Further to the ASX announcement dated July 7, 2008, Otto Energy has provided the following update on the development of the Galoc Oil Field, SC14C in the Philippines.
As indicated last week, weather conditions on the Sulu Sea had improved following Typhoon Fengshen and the field operator, Galoc Production Company (GPC) and the owner and operator of the FPSO, Rubicon, commenced reconnection procedures of the mooring and riser system to the FPSO on July 1, 2008.
GPC has since provided an update to Otto and its joint venture partners that when the riser and mooring tether were lifted for reconnection to the FPSO, damage was identified in one section of the riser. It is believed the damage was caused during the disconnection of the vessel, but was not evident until during the lifting process last week.
As a result, a new section of riser has been mobilized to the field from Singapore and is expected to arrive within the week. In the meantime, the FPSO will remain in the field and function testing of the umbilical and wellhead valves will be undertaken as part of the integrity and systems safety check required to flowing oil.
Otto will provide an update as to the anticipated timing for first oil once additional information is provided by GPC and Rubicon, however initial indications are it will now probably be during August.
Otto's CEO, Alex Parks, said," These delays to first oil are obviously frustrating, however GPC and Rubicon are working closely together to rectify the problems. The timing of Typhoon Fengshen was particularly inopportune for the Galoc Field as some final elements of the system were still in the process of being commissioned.
"The important thing to note is that provided Galoc comes on-stream shortly, the financial impact of the delay is relatively minimal to Otto. The fundamentals of the project in terms of the reserves, the well deliverability and the high oil price are solid and the project is commercially robust," said Parks.
Otto has an 18.28% indirect interest in the Galoc Oil Field through its 31.38% shareholding in the field operator, GPC.
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