NorAsian chairman Rufino Bomasang said from Manila that the rig was “state-of-the art” and delivery was scheduled for late 2007.

“Chartering the rig for up to three years or more provides certainty of being able to put the Calauit 1B well on an extended production test, fully develop the Calauit field with two additional wells and to be in a position to drill and test other prospects in a range of water depths,” Bomasang said.

Successful completion of the bare boat contract (BBC) rig transaction would significantly reduce Ottoman’s potential financial exposure to long-term contracts, which required commensurate guarantees, generally outside the capability of most small-to-medium size companies, he said.

All formal documentation to finalise the BBC, including the satisfaction of conditions, is expected to be completed by September, at which time Ottoman will announce the final terms of the rig contract and related arrangements.

“The proposed bare boat contract timetable enables NorAsian to undertake detailed planning studies for a full field development program, initially three wells, and provides sufficient time to negotiate and secure long lead time items, put in place the third party contracts for rig management, storage and shuttle tankers and to negotiate offtake agreements,” Bomasang said.

Once the rig is on location, Ottoman intends to re-enter the Calauit 1B well, and drill a sidetrack well horizontally in the top of the reservoir. First production is expected within one month of re-entry, according to Ottoman.

“Reservoir simulation studies indicate that initial flow rates up to 15,000bopd may be achievable,” Ottoman managing director Jaap Poll said.

“The company expects peak production from a three-well development program to be in the order of 25,000bopd.”

As previously announced, based on the 1997 test results, the Calauit 1B oil field contains 39.4 million barrels (MMbbl) barrels of oil in-place, of which 6.44MMbbl are recoverable.

NorAsian has submitted a drilling timetable to the Philippine Department of Energy for approval, upon which the company intends to proceed with the proposed BBC and accelerate its development planning for the Calauit field and its offshore exploration projects in SC51 and SC55.

In addition, NorAsian has executed a contract with Veritas Geophysical for a 400km seismic program over the Marantao Prospect in its Southwest Palawan deepwater block (SC55).

Ottoman currently holds an indirect 50% beneficial interest in the Calauit oil field (SC50) via its shareholding in NorAsian. Subject to shareholder approval being received at the general meeting to be held on August 18, Ottoman will hold a 100% beneficial interest in SC50.

Canadian company Vital Resources has the right to earn a 30% interest in NorAsian’s three licences, SC50, SC51 and SC55. To acquire these interests, Vital will be contributing the bulk of expenditure relating to the seismic program and bringing the Calauit oil field into production.