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New Developments

PETROLEUM PROJECTS

Service Contract 14C - Galoc, Offshore Northwest Palawan
GALOC: The Galoc Production Company (GPC) has submitted to the DOE its Galoc work program. The bulk of the Galoc work program and budget hinge on the drilling of two development wells, with a sub-sea tie-back to a floating production facility.
WEST LINAPACAN: The consortium partners decided, at end of 2005, to favor the farm-in proposal of Vitol, the major financier in the Galoc Production Company. AGRC's 100-for-75 proposal was turned down. After Vitol has completed the due diligence period they requested, Vitol withdrew it farm-in offer. They thought that reactivation of West Linapacan is too complex for a new oil exploration company like Vitol. After Vitol's withdrawal, Nido Petroleum submitted a similar proposal and similar work program to the partners hoping to fill in the vacuum left by Vitol.
Another foreign group has shown interest in developing West Linapacan. An initial exploratory talk has already been made and the West Linapacan partners are weighing their options.
Service Contract 14 Block B-1 - North Matinloc, Offshore Northwest Palawan
The Contract area is located SSE of Camago-Malampaya Gas Field. North Matinloc was discovered in May 1988 with an estimated proven reserve of about 2.5 million barrels of oil.
Oil production started July 1988. Total oil production amounted to 2,063,963 barrels before production was suspended in November 1991 due to water influx. Well stimulation revived limited cyclic production at the beginning of 1998, which again stopped in April 2001 after producing an additional 95,423 barrels of oil.
Thereafter, attempts to revive cyclic production failed. But now, with the possible farm in of an Australian group, there is still some hope that production might be revived using  advance production technologies and equipment. Negotiations are presently in progress to finalize their farm in terms.
Service Contract 6A - Octon, Offshore Northwest Palawan
After completing a six-month G & G study at an estimated cost of US$ 300,000, the consortium partners executed a deed of assignment with Rock Oil International last July 17, 2002 assigning 5% interest of the block to Rock Oil.
Rock Oil has made a firm decision to drill one well in the West Malajon shallow gas prospect. The commitment was announced during the presentation of the final report last June 2003. The decision to drill was based from 3D-seismic interpretation, petroleum chemistry and petrophysical studies.
In the July 2, 2003 Operating Committee Meeting of the SC 6-A consortium, the participating interests of Oriental Petroleum & Minerals Corporation of 9.5% (North Block) and 10% (Octon Block) were redistributed pro-rata amongst the paying partners.  Accordingly, AGRC's participating interests have increased to 1.570% (North Block) and 1.670% (Octon Block).
Disappointingly, after 360 days, within which Rock Oil must drill their committed well, Rock Oil manifested the sorry predicament they found themselves in. They cannot find suitable financiers who would bankroll the drilling project. Rock Oil requested for more time or until September 2004 to carry out its well commitment or the 5% participating interests previously assigned to them would revert back to the SC-6A consortium.
Service Contract 6B - Bonita, Offshore Northwest Palawan
Contract area is 53, 293 hectares and located offshore NW Palawan adjacent to Matinloc production complexes with estimated oil in place is around 1.0-1.2 million barrels of oil. Commercial oil was discovered but Bonita-1 flowed at combined rates of only 2,102 BOPD .
Actual development was deferred but with the favorable market conditions for oil, an Australian company had shown interests in trying to put the field into production. Negotiations are presently in progress to finalize their farm in terms.
Service Contract 51 - East Visayan Basin
The conversion of GSEC 93 was approved by DOE last July 8, 2005. into Service Contract No. 51. The consortium committed to undertake a new 250-km seismic program over the Cebu Strait and an engineering study of the Villaba gas discovery in offshore Northwest Leyte within the first 18 months of the contract term.

However, despite the completion of the seismic IEC, the technical operator, Trans-Asia, has yet to lock-in a seismic boat that will conduct the 2D survey. There simply is no boat interested enough to do a small job like the SC 51 seismic survey.

A group shoot is being worked out with other consortium to entice a seismic boat to swing by the Philippines and do the job.



Gabon, West Africa
The company has already received part of the agreed payment scheme from Nissho Iwai in accordance with the stipulations provided for in the signed heads of agreement.
In June 17, 2002 Vaalco-Gabon announced the successful completion of the first of three wells planned for the Etame Development Project. The ET-3H well flowed at a rate of 7,630 barrels of oil per day on a 42/64" choke.
Vaalco Gabon announced last September 30, 2002 that it commenced oil production from the Etame Field offshore southern Gabon. The field is currently producing in excess of 14,500 barrels per day of 36 degree gravity, sweet crude oil. Robert Gerry, Chairman of VAALCO said, We are pleased to have brought the Etame field on production on schedule. For the next several months, we will be monitoring the field performance to determine optimum production rates and if additional development drilling is warranted. We also are planning to acquire 3-D seismic in the vicinity of the field early next year to investigate the potential for a northern extension of the field as well as other exploration targets.
Phase I of the Etame field development consisted of the subsea completion of two horizontal wells and one vertical well. The wells were connected using flexible flowlines to a Floating Production, Storage and Offloading tanker (FPSO) with total storage capacity of 1.1 million barrels of oil. Crude oil will be offloaded from the FPSO via shuttle tankers for delivery of the oil to refineries.
The Etame field has produced 9 million barrels in the eighteen months that it has been on production and continues to produce at approximately 15,000 barrels per day. Vaalco-Gabon announced that it has spudded the Etame-5H development well in the Etame field. The well will be completed horizontally in the Gamba sandstone reservoir at Etame, and should increase total field production to over 20,000 barrels per day.
 For further updates on Gabon Etame block please click this link: http://www.vaalco.com


MINERAL PROJECTS

Mineral Production Sharing Agreement (MPSA 066-97-VIII)
Leyte Cement Project: Isabel- Merida, Leyte
The company reduced the cement claim holdings from 3,564 hectares to 1,784.47541 hectares.  It has already paid its mining occupation fees, based on the new area computation.
The application for a two-year extension of the exploration period was approved and  took effect last March 04, 2003. The exploration extension will end on March 3, 2005.
Personnel from DENR-MGB Regional Office No. 8 in Tacloban conducted the annual field audit last August 3 and 4 and found everything in order considering that the project has been practically placed in suspension.
People living within the claim area are still hopeful that the cement project will see the production stage soon.
Likewise, the company has endeavored to comply with all reportorial requirements to the BOI to extend and preserve the pioneer status with non-pioneer incentives of its Leyte Cement Project.



Mineral Production Sharing Agreement Application
Agusan Gold Project: Rosario, Agusan del Sur
The MPSA application for the 5 mining claims have been languishing at DENR Region XIII (Caraga) office in Surigao City since September 1997 waiting for resolution and approval.
The project remained in suspended mode pending MPSA approval. Approval of the MPSA was delayed by the adverse claim lodged by PICOP, a logging company in Bislig, Surigao del Sur. The case awaits the decision of the Panel of Arbitrators in Surigao City. The company is actively seeking the approval of the MPSA the soonest so that it can make the project more attractive to investors and potential joint-venture partners.
Phil Saga Mining Corporation, a foreign-based gold exploration company, has signified their intention to look into the area and currently finalizing the schedule of their visit to the mine area.
China Kuangye Nonferrous Metals Ltd. Liability Co. Phils, a company based in Peoples Republic of China, ECA Philippines Inc., a Philippine-based explosive trading company and ANVIL Mining NL of Australia have also signified their interest in the area. AGRC has sent replies to their letters of intent and already scheduling exploratory meeting with these companies.