Otto Energy Limited announced Friday that it has entered into a seismic acquisition and farm in option agreement in respect to its SC55 permit in the Philippines with BHP Billiton (BHPB).
Under the agreement, Otto is required to secure seismic services providing for the commencement of the seismic acquisition. BHPB will fund the acquisition and processing of a minimum of 1,000 km2 and up to 2,000 km2 of 3D seismic in SC55. In consideration Otto has agreed to grant BHPB exclusivity to review the entire seismic data base and exercise an option to farm-in to SC55.
The farm in option provides BHPB with an exclusive right to elect to earn a 60% net participating interest in SC55 through funding the drilling of the two deepwater exploration wells and the reimbursement of Otto's past costs. BHPB will also be assigned operatorship in the event that it elects to farm in to SC55. If BHBP elects to drill only the first deepwater exploration well then BHBP will transfer back 30% interest and operatorship of SC55 to Otto.
Any farm-in by BHPB will be subject to the negotiation of formal farm-in and joint venture agreements and all necessary approvals being obtained from the current Joint Venture partner and the Philippines Department of Energy.
Otto has recently completed the acquisition of 600 km2 of 3D seismic in SC55 and is pleased to be working with BHPB to acquire and process up to an additional 2,000 km2 of new 3D seismic in the Service Contract. Together these seismic surveys will allow Otto to establish a comprehensive subsurface understanding of the offshore Palawan permit area and prospects inventory for future drilling campaigns.
SC55 covers an area of 9,000km2 and is located offshore Palawan Island in the Philippines. Otto currently has an 85% working interest in SC55 and is the operator. Based in West Perth, Otto Energy Limited is an international exploration and production company that has assembled a balanced portfolio of oil and gas assets in the Philippines, Turkey, Italy and Argentina.
As of mid 2008, Otto expects to receive revenue from production at the Galoc Oil Field in the Philippines which will be used to fund further development and exploration across all of the Company's highly prospective assets. Otto is opportunity rich with an exploration portfolio that includes additional discoveries that are under development, approximately 20 drillable prospects covered by new 3D seismic and well over 60 exploration leads which are being matured as follow-up potential. Consequently, Otto has an active exploration and appraisal drilling program in 2008/2009.
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