Red Emperor Resources provides an update with respect to Service Contract 55 (SC55), offshore Palawan Basin in the Philippines.

This week the Company finally received official confirmation from the Philippine Department of Energy (DoE) ratifying the request for the transfer of participating interests in Service Contract no. 55 (SC55) from Otto Energy to its partners, Century Red Pte. Ltd (a 100% owned subsidiary of Red Emperor Resources), PaIawan55 Exploration & Production Corp and Pryce Gases, Inc.

Red Emperor's equity interest in Block SC 55 is now 37.5% (previously 15%) after the DoE found the partners to be 'Financially qualified to assume the proposed interests. Legally qualified to assume the participating interest from Otto Energy considering that they are existing petroleum companies operating either as operator and/or consortium members in petroleum service contracts; And technically qualified, as exemplified by the joint cooperation and completion of previous exploration activities, such as the drilled Hawkeye-1 well.'

As a result, the participating interests in SC55 are as follows:

Palawan55 Exploration & Production Corp (Operator) 37.50%; Century Red Pte. Ltd (Red Emperor Resources) 37.50%; Pryce Gases, Inc. 25.00%.

It is also understood that Palawan55 Exploration & Production Corporation will be the 'Operator' of SC 55 as endorsed by the other remaining partners.

Red Emperor participated in a USD $25m exploration well (Hawkeye-1) within the block in 2015 and contributed in excess of AUD $5m towards drilling costs. Over USD $50m has been spent exploring the block to date and a number of drill-ready targets remain, including the 'Cinco' gas prospect which has a best estimate prospective resource of 1.6tcf recoverable gas. Given the Hawkeye well discovered gas and a working petroleum system relatively close to Cinco, Red Emperor believes that Block SC55 remains a key asset for the Company to maintain exposure to.