I was surprised at this news article by offenergytoday.com interviewing Leocadio Ostrea, Vice-President of PNOC EC on the 2 July 2010. This excerpt highlights some important news coming our way.
"In themeantime, Ostrea confirmed that the company also wanted to farm out its interest in SC 63 or the East Sabina block and is currently negotiating a separate set of potential foreign investors. Ostrea said negotiations on the terms of the deal were still ongoing, particularly on whowould become the operator. SC 63 covers 10,560 square kilometers in offshore southwest Palawan. PNOC EC holds a 50-percent stake and is the operator of the block, while Australian firm Nido Petroleum Ltd. owns the remaining 50 percent. The firm earlier said seismic interpretations showed several prospects and leads that were successful in both offshore northwest Palawan and Sabah."- Phillipines: Foreign Firms Talk with PNOC-Exploration About Possible Farm-in Agreement, www.offenergytoday.com, 2 July 2010.
By using the phase "also wanted to farm out its interest" and "negotiating a separate set of potential foreign investors", could this imply NDO is also currently negotiating the farming-out of SC63? Everyone is expecting Gindara to be farm out. Could it be NDO want to do SC54B Gindara on its own while farming out the rest of its service contracts?
Typically, farm-in arrangement could see the farming party getting cash re-imbursement from the farmees. If they intend to farm out SC54B, this should solve KIK's cashflow problems as KIK holds 40% working interest. However KIK choose to have an EGM to retify their placement did on the 25 June 2010 so that they could raise up to 15% of their issued capital without shareholder's further approval.
Food for thoughts: Will NDO do Gindara by herself while farming out the rest of her working interests in other SC such as SC63 and SC58?
