 of ASX Guidance Note 32) calculates recoverable oil in the range from a Low Estimate of 14 million barrels to a High Estimate of 601 million barrels with a Best Estimate of 104 million barrels within Service Contract 44, located onshore Cebu in the Philippines.
The large size of contingent and prospective resources justifies further exploration within SC 44. In that respect, the Company is continuing discussions with interested parties for funding the complete appraisal and development work (seismic acquisition, production well drilling and production facilities) at the Malolos Oil Field and additional exploration prospects by a farmout of part of its 100% interest in Service Contract 44. In view of the time frame available to the Company for SC 44, it will also consider sole funding some of the work early should farmin terms and agreements take undue time to finalise.
