Australia's Otto Energy Limited (Otto) reported Thursday that it has acquired 100 percent of the issued capital of Borealis Petroleum Pty Ltd. (Borealis) to earn an interest, through staged capital injections, in a substantial acreage position on the highly prospective, oil prone, onshore Alaskan North Slope held by Great Bear Petroleum Operating LLC (Great Bear). Otto will now control Borealis Petroleum Pty Ltd and its subsidiary, Borealis Alaska LLC.
Otto had previously announced it entered into a Letter of Intent (LOI) to invest $4 million into Borealis as part of a larger capital raise by Borealis. Otto has terminated the LOI and acquired 100 percent of the issued capital of Borealis for consideration of $879,200 (AUD 1.2 million) to be paid for by the issue of Otto shares. A total of 17,518,250 Otto shares will be issued.
Otto has taken this decision following drilling progress to date at the Hawkeye-1 exploration well and the recently completed SC55 farm-in option agreement with Pryce Gases Inc., which have collectively de-risked Otto’s short term capital expenditure program.
Through its agreements with Great Bear, Borealis has the right to acquire an 8 percent and 10.8 percent working interest (equivalent to 58,334 net acres) in two areas of Alaskan North Slope exploration acreage held by Great Bear through a staged purchase arrangement of up to $20 million.
Consideration to paid to Great Bear to complete the entry and the forward capital investment program will involve the following:
This drilling program is targeting existing proven geological play types, which if successful have the potential to yield significant recoverable resources.
In addition, Borealis has an option to acquire an interest in a further 22,804 acres for a purchase price of $25 million. This acreage includes a very recently drilled exploration well by Great Bear in early 2015 (Alkaid-1) and numerous exploration prospects (including the Phecda prospect).
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