April 1, 2011

PHILIPPINES – SC6B BONITA

PHILIPPINES – SC6B BONITA

Peako has finalised its Farm-in to the SC6B Bonita Joint Venture.  The Farm-in documentation has been submitted to the Philippine government for final approval after which Peako will hold a 32.2% interest in the SC6B Bonita block and be the designated Operator.

The Bonita block surrounds the SC6 Cadlao Block and provides opportunities to tie-back incremental oil production to the Cadlao Development, including from the nearby Cadlao East Prospect with around 2.68 mmbbls mean prospective oil resource.

Due to the Philippines fiscal system, and historical connection of SC6 Cadlao and SC6B Bonita with the original SC6 exploration PSC, Peako will be entitled to amalgamate its Bonita costs as part of its Cadlao cost recovery pool effectively subsidising the Company’s exploration and development expenditure.

Exploration potential for Bonita is contained within two main prospects very close to the proposed Cadlao Redevelopment Project. ISIS, the Independent Technical Expert, has provided the following prospective resource estimates.

Prospect P90 P50 P10 Mean Units
Cadlao East 0.60 1.90 5.78 2.68 mmbbls
Libro South 0.21 0.56 1.48 0.73 mmbbls
Total Mean 3.41 mmbbls

Table 1: Bonita resource estimates

The SC6B Bonita block is of particular interest to Peako because it incorporates two high value, low risk exploration prospects within “long-reach drilling” or easy tie-back distance from the planned Cadlao Redevelopment Project. An extensive 3D seismic data set, acquired by Western Geco in the Palawan basin in 1998, provides excellent definition of these prospects over the area mapped in figure below.

Fig 1: SC6 Exploration Block

Fig 2: Palawan Basin – 3D seismic data set

The Cadlao East Prospect is a pinnacle reef complex encased in the Pagasa Shale, a proven lateral and vertical seal for the oil fields along trend to the Cadlao oil field. The 3D seismic data set over the Cadlao oil field and the Cadlao East Prospect is fair to good quality and high confidence can be placed on the interpretation of the top pinnacle reef reservoir. The Cadlao East Prospect is a low risk exploration opportunity in a basin with a proven oil and gas generative system.

An additional tie-back prospect has been identified in the SC6B Bonita block. The Libro South Prospect is in 80 m water depth, around 10 km tie-back distance to the Cadlao Redevelopment Project via Cadlao East. The Libro South Prospect lies in the northern area of the block on trend with the Libro-1 and Tara South-1 oil discoveries. The prospect is a significant pinnacle reef development and is a low to moderate risk exploration opportunity in a basin with a proven oil and gas generative system. The Libro South Prospect is partially covered by a 3D seismic data set. It has a currently calculated mean prospective resource of 0.73 mmbbls which could be larger if additional structural closure can be mapped following purchase and mapping of the missing 3D seismic on the eastern flank of the prospect. This activity is expected to form part of the committed geological and geophysical studies.

It is considered that the Bonita to Libro South – Nido Formation Reef Trend provides additional appraisal and exploration tieback opportunities on this proven oil trend in the SC6B Bonita block.