Vital announced that it has entered into an agreement with PetroNext Energy Development Fund Ltd to provide US$5million on a non-recourse basis towards Vital's requirements to develop the Calauit Oil Field under its farmin arrangement with NorAsian Energy Ltd, a 100% Otto subsidiary. This agreement is subject to final documentation with PetroNext, an Isle of Man incorporated oil and gas investment fund. Otto will make a further announcement when it is advised by Vital that its financing arrangement has become unconditional.
Vital is an emerging Calgary-based oil company focused on building shareholder value through development and exploration in the Philippines. Vital has agreed to a farmin into NorAsian's three offshore Philippine licenses SC50 (Calauit Oil Field – NW Palawan Basin), SC51 (Visayas Basin) and SC55 (Ultra Deep Water – SW Palawan Basin).
Vital will earn a 35% interest in SC50 (Calauit Oilfield) by funding 60% of the US$20m of costs (including Bare Boat Charter ("BBC") payments) estimated to get Calauit on production. Otto will retain a 65% ownership in Calauit by funding 40% of these costs. In addition, Vital has agreed to pay to NorAsian an Entry Fee to participate in Calauit of US$825,000 in four equal installments.
Otto previously announced that its 100% subsidiary NorAsian had entered into a 3 year (plus options) Bare Boat Charter ("BBC") of a new build Multi Purpose Semi Submersible Rig ("MPSS") with a delivery time of 15 October 2007.
Commenting on the Company's progress towards the development of the Calauit Oil Field, Otto's Executive Director Jaap Poll said:
"The BBC requires 6 periodic payments over a 12 month period totaling US$11.25 million. The first payment was made by Otto and Vital and Vital will substantially carry the Company through the remaining 5 installments. The company is proceeding with the various technical studies required to ensure that the MPSS meets all specifications for a successful development of the Calauit Oil Field by end 2007."
West Perth, Australia-based oil and gas explorer Otto Energy Limited has assembled a portfolio of oil and gas exploration and potential production projects in the Philippines, Turkey and Argentina. Otto recently acquired 100% of NorAsian Energy Limited, which gives the company operational control to progress the development of the Calauit Oil Field (SC50 – 65%) in late 2007, after recently securing a semi-submersible drilling and production rig. Dr Andrew Wadsley calculates that the Calauit Oil Field contains 39.4 mm barrels of oil in place of which 6.44 mm barrels are recoverable (mean category). Other licenses include East Visayan (SC 51-50%), Ultra Deep Water Palawan (SC 55-55%).
Otto now has one of the largest publicly owned acreage holdings offshore Philippines, with a total area of over 15,000 sq km (over 3.7 million acres). Canadian Vital Resources Corp ("Vital") agreed to acquire a 35% interest in SC50 and a 30% interest in SC51 and SC55 on advantageous terms to Otto.
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