Otto and Incremental Hit Gas Pay in Turkey

Australian oil and gas exploration and development company Otto Energy, together with joint venture partner Incremental Petroleum, reported that the Koyustu-1 gas exploration well, in the Edirne License, Thrace Basin, Turkey has discovered gas in the first of two main intervals to be tested.

The first well in the 2006/07 Edirne drilling program, Koyustu–1, was drilled on a prospect immediately adjacent to Otto's first gas discovery Bati Umur-1 targeting shallow gas in similar formations.

Koyustu-1 was drilled to a total depth of 617m and several potential gas pay intervals have been interpreted from wireline logs. The interval from 324 -331m produced dry gas to surface without stimulation.

The interval was flowed for a total of 12 hours at a series of increasing flow rates finishing with a final stable rate of approximately 2 MMcf/d for 6 hours to allow evaluation of the reservoir.

Forward Program

This successful flow test, will be followed up with testing of the main reservoir zone from 245-255m in the next few days. One further shallower gas zone has also been identified from wireline logs at around 215m, however this 2m zone may be left untested, until the JV return to the well for commercial production.

Following the completion of evaluation at Koyustu-1, the rig will be moved to Bati Umur-1 for flow testing of that well. Bati Umur was drilled by the Joint Venture in December 2005 and several zones of potential gas pay were identified on wire line logs. The well was not flow tested due to the severe winter conditions at the time of completion.

The Joint Venture is meeting in mid-January in Turkey to discuss which of the other prospects will be selected for drilling following the current Koyustu / Bati Umur drilling and testing program.

Once the wells have been evaluated, a feasibility study will commence to identify the best way to commercialize these fields.

Reporting Schedule: Otto will continue to report the progress of the operations each Wednesday until completion of the drilling and testing operations, unless receipt of specific market sensitive data requires otherwise.

Joint Venture

The Edirne License Joint Venture comprises Otto 65%, Incremental 15% and Turkish Operators Merty Energy and Petrako Limited – 10% each.

Otto is being carried by Incremental through the recently completed seismic survey and current drilling and flow testing up to an expenditure of A$3million.

Commenting on the discovery, Otto's CEO Alex Parks said:

"The discovery at Koyustu-1 is a seminal event in Otto's short history as the test marks the first hydrocarbons flowed to surface by the company. Indications are that Otto and our JV may have a modest but commercial quantity of gas that we can now plan to rapidly develop during 2007".

West Perth-based oil and gas explorer Otto Energy limited ("OEL") listed on the ASX on 20 December 2004 and has assembled a balanced portfolio of oil and gas exploration and production projects in the Philippines, Turkey and Argentina.

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