PXP Energy Corporation

SC 40 North Cebu

Forum Exploration, Inc.: 100%

SC 40 (North Cebu) is located in the Visayan Basin, in the central part of the Philippine Archipelago. The license area encompasses the northern portion of Cebu Island and the adjacent offshore areas in the Central Tañon Strait and the Visayan Sea. The DOE considers the Visayan Basin to be one of the most prospective basins in the country, second only to the producing Northwest Palawan Basin.

The block was originally awarded as Geophysical Survey and Exploration Contract (GSEC) No. 69 to a consortium led by Forum Pacific, Inc. (FPI). The concession was subsequently converted into a service contract, SC 40, on February 19, 1995. In November 1997, FPI transferred its interest in SC 40 (Cebu) to Forum Exploration, Inc (FEI), then a wholly-owned subsidiary of FPI. In April 2003, Forum Energy, through a subsidiary, acquired 66.67% of the issued shares of FEI from FPI.

The original term of the Exploration Period of the service contract was seven years from 1995 and originally set to expire in 2002. Following this, the contract received short-term extensions to allow continued exploration activities. In September 2003, the contract was formally extended for a further three years, with DOE-approved work program commitments for each year. On November 25, 2005, SC 40 entered the Production Period following the signing of the Joint Determination of Commerciality for the Libertad Gas Field. This automatically extended the contract term by 25 years and deferred certain Exploration Period commitments. Concurrently, the DOE approved a Libertad Production Area totaling 80 square kilometers.

Forum carried out onshore gravity surveys in the Toledo and Maya areas in 2009 and in the Bogo, San Remigio, Medellin, Tabogon, and Daanbantayan areas in 2012-2013.

In 2013, PGS prepared an Oil & Gas Competent Person's Report covering the entire block. The report estimated in-place contingent resources is 14.1 million barrels of oil from the Maya and Toledo prospects, while prospective resources were estimated at 644.2 million barrels of oil from other prospects and leads. In 2014, a block-wide Geological and Geophysical (G&G) studies were conducted to identify and prioritize highly prospective areas for future exploration.

In early 2017, an additional gravity survey was conducted in San Remigio to investigate an apparent structure identified from the previous survey results. More recent land gravity surveys were conducted in Daanbatayan, Medellin, and Bogo from 2019 to 2020 to further delineate the carbonate bodies observed in these areas. Forum also reprocessed several onshore and offshore 2D lines in preparation for a block-wide re-evaluation of SC 40, with the objective of generating new drilling prospects.

Libertad Gas Field

The Libertad Gas Field is situated in Bogo City, north of Cebu City. The field was discovered in the late 1950s but remained undeveloped for several decades. In 1993, a testing program was conducted on two wells, followed by the drilling of five additional wells between 1994 and 1995. One of these wells, L95-1, tested gas and was subsequently completed as a gas producer.

In 2004, Forum carried out a feasibility study to determine the most commercially viable development option for the field. The study recommended a development plan based on gas-to-electricity generation, with a maximum capacity of 3.0 MW.

In 2009, a Gas Sale and Purchase agreement was signed with local company Desco Inc. for on-site power generation. As mandated by the DOE, Forum's role was limited to supplying natural gas, while Desco acted as the buyer. Desco, in turn, sold the generated electricity to the Cebu Electric Cooperative (Cebeco II) under a Power Supply Agreement.

Construction of the power plant was completed in 2011, with the installation of a 1MW GE Jenbacher engine. In February 2012, commercial gas production from the L95-1 well officially commenced with an initial production rate at 240,000 cubic feet of gas per day. However, in August 2015, the well was shut-in due to a rapid decline in formation pressure. The Libertad Gas Field was finally decommissioned in 2017 after producing a total of 208.9 million cubic feet of gas.

Maya Prospect

The Maya area is located on the northeastern tip of Cebu Island. Initial exploration occurred between the 1960s and 1970s, with several companies conducting tests, including the Chinese Petroleum Corporation, which drilled the CMB-2 well and recorded an oil discovery in 1972.

In 2003, Forum Exploration, Inc. drilled three wells in the area: Forum-1X (with its deepened section Forum-1XA), Forum-2X, and Forum-3X. These wells encountered sandstone layers that are thicker than those encountered in the earlier wells. Notably, the sandstone intervals exhibited compelling gas shows, such as kicks and blow outs, accompanied by oil indicators.

The wells Forum-2X and Forum-3X wells appear not to have fully penetrated the entire sandstone sequence. An attempt to test Forum-2X was suspended due to mechanical issues. Future drilling in the Maya area should incorporate a carefully designed fluid and casing program to manage the high pore pressures and the swelling clays previously encountered in these formations.

Dalingding Prospect

The Dalingding Prospect is a seismically-defined feature interpreted as a reefal buildup associated with the limestone facies of the Upper Miocene-Pliocene Barili Formation. The Dalingding-1 well, drilled in 1996 by Cophil Exploration, was designed to test this structure. The well was drilled to a final depth of 1,508 ft and encountered a 3-ft limestone at the bottom, which produced 900 barrels of brackish water per day with undetermined amounts of gas. The well was subsequently plugged and abandoned as a dry hole. Technical reviews indicated that Dalingding-1 did not penetrate the top of the Barili Limestone.

In 2009, Forum reprocessed several vintage lines in SC 40, including those located over the Dalingding structure. Analysis indicated that the top of the Barili at the Dalingding-1 location corresponds to 0.51 seconds two-way travel time (TWT), which translates to a drill depth of approximately 1,740 ft using a velocity value at Jibitnil-1 for the correlative overburden. Since Dalingding-1 had a total depth of only 1,508 ft, it likely did not intersect the Top Barili.

In 2024, a magnetotelluric survey over the prospect imaged the top of the Barili structure and confirmed that it lies deeper than the depth reached by Dalingding-1. A new well will therefore be required to penetrate and test the Barili Limestone and to reach the secondary objectives below.