Sacgasco to Increase Stake in Cadlao Oil Field

- Nido (Sacgasco’s subsidiary) farmin to Cadlao Oil Field for 72.727% and Operatorship
- Cadlao Extended Well Test planned for 2022 drilling program
- Drilling site surveys planned for March 2022
- Independent Reserves Assessment results expected March 2022

Sacgasco Limited (SGC) (“Sacgasco”) is pleased to announce that its wholly- owned subsidiary, Nido Petroleum Philippines Pty Ltd (“Nido”) has entered into a Farmin Agreement (FIA) with the Service Contract 6B (SC 6B) Joint Venture to fund 100% and Operate the Extended Well Test (EWT) and subsequent development of the Cadlao Oil Field in return for an additional 63.637% working interest, bringing Nido’s total working interest in SC 6B to 72.727%. Sacgasco holds its SC 6B interest in its wholly-owned subsidiary Nido and references to Sacgasco in this announcement includes this subsidiary, and vice versa.

The Cadlao Oil Field produced 11.1 million barrels over 30 years ago. Oil rates reached a peak of 6,000 bopd during this first production phase. In 1991, the Operator of the day shut the field in to utilize the surface facilities on another asset.

The Company believes that the field has significant remaining potential reserves (including from reservoir recharge in the intervening 30 years since last production) and previous wells have proven high productivity from the reservoir. A reserves assessment is underway and expected to be completed during March prior to submission of an EWT proposal to the Philippine Department of Energy (DOE).

The FIA includes Nido taking Operatorship of the Cadlao development and is designed to both accelerate and increase Sacgasco’s exposure to cashflow from the anticipated development of the proven oil in the field. Under the FIA, Nido will fund the cost of the EWT and any subsequent development costs 100% up to the date of a Declaration of Commerciality on Cadlao. Nido will receive preferential cost recovery during this period.

Sacgasco’s Managing Director, Gary Jeffery commented:
“Securing this farmin gives Sacgasco the opportunity to fast-track the redevelopment of Cadlao Oil Field, as well as greater exposure to its near-term cashflow potential through an EWT. I am pleased that our JV partners have recognised our ability and commitment to execute quickly and to a high standard given the track record of management and in-country team.

The Philippines is one of the best countries in Asia to develop oil and gas with proven, high productivity reservoirs, a proactive government and attractive fiscal terms which allow oil and gas companies to recover their investment costs quickly and efficiently, especially during EWT periods.

Tying the EWT for Cadlao into our 2022 drilling program along with Nandino will make for an exciting and potentially transformational year for Sacgasco.”