Transcription of Finance news Network Interview with Nido Petroleum Limited (ASX:NDO) CEO and Managing Director, Phil ByrneJoel Spreadborough: Hi I’m Joel Spreadborough for the Finance News Network and joining me from Nido Petroleum Limited
(ASX:NDO) is its CEO and Managing Director, Phil Byrne. Phil welcome.
Phil Byrne: OK thank you Joel, it’s a pleasure and I look forward to the interview.
Joel Spreadborough: Could you start by introducing us to Nido Petroleum and giving us an idea of your focus and where you operate?
Phil Byrne: Well Joel, Nido is an ASX listed company, we’re focused on exploration and production in the Philippines, and we’ve been exploring there for the last 13 years or so. And we’ve got offices in Perth - our head technical office and we’ve got a branch office up in Manilla, which looks after the drill in the Philippines. We’ve got the largest exploration portfolio spread offshore Palawan, over six million acres of landholding and we also produce through the Galoc field.
Joel Spreadborough: Now Phil, Nido has a working interest in a number of producing oil fields. What is your core development asset and what are the latest production figures?
Phil Byrne: The core asset is the Galoc field which is presently producing just over 6,000 barrels a day. It’s producing from two wells at the moment through a floating production system, an FPSO (floating production storage and offloading). It’s performing very well; it produces a very light oil which is sold at a premium to Brent, which I am pleased to say. We’ve just finished a modification of the floating production system, which is going to allow us to increase reliability and our production upturn. Also in addition, the field’s reservoir has been performing very nicely and it’s allowed us to upgrade our reserves.
Joel Spreadborough: Now you’ve recently secured funds for Galoc Phase II. How do you think those funds will accelerate operations?
Phil Byrne: Well I’m very excited about Galoc Phase II; we’re hoping to reach final investment decision on this project imminently. We are going to be drilling two horizontal wells into the field and it’s going to increase production to over 12,000 barrels. We’re going to tie these wells back through the existing facility, which I mentioned earlier we’ve modified recently in Singapore. And the development actually will allow for us to produce probably an additional eight million barrels from the field.
And the gross capital expenditure for this project is about $187 million and Nido’s share will be $43 million, so it’s a considerable amount of money for a company of Nido’s size. But, you know, we’ve got every confidence in the operator’s ability to deliver the project on cost and on schedule. And it’ll be a game changer to Nido; it’ll really increase our production.
Joel Spreadborough: Nido also has equity in a number of discoveries offshore Palawan. What are your plans to develop these assets?
Phil Byrne: Yes, in certain of our blocks offshore, we have discovered hydrocarbons and one of my key drivers in Nido is ready to bring these on production. And there’re two, one is SC 16C which contains the West Linapacan oil field, and interesting enough, this was produced previously by Gulf Oil. It finished production in 1996 and when oil price collapsed in 1996, and Gulf basically ceased production because of the economics of the field. Now obviously oil is now around $100 a barrel which changes the whole economics of the field.
We’ve done some work entirely in Nido; we reckon there’s probably 111 million barrels oil in place. So at the moment we’re working with the operator RMA. We’re doing some reservoir studies and hope by the end of the year to have a revised reservoir reserves figure, and something that we can certify. And then the next stage after that is to make an investment decision next year and then be producing oil in 2014.
And secondly, if I could just go on Joel, is SC 54A which is in the southern part of the Palawan and we’ve got a number of small discoveries there. And I’m in very advanced stages of negotiation with a private company for them to come in, drill a number of development wells in return for equity, at no cost to Nido or our partners. And what we’ll do then, we’re hoping to have those on production next year.
Joel Spreadborough: What is the potential in your exploration acreage, and what are your plans to exploit that moving forward?
Phil Byrne: We’re doing some more technical work obviously on the blocks and we’re still finishing off some interpretation, because in the last year we shot some more two and three dimensional seismic surveys. So we’re finishing this off and you know, it’s also exciting for us, it’s confirming many of our prospects. It means that a lot of our prospects are now drill ready, so all we need to do is secure some finance and be able to get some partners in to drill it, and we’ll be able to go.
Joel Spreadborough: Phil can you run us through some of Nido Petroleum’s goals for the near future?
Phil Byrne: We’ve got very simply goals for the next period - I’m talking about the next 18 months. Firstly is really to focus on the development side of the business, the base business gives you production and also gives you cash flow. And as I’ve said, we’ll be supporting the operator of Galoc and making sure that Phase II is developed and comes on production in time. Secondly we’ll be looking at our two development opportunities in West Linapacan and 54A – so pushing those hard as I want production from both of them by the end of 2013, maybe into 2014.
And so this is the first sort of leg of a three-legged strategy that is building our production base and getting cash flow. OK, the second is going to be around the exploration portfolio, drilling the two wells, drilling essay for me at the exciting Galoc North well and SC 63, so there are two firm wells next year. And as part of that, farming out some of our other acreage so that we can have the potential to drill the third well in 2013.
Joel Spreadborough: Phil can you tell us a little bit more about Nido’s plans for further expansion in Southeast Asia?
Phil Byrne: We’re not going to be purely Philippine centric and I feel that we are mature enough as a company, that we can look at other opportunities in Southeast Asia now. Given the size of Nido, we’re going to be very, very focused on what we look at and target, and actually what we can afford as a company. But I think we’ve got this expertise over the 13 years we’ve drilled, we operate, we produce, so we have the experience which I think we can replicate in other areas in Southeast Asia.
Joel Spreadborough: Finally Phil. Can you give us an overview of Nido Petroleum’s market position?
Phil Byrne: Well our market cap at the moment is just over $50 million - $50 to$55 million at the moment. We’ve got revenues out of production from the Galoc field. And so we’re funded for our exploration program for next year, but part of my strategy of course, is to try and get farm-in partners into the exploration acreage and to pay their way. So to basically lessen our risk in some of the blocks, but you know I’m very confident that Nido has the funds available for the work program which I detailed earlier.
Joel Spreadborough: Phil Byrne, thank you for talking to FNN and thank you for introducing us to Nido Petroleum.
Phil Byrne: OK thank you Joel, it was a pleasure.
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