Otto Energy Limited 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.

Tags: Otto Energy Limited