LONDON (Alliance News) - Red Emperor Resources NL Thursday said it may increase its stake in its joint venture in the Philippines after its partner decided to exit the project and also provided an update on its interests in Georgia.
The company said it expects a response from the Department of Energy in the Philippines with respect to the moratorium request submitted by its partner and operator of the SC55 licence, Otto Energy Ltd, in the fourth quarter of 2015.
Otto Energy requested a two-year moratorium late last year after the joint venture fulfilled the work obligation under the current exploration sub-phase by drilling the Hawkeye-1 well in August 2015. Although the well did not encounter gas in commercial quantities, it proved the presence of an active petroleum system in the contract area, it said.
"The consortium intends to undertake further technical studies during the moratorium period, including a quantitative interpretation study," said Red Emperor. "The joint venture expects a response from the Department of Energy with respect to its moratorium request in the first quarter of 2016."
Quantitative interpretation is a relatively recent geophysical technique that is designed to gain a better understanding of existing and potential petroleum reservoirs.
Since the start of 2016, Red Emperor was advised by Otto Energy of its intention to exit the Joint Venture as part of its strategy to focus on its North American assets. As a result, Red Emperor would have the option to either maintain its 15% participating interest in SC 55 or be assigned a percentage of Otto Energy's interest on a pro-rata basis, it said.
In this instance, Red Emperor's participating interest could be increased by up to 22.5% to 37.5%. Red Emperor is considering its options and will advise the market accordingly.
In Georgia, Red Emperor said Strait Oil & Gas Ltd is continuing to negotiate deals with potential buyers of the production from Block Vla. Red Emperor is not directly involved in the project but holds a 20% stake in Strait at a corporate level.
"Red Emperor understands that delays in reaching agreement with the potential purchaser have been due to volatility in the oil and gas price and political instability in the region. Strait is still hopeful of a conclusion to the negotiations before the end of the first quarter of 2016," said Red Emperor.
Red Emperor shares were trading down 3.0% to 0.907 pence per share on Thursday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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