Exxon Rig To Return To Philippines

Further Drilling Expected in South Sulu Sea

Exxon Mobil Corp. is set to drill a third well in the South Sulu Sea in the south-west Philippines in a bid find petroleum reserves in the area

Philippines Energy Undersecretary Ramon V. Oca said the West Aquarius drill rig, which was used by Exxon to drill the first and second wells, is expected to return in the coming weeks.

“At the earliest April, but most probably May,” Mr. Oca told reporters on Monday.

The cost for the drilling of the third well will be similar to those incurred in the first and second, which is $100 million.

Two wells have already been drilled in the area since last October and Mr Oca said that data from the drilling was still being processed with the results due in the next few months

Mr Oca said that the target for the third well is about five kilometres from sea level and that drilling might take two to three months depending on the sea surface

ExxonMobil Exploration and Production Philippines B.V. is the operator of the field, with a 50% stake while Mitra Energy Limited and BHP Billiton Pty. Ltd. each have a 25% interest.

The field – known as SC 56 - covers an area of 8,200 square kilometres and is located some 900 kilometres southwest of Manila and 200 kilometrer northwest of Bongao, the capital of Tawi-Tawi.

The Philippines Department of Energy estimates possible reserves at SC 56 at about 750 million barrels, which, if true, may be enough to fuel the country’s oil requirements for seven years.

Oil investors are entitled to a 70% share of revenues from production sales under the government’s fiscal regime for petroleum development. The mechanism is designed to allow the contractor to recover investment costs.

The government will then receive 60% of the remaining 30% of revenues, with the remaining 40% divided over the companies involved in the project.