THE PHILIPPINES Department of Energy has extended the work program signed by Otto Energy over SC55, off the coast of the Philippines.

Otto Energy had declared a force majeure over the project in the 2012 to 2013 financial year following the delayed issuance of the Strategic Environmental Plan clearance from the Palawan Council for Sustainable Development in 2012-2013.

The change means that the company’s first deepwater well must be drilled before 23 December 2014, and a second must be drilled by 23 Dec 2016.

Otto said this represented an extension of about 14 months, with company chief executive Matthew Allen saying the move was an important step in progressing the company’s exploration program.

“The combination of the excellent prospectivity of SC55 and the funding arrangement secured by Otto means we are able to offer a very attractive exploration opportunity as part of a farm-out campaign,” he said.

The company is several months into a farm-out process to introduce a new joint venture to the drilling of the Hawkeye 1 exploration well, with Mr Allen saying he hoped to secure a new joint venture partner by mid-2014.

The news came as Otto withdrew from the nearby Service Contract 51, following post-drilling studies at its Duhat 2 well, citing drilling safety concerns.

Otto Energy Investments (OEIL) carried out a detailed analysis of the Duhat 2 well after its flows were found to comprise brackish water with low trace gas readings.

“Based on these reviews, OEIL has concluded a well cannot be safely drilled at the Duhat-2 well location given the shallow overpressures experienced and the indications of low rock strength above the zone of overpressure,” Otto said.

“In addition, OEIL has formed the view that a well cannot with confidence be drilled in accordance with good industry practice elsewhere on the San Isidro anticline given the results observed at the Duhat-2 location.”

With no other drillable prospects identified on existing seismic data, Mr Allen said Otto had elected to withdraw.

“The Duhat-2 well presented a series of very unexpected and potentially dangerous challenges to our drilling team, which were successfully and safely addressed as a result of comprehensive pre-drill planning and preparation,” he said.

“These potentially dangerous challenges could be expected during future drilling activities in the block.”

“OEIL sees no further defined exploration targets within this licence.”