Nido has one of the largest acreage positions in the Philippine oil and gas sector. All exploration assets are located in the offshore NW Palawan Basin, considered the Philippines' premier producing basin.

The Company's footprint in the NW Palawan Basin covers approximately 30,000 sq km of contiguous high quality acreage with water depths ranging from less than 100m to in excess of 2,000m. This provides Nido with an envious acreage position with substantial running room in which to explore a diverse range of plays across a range of water depths. Much of the NW Palawan basin remains lightly explored despite the numerous oil and gas discoveries made in the shallow water areas of the basin, including Nido's 2008 oil discoveries in Service Contract (SC) 54A, and the single giant Malampaya gas field in SC 38, operated by Shell Philippines Exploration. The deeper water areas provide Nido with superb leverage to large, high impact exploration targets with multi hundred million barrel potential. If successful, any one of these would have a transformational impact on the Company.

Since 2007, Nido has invested heavily in the acquisition of modern 2D and 3D seismic data which has delivered an extensive Prospect and Lead Inventory of over 90 defined opportunities. 2008 was a watershed year for the Company with the drilling of two exploration wells at Yakal-1 and Tindalo-1 (SC 54A) in the Company's first foray as an offshore operator. Following completion of the SC 58 deepwater sea-bed coring project and interpretation of the SC 63 Kawayan 3D seismic survey during 2010, the Company announced at the Annual General Meeting held on 21 May 2010, plans to initiate a five well drilling exploration program across its NW Palawan exploration acreage commencing in 2011. The planned drilling candidates in this program are designed to deliver a number of key strategic objectives:

• Maximise the chances of making a significant commercial discovery by drilling a set of wells comprising a balanced mix of low to high risk/reward prospects.
   
• Test a number of key play types across the basin which would provide additional subsurface data to further de-risk the exploration portfolio.
   
• Meet future Service Contract work program obligations.
   
• Secure tenure over the Company’s exploration acreage.

The five well program will test two distinct geological provinces: (i) the NW Palawan geological province (SC 54B/SC 58) where the primary target is the proven Nido Limestone play in both shallow and deepwater environments; and (ii) the Sabah geological province (SC 63) which represents the extension of the prolific offshore fold-thrust belt  of Brunei and Sabah where the primary reservoirs are the Miocene-aged clastics and a new potential reservoir objective in the deeper pre-Nido section.

The current drilling candidates for the five well program are: Gindara-1 (mid water depth, SC 54B), Balyena-1 (deepwater, SC 58), Aboabo area well and Pinta Flores (ex Kalapato) (shallow water, SC 63) and Lawaan-1 (shallow water, SC 54A). The timing of these wells will be influenced by a number of factors including Joint Venture approvals and rig availability.

Following the Shell Philippines Exploration B.V. (“SPEX”) farm-in to SC 54B, the Gindara-1 prospect will be the first well to be drilled in May 2011.
In the first quarter of 2011 Nido’s Board approved the Company’s entry into the next Sub-Phase of its SC 63 exploration program which includes the drilling of a commitment well with Joint Venture partner, PNOC Exploration Corporation, not later than November 2012. Nido is targeting a drilling window between December 2011 and March 2012 for its second well in the five well program and is now actively preparing for the drilling campaign.
 

Nido was awarded 100% interest in Service Contract 54 (SC 54) on 5 August 2005. The block is located immediately to the south of and on-trend with the large Shell operated Malampaya gas field in SC 38. The block also surrounds SC14A which contains the Nido oil fields in which Nido also has a 22.49% participating interest. Water depths range from less than 100 meters to over 900 meters along the western margin of the block.
In 2008, following the drilling of the Tindalo-1 and Yakal-1 exploration wells, the block was divided into sub-blocks SC 54A and SC 54B. Current participants in the  sub-blocks are as follows:

SC 54A:
Nido Petroleum Philippines Limited                      42.4% (Operator)
Yigarn Petroleum Philippines Pty Ltd                    30.1% 
 _{(A wholly owned subsidiary of Kairiki Energy Ltd)}
TG World (BV1) Corporation                                12.5%
Trafigura Ventures III (BVI)                                 15%

SC 54B:
Nido Petroleum Philippines Ltd                             60% (Operator)
Yilgarn Petroleum Philippines Pty Ltd                    40%
_{(A wholly owned subsidiary of Kairiki Energy Ltd)}

Joint Venture Partners: Yilgarn Petroleum Philippines Pty Ltd 30.1%; Trafigura Ventures III (BV) 15.0% ;TG World (BV1) Corporation 12.5%
Area 862 sq km

SC 54A is located over the shallow water sector of SC 54 where water depths are generally less than 120 meters. The exploration strategy is focused on exploiting the proven oil potential of the Nido Limestone pinnacle reef play by using low cost development concepts. The entire block is covered by 3D seismic data and contains a number of undeveloped oil discoveries and a large Prospect and Lead inventory of low risk drilling opportunities.

Prior to the formation of the SC 54A sub-block, the original SC 54 Joint Venture consisting of Nido Petroleum Philippines Ltd and Yilgarn Petroleum Philippines Ltd drilled two exploration wells  during 2008 at Yakal-1 and Tindalo-1 in what is now SC 54A. Both wells discovered oil in the primary Nido Limestone reservoir.  Following the drilling of these wells, Nido and partner Yilgarn jointly farmed down a portion of their participating interest to TG World (BV1) Corporation and Trafigura Ventures III (BV) for a carry on the planned development of the Tindalo-1 discovery. In xx 2010 Tindalo-1 was put on an Extended Well Test (EWT)  but was abandoned when the field failed to produce commercial volumes of oil due to higher than anticipated water cut.

Nido is currently in the process of developing the forward strategy for the block which includes considering potential development options for currently undeveloped oil discoveries in the block at Nido 1X1, Yakal-1 and Signal Head-1 as well as maturing a number of exploration drilling targets such as the Lawaan-1 Prospect for future drilling.
 

Joint Venture partner: Yilgarn Petroleum Philippines Pty Ltd 40%

Prior to the formation of SC 54B, the original SC 54 Joint Venture of Nido Petroleum Philippines Ltd and Yilgarn Petroleum Philippines Ltd acquired the 850 sq km Abukay 3D seismic survey located over what is now the northern sector of SC 54B. Following the maturation of the 3D Prospect and Lead Inventory, the Gindara Prospect was high-graded for drilling.

Following the farmin in to SC54B by Shell Philippines Exploration B.V. in late 2010, the Gindara-1 well was drilled during xx 2011 using the Atwood Falcon semi-submersible rig with the Nido Limestone reservoir as the primary reservoir target. The well was drilled to a total depth of 3,660 meters and encountered a 187 meter gas column in the primary Nido Limestone reservoir of which the lower 43 meters is interpreted to represent a possible oil-leg based on electric logs.  However, the interpreted gas column was  in a low porosity section of the Nido Limestone reservoir resulting in the well being a non-commercial gas discovery. The Gindara-1 well was consequently plugged and abandoned.

Following the  results from the drilling of the Gindara-1 well, the exploration strategy in SC 54B has  focused on the central and southern sector of the block. Review of vintage 2D seismic data from this area has identified a number of interesting Leads of which the Pawikan Lead is the largest and of most exploration interest. The Pawikan Lead is approximately 53 sq km in size and has a vertical relief of around 300 metres and therefore larger in size than the nearby Gindara structure. Following the test reprocessing of a number of 2D vintage seismic lines over the Pawikan structure, the Joint Venture is considering acquiring new 2D seismic over the Pawikan Lead in order to mature it to prospect status and a candidate for future drilling.

On 30 December 2011 Shell Philippines Exploration B.V. withdrew from the block.

 

Joint Venture Partner: PNOC-EC 50%
Area: 13, 487 sq km

Service Contract 58 (SC 58) is a large deepwater block of approximately 13,440 sq km that lies immediately outboard of the giant Malampaya gas field. No wells have been drilled in the block to date. Water depths are in excess of 1,000 metres over most of the block.

 In 2006 and 2007 Nido implemented an aggressive seismic acquisition campaign, acquiring 3,184 km 2D seismic in 2007 followed by 661 sq km of focused 3D seismic over four large high graded deepwater leads. Interpretation of the seismic data has confirmed the presence of an extensive deepwater play fairway comprising Oligocene-Miocene Nido limestone platform and reefal plays and Miocene turbidites. Nido has matured an extensive Prospect and Lead inventory for the block, dominated by five large prospects: Balyena, Balyena East, Butanding, Butanding West and Dorado.

The main activity during 2010 was the multi-beam survey acquired by Fugro Survey Pte Ltd which acquired approximately 1,500 sq. km. of data producing a highly detailed topographic map of the sea-floor over the central sector of the block which contains a number of large prospects including Balyena, Balyena East, Butanding and Dorado. The map was integrated with seismic data and areas of potential sea-floor seepage identified. A total of 180 drop cores were collected from the high-graded areas and analysed geochemically using Gas Chromatography and Gas Chromatography Mass Spectrometry.
 

The results were very encouraging:

•  The majority of core data indicates widespread micro-seepage of liquid 
   hydrocarbons across SC 58 based on Gas Chromatography (GC) results.
   
•  Gas Chromatography – Mass Spectrometry (GC-MS) analysis of 14 selected core 
   samples for biomarker ‘fingerprinting’ confirmed the liquid hydrocarbons show
   similar thermal maturities and biomarker affinities with known NW Palawan source
   rocks and oils recovered from fields in the inboard parts of the NW Palawan basin
   (Malampaya/Galoc/Nido/Tindalo fields).
   
•  The central area of the sea-bed coring survey showed the strongest evidence for    
   light hydrocarbon micro-seepage corresponding to the location of the large 
   Butanding, Balyena, Balyena East and Dorado Prospects.

The Company believes that the results of the sea-bed coring program have significantly reduced the charge risk in deepwater SC 58 and upgraded the prospectivity of the Prospects and Leads portfolio identified from the existing 2D and 3D seismic data.

Following integration of the sea-bed coring results, the focus of technical work during 2011has been on a further detailed review of the internal reservoir architecture of the reservoir targets in the main Balyena, Butanding and Dorado prospects. This has resulted in the Joint Venture agreeing to undertake a seismic inversion and Amplitude Versus Offset (AVO) project to further de-risk reservoir uncertainty. The project will take up to 12 months to complete and will assist the Joint Venture in further de-risking the Nido and Miocene reservoir objectives with respect to porosity and potential fluid types.

Currently, the Balyena Prospect is the expected first well to be drilled and forms part of the five well drilling program.


 

Joint Venture Partner: PNOC-EC 50%
Area: 10,671 sq km

Service Contract 63 (SC 63) was awarded to Nido and PNOC-EC in November 2006. The block covers an offshore area of 10,560 sq km and is contiguous to the southern portions of SC 58 and SC 54B. The blocks are on trend and share similar geology with the prolific hydrocarbon province offshore Sabah, Malaysia to the southwest. In addition, the block contains a gas discovery at the Aboabo A1-X well (Phillips Petroleum Ltd, 1981) located in the southern sector of the block, reported to have flowed gas at an estimated rate of 50 million cubic feet per day on test.

The existing exploration wells have all been drilled on the shallow shelfal regions of the block, many of them encountering hydrocarbon shows. The majority of the wells were drilled on very poor quality vintage 2D seismic resulting in numerous failures due to wells being drilled off-structure. In many ways, Nido regards the block as essentially lightly explored but the gas discovery at Aboabo A1-X indicates that the upside of the block has yet to be realised.

In 2007, the Joint Venture acquired the 3,255 km 2D East Sabina seismic survey thus prioritising the southern sector of the block for coverage by 3D seismic. In October 2009, the Joint Venture acquired the 754 sq km Kawayan 3D seismic survey, covering the area around the Aboabo A1-X discovery. Processing of this survey will continue through to mid 2010.

Detailed seismic interpretation of the Kawayan 3D data has continued in 2011. Preliminary results emerging from the 3D interpretation are encouraging with a number of new leads identified across a range of play types. These include hanging wall anticlines, sub-crop traps and toe-thrust anticlines within the objective Miocene stratigraphic section.

The block is currently in Sub-Phase 2b. This Sub-Phase contains a commitment well which must be drilled before November 2012. Nido is targeting a drilling window between December 2011 and March 2012 and is now actively preparing for the drilling campaign.

Nido Petroleum Philippines Pty Ltd and Total have executed a Joint Study and Bid Agreement to evaluate exploration acreage released in the Philippine Energy Contracting Round No.4 (PERC 4).  Nido on behalf of Total will undertake technical and commercial evaluations of all fifteen blocks contained in the PERC 4 release.  Submissions of bids is due between April and July 2012, with the award of blocks in the second half of 2012.