SC55 - Otto executes binding agreements to assume BHP Billiton's interest
PERTH -- Otto Energy Limited (Otto) has executed final binding agreements with BHP Billiton Petroleum Philippines (BHPB) to terminate the farm-out agreement between the two parties over Service Contract 55 (SC55), offshore the Philippines.
Otto has submitted a request to the Philippines Department of Energy (DOE) for reassignment of BHPB's 60% working interest to Otto, taking Otto’s working interest in SC55 to 93.18%.
Otto has briefed the DOE of the intention to undertake drilling of the 3D seismically defined and DHI (Direct Hydrocarbon Indicator) supported Hawkeye-1 exploration well in Sub-Phase 4. Hawkeye is a turbidite clastic reservoir target in 1,690m of water with top reservoir prognosed to be at 2,732m. Drilling could commence as early as Q4 2014.
SC55 contains a number of distinct exploration play types including the carbonate gas-condensate trend that has the potential for an oil charge, and the turbidite clastic prospects. The permit provides material opportunity and a series of possible drilling targets in an exploration campaign that will be undertaken during the remaining term of the service contract.
Otto has commenced drilling planning preparations, including development of well designs, planning studies and the necessary equipment procurement required to undertake this programme. Otto has invited expressions of interest from drilling rig owners to determine availability of drilling units to drill the Hawkeye-1 exploration well within the required timeframe.
Otto has commenced a farm-out process intended to introduce a new partner into the joint venture to participate in the drilling of the Hawkeye-1 exploration well. Otto is targeting suitably qualified partners to join the program.
A number of parties have commenced due diligence reviews of the data room ahead of the formal launch of the farm-out campaign.
Otto has engaged with the DOE regarding the revised timing of the work program commitments following the suspension due to delays in the receipt of the Strategic Environmental Plan(SEP) Clearance. It is expected that this revised timing will be the subject of a separate announcement shortly.
Otto CEO Gregor McNab said: "The termination of the farm-out agreement with BHPB represents a favourable outcome for Otto shareholders, providing us with material funding to allow drilling in SC55. This licence is a material and high potential permit with a number of exciting prospects and leads within it.
We have commenced drilling planning activities and we look forward to unlocking the value from this permit through drilling the first well. The prospectivity of the carbonate trend, including the Cinco prospect, and the Hawkeye turbidite clastic prospect demonstrates the high impact potential to be tested by exploration drilling in SC55."