DOE okays Nido-Dragon farm-out deal

MANILA, Philippines - Nido Petroleum, an Australian oil and gas company, has obtained the green light from the Department of Energy (DOE) for the first stage of its farm-out agreement with Dragon Oil Plc., a United Arab Emirates (UAE)-based company.

Nido signed an agreement with Dragon Oil in January, under which Dragon Oil will acquire a 40-percent participating interest in Service Contract 63 from Nido’s current 50-percent participating interest.

In a disclosure to the Australian Stock Exchange yesterday, Nido said the first stage of the farm-out process with Dragon Oil involving the transfer of a 40-percent participating interest in the service contract has been approved.

“Nido is now focusing on the second stage of the farm-out process, which subject to certain approvals will see Nido re-acquire a net 10-percent participating interest from PNOC- Exploration Corp. bringing Nido’s interest to a 20-percent participating interest in Service Contract 63,” Nido said.

Drilling in the area is set to commence in May as preparations for the Baragatan-1 well are now in the final stages, Nido also added.

During the Baragatan-1 drilling operations, Nido will remain as technical operator and PNOC-EC as operator of the service contract.

In this period, Dragon Oil will be responsible for overall drilling management and eventually, following the drilling of the Baragatan-1 well, Dragon Oil will have the right to become operator of the service contract.