Basic Energy Corp. said Monday it signed a farm-in agreement allowing Desco Inc. to acquire an 80-percent participating interest in the Iriga geothermal power project.
Basic Energy said in a disclosure to the stock exchange Desco would bear the entire expenditure for the geophysical survey and all other activities required to bring the Iriga geothermal service contract to drilling.
“Notwithstanding approval from DoE, Desco shall commence the geophysical activities in February 2016 and shall endeavor to complete the survey in accordance with the work program,” it said.
Desco shall also fund the entire drilling cost for the first well, with Basic fully carried in the first well. Desco is a local drilling firm engaged mostly in servicing the geothermal, oil and gas industries.
The agreement also stipulates that the cost of drilling the second well and succeeding wells and the cost of production facility shall be divided pro rata between Basic and Desco at 20 percent and 80 percent, respectively.
The Iriga geothermal service contract was awarded by the Energy Department to Basic Energy on Feb. 26, 2013.
The Iriga, Camarines Sur geothermal area is bounded in the north by the Isarog geothermal block of PNOC Renewables Corp. and to the east by the highly productive Tiwi geothermal service contract, owned by AP Renewables Inc.
The areal landscape is dominated by Mount Asog, a stratovolcano immediately southwest of Lake Buhi in Southern Luzon.
The area is dominated by the Iriga or Asog volcano located to the southwest of Lake Buhi in southern Luzon.
Basic Energy earlier said Desco’s entry following an extensive review underscores its bullishness on the project.