Otto Reports on Philippines, Plans to Drill More Wells

Two years of detailed technical review and evaluation has identified considerable potential in Otto's Philippines acreage portfolio that warrants commitment to the drilling of multiple explorations wells. In SC55 numerous potentially "billion barrel" in place structures have been identified in the heart of an established petroleum system. The Argao structure in SC51 consists of eight stacked target zones that each could contain 40 with 300MMbbls in place. Otto has also invited bonafide parties to evaluate the work done with a view to acquiring equity in the projects via partial purchase or via exploration carry commitments.

Otto became operator of SC50, SC51 and SC55 following acquisition of NorAsian Energy. The Company has very high equity of between 80 and 85% in each of these three Service Contract areas.

SC 55, whichOtto holds 85% in, is a 9,000km2 deep water block west off Palawan Island. Otto has acquired two 2D seismic surveys in SC55, totaling 1,400km of new seismic data, and undertook reprocessing of almost
all the existing deep water 2D data in the block.
The Nido Limestone formation has been extensively mapped and at least eight structures have been identified, each with the potential to hold over a billion barrels of oil in place.
The overlying turbidite systems also have the potential to form further traps, as proven by several recently discovered giant oilfields only a few 100k’s to the south off the west coast of Borneo. These turbidites require 3D seismic coverage before they can be considered “drill ready”. Otto’s work has clearly demonstrated that the block has considerable potential and that an extensive exploration program is warranted. Deep water rigs are currently in high demand and there is a long lead time in securing a rig slot. Otto is therefore currently seeking a farm in partner to join us in the block this year, to allow firm commitment to securing a rig slot in 2009/2010. While waiting on the rig to arrive, an extensive 3D seismic program may be undertaken to evaluate the
turbidite potential of SC55 and to better delineate some of the sparsely covered limestone structures.
SC51, whichOtto holds 80% in, lies in the Cebu-Bohol Straits in the Visayan Basin, is considered to be highly prospective, but under explored. Otto has invested considerable efforts to understand the petroleum system and to "mature" the Argao structure to drillable status. All the existing 2D seismic in the area has been re-processed and reinterpreted and during 2007, Otto acquired a high quality 3D seismic survey over the Argao structure and surrounding area. The Argao structure consists of potentially eight stacked intervals that could
contain hydrocarbons.
 One of the horizons is interpreted to contain a small gas cap at the crest of the structure. A petroleum system modeling study indicates that the hydrocarbon charge in the area is predominantly oil, supported by oil seeps in the area. Otto therefore interprets this being a gas cap over a potential oil column. Detailed well design and planning is underway and Otto intends to acquire a sea bed site survey in the next few weeks to identify any sea bed hazards and shallow gas pockets, to allow safe mooring of a drilling rig in 2009.
SC50, which Otto holds 85% in, is a smaller offshore block north of Palawan Island. The block contains the Calauit and Calauit South oil discoveries. The fields are considered to be potentially commercial in the current oil price environment. They lie in only 90m of water and can be drilled with a jackup rig.
Otto acquired 3D seismic over the fields in 2007 to better delineate the structures and to map "fracture swarms" that are the potential "sweet spots" of the reservoir. Otto has conceptually designed an appraisal program that is intended to be "cost neutral." An appraisal well will be drilled in the known Calauit oil reservoir and flow tested into an adjacent storage tanker. The oil will be sold to pay for the drilling costs and perhaps more. This is possible due to the high productivity of wells drilled in fractured reservoirs such as Calauit and the likely high oil price. Otto is conducting site surveying and seabed coring of the selected well site in the coming weeks to plan for drilling and testing Calauit in the first half of 2009.
In May 2008, Otto was awarded SC69 in a joint application with TranAsia Oil and Energy Development Corporation. The participating interests are Otto at 70% and TransAsia with 30%. Otto as Operator has started acquiring existing data not previously available to it to evaluate the prospectively and potential for hydrocarbons and to guide future activities. Plans are being made to reprocess all the existing digital seismic data acquired by previous operators.