PXP Energy Corporation

Forum (GSEC 101) Limited (Operator): 70%

The Recto Bank concession of SC 72 is located in the West Philippine Sea, west of Palawan Island and southwest of the Shell-operated Malampaya Gas Field. Formerly Geophysical Survey and Exploration Contract (GSEC) No. 101, SC 72 was awarded to Sterling Energy Ltd in June 2002 and covered an initial two-year term.

In April 2005, Forum Energy acquired the concession from Sterling and became its operator. In 2008, Monte Oro acquired a 30% interest in the block upon payment of a portion of the past costs and expenses of Forum Energy.

On 15 February 2010, the licence was converted to a Service Contract and Forum Energy immediately conducted geological and geophysical works to further evaluate the block and to fulfil its commitment to the government. SC 72 covers 8,800 square kilometers, which is 85% of the area of GSEC 101.

Exploration

Exploration in the area began in 1970, and in 1976, gas was discovered in the Sampaguita structure following the drilling of a well. To date, a total of three wells have been drilled at the southwest end of the structure. Two of the wells tested gas at rates of 3.6 mmscf/d and 3.2 mmscf/d.

In mid-January to mid-March 2011, Forum Energy acquired 2,202 line-kilometers of 2D seismic, gravity, and magnetic data over SC 72 to further define leads. Also, 565 square kilometers of 3D seismic data were acquired over the Sampaguita field. These activities fulfilled the Joint Venture’s commitment under the first sub-phase of SC 72.

The interpretation of these surveys was carried out by Weatherford Petroleum Consultants in 2012. The report indicated the Sampaguita Gas Field to contain contingent resources of 2.6 trillion cubic feet (TCF) Gas in Place (GIP).

2D seismic data were reprocessed in 2013 and were subsequently interpreted, aided by gravity-magnetics data that were interpreted by Fugro (2012) and Cosine, Ltd. (2015). In 2015, Arex Energy produced a report on the North Bank area and estimated the prospective resources to be 3.1 TCF.

SC 72 was put under force majeure on December 15, 2014 due to the West Philippine Sea maritime dispute. On October 16, 2020, Forum Energy received notice from the DOE that the force majeure imposed on SC 72 was lifted with immediate effect and that the Joint Venture was to resume exploration activities on SC 72. The JV had 20 months from the date of the lifting of the suspension to drill two commitment wells.

Forum Energy made preparations for the drilling of the two wells, including the purchase of long lead items, requisitions for other drilling materials, and signing up of technical services. On April 6, 2022, just as a geophysical survey over the proposed drilling locations was about to commence, the DOE gave a directive to “put on hold any exploration activities for Service Contract Nos. 72 and 75 until such time that the [Security, Justice and Peace Coordinating Cluster (SJPCC)] has issued the necessary clearance to proceed.” To comply with this directive, all activities were then suspended immediately. As the suspension order is deemed to be indefinite, Forum submitted a letter to the DOE on April 11, 2022 affirming a declaration of force majeure under SC 72 beginning April 6, 2022.