Otto Farms-Out Philippines Service Contract 51
Otto has executed a farm-out of Service Contract 51 ("SC51") to SWAN Oil and Gas Ltd. The agreement has been approved by the SC51 Joint Venture Partners and is awaiting Philippine Department of Energy approval.
SWAN is an unlisted Australian company whose vision is to be a long-term investor, owner and operator of oil and gas projects in Australasia.
The key terms of the agreement are as follows:
- Otto will divest 40% equity in SC51 to SWAN
- Otto will retain operatorship
- SWAN will pay the first US $1.5 million towards the drilling of Duhat-1 in San Isidro, Onshore Leyte in the Philippines to earn this interest
- SC51 Joint Operating Agreement and Farm-in Agreement have been amended to split SC51 into a Northern and Southern block. Otto has elected to not continue in the South block, containing the Argao prospect, giving SWAN 80% working interest in the Southern block. Otto will retain a 40% working interest in the Northern block.
Otto's Managing Director Paul Moore said that the completion of the farm-in has been a key focus of the company. "Otto is moving towards drilling our first operated well in the Philippines, Duhat-1, early in 2011. By reducing our equity to our optimum working interest we have positioned Otto to participate in ongoing investment given exploration success. We are excited to be working with SWAN in drilling Duhat-1."
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