PHILIPPINES-focused Nido Petroleum has completed the second stage of a farm-in process over the SC 63 licence area, containing the Baragatan prospect, in the north west Palawan basin.

The company farmed out 40 per cent of its then-50% holding in the permit to Dubai-based Dragon Oil in January, in exchange for payment of 56 per cent of exploration costs and US$3.4 million in other costs.

The second stage of that farm-out has now been met, enabling Nido to acquire a 10% participating interest in the field from its project partner, government-owned PNOC Exploration Corporation, on the same terms.

The deal increases Nido’s stake in the field to 20%, while PNOC-EC and Dragon Oil will both hold 40% stakes.

Nido will be required to contribute US$2 million towards the cost of the Baragatan-1 well (based on the US$25 million dry hole cost cap) in payment for the deal, with the company also receiving about US$1.63 million for past seismic costs through the farm-in process.

The news comes shortly after Nido announced the spudding of the Baragatan-1 exploration well in mid-May.

The UMW Naga 5 jack-up rig was drilling ahead in the 36 inch hole section prior to setting the 30 inch conductor as planned at the time of going to press.