Galoc JV Celebrates Anniversary of First Oil at Galoc Field

Otto has provided an overview of operations at the Galoc Oil Field which commenced production on October 9, 2008. Otto owns an 18.78% indirect interest in the Galoc project via its interests in Galoc Production Company WLL (GPC).

In its first year of production the Galoc Field has produced over 2.9 million barrels (Otto share 0.5 million barrels), generating approximately US $110 million in gross revenues for the Joint Venture. The most recent offtake of 335,432 barrels was successfully lifted on September 15, 2009 and is scheduled to be followed by another cargo lifting mid October, sold to a repeat buyer.

Since production recommenced at the field in August 2009 production uptime has been approximately 99%. No disconnection of the FPSO was required during the recent typhoons which hit the Philippines and flooded Manila in late September 2009. Improved uptime has been attained following improvements in both mooring and operating practices, from those initially adopted at field start up.

The field is currently producing circa 10,600 bopd from two wells. Options to further improve the up time of the FPSO and mooring and riser system and also for further development drilling, are currently under consideration by the Joint Venture.

The GPC project debt over the Galoc Field of approximately US $40 million was fully repaid from Galoc production revenues during the year. Following repayment of the project debt, Otto received its first distribution of US $2.16 million from GPC in August 2009 and anticipates receiving regular distributions from production revenues moving forward.

Otto has estimated Galoc gross remaining 2P Reserves to be 8.4 million barrels at June 30, 2009 with Otto's share of the Galoc remaining 2P Reserves being approximately 1.46 million barrels. Galoc gross 2C and 1C Contingent Resources are estimated by Otto to be 6 million barrels and 2 million barrels respectively, a significant proportion of which Otto expects to be moved into the Reserves category in the event of a Phase 2 investment decision to develop.