The agreement, said to be worth $7m (RM22.7m), is for a jack up drilling rig to drill the Baragatan prospect on behalf of the SC 63 joint venture (JV).
The rig will have a capacity to operate in a water depth of up to 400ft (about 120m) and, according to Nido, can drill to a total depth of 30,000ft (about 9,100m) sub-sea.
The newly-built, premium jack up drilling rig UMW Naga 5 rig will be delivered by the Keppel Shipyard in May 2014.
The JV will contract the UMW Naga 5 for a period of six weeks with commencement expected during June 2014.
Commenting on the execution of the binding rig contract with UMWSD, Byrne from Nido Petroleum said the Baragatan prospect is one of four wells the company plans to drill in the Philippines and Indonesia over the next six to 12 months.
"We are pleased to have signed a binding rig contract with UMWSD and we look forward to drilling operations commencing with respect to the Baragatan prospect," Byrne said.
The company is expected to provide further updates on progress towards the drilling of the Baragatan prospect, upon achieving major milestones.
Malaysian provider of drilling and oilfield services UMW Oil & Gas has a fleet of five offshore drilling rigs and has been carrying out offshore drilling operations since 2005.
Image: UMW Naga 5 jack up drilling rig. Photo: courtesy of UMW.