Shares in Otto Energy have risen after the company declared it was free from debt and its Galoc oil field in the Philippines had reached commerciality.
Shares in Otto Energy have risen after the company declared it was free from debt and its Galoc oil field in the Philippines had reached commerciality.
Otto's share price closed up 0.6 cents or 8 per cent at 7.9c after reaching a high of 8.2c.
More to come...
The announcement is below:
Otto Energy Limited ("Otto" or "the Company") (ASX: OEL) is pleased to announce that commerciality has been declared at the Galoc Oil Field and that the Company is now debt‐free. The Company also provides an update on its exploration and production operations.
Highlights
- The extended testing phase at Galoc has concluded and commerciality has been declared
- GPC project debt for the Galoc field has been fully repaid totalling over US$40 million in repayments from oil sales.
- Otto's shareholder and director loans were fully repaid using funds raised from its recent capital raising.
- Otto currently has approximately A$13 million in cash.
Repayment of GPC Project Debt
In 2007, when Otto acquired its interest in Galoc Production Company W.L.L ("GPC"), it inherited a share of project finance debt facility already in place to fund the GPC portion of the development costs of the Galoc project. Primarily via receipt of production revenues, GPC has serviced the debt repayments and Otto's share of the debt (both non recourse and recourse portions) is now fully repaid.
Otto now expects to receive regular dividend payments from GPC from production net proceeds.
Declaration of Commerciality - Galoc Field
Under the terms agreed with the Philippine Department of Energy for the Galoc project, GPC on behalf of the Galoc Joint Venture has issued a formal "Declaration of Commerciality" following the completion of the extended testing period. (See attached release from GPC).
The data obtained during the extended test phase has proved invaluable in providing sufficient confidence of the reservoir performance to justify the commencement of long term production.
As a consequence of the declaration, the fiscal terms for the Galoc project revert to the standard terms of Service Contract 14.
OPERATIONS UPDATE
Turkey ‐ Edirne Licence
Testing of the Ortakci‐1 discovery well (drilled in 2008) commenced on the 21 June 2009. Four intervals with a gross combined height of approximately 18m have been tested in the Ortakci‐1 well from 238 - 330m. A comingled production test of all the zones produced approximately 2.5 MMscf/d with no water. The rig will move to the Kuzey Ikihoyuk‐1 exploration well on completion of testing at Ortakci‐1. Italy - Cento‐Bastiglia Permits
The Gazzata‐1 exploration well has been plugged and abandoned as a dry hole.
Argentina - Santa Rosa Licence
Preparations continue at the well site. The Operator, Oromin, advised that final steps are now underway so that rig mobilization can commence as soon as possible. Spudding of the first exploration well is expected to occur in July 2009.
Philippines ‐Galoc Oil Field
GPC has advised that due to adverse weather conditions at the field location, the FPSO 'Rubicon Intrepid' has shut‐in production operations and safely disconnected from the mooring and riser system. The FPSO remains near the Galoc location and will reconnect once local weather conditions are suitable.
Galoc Field - Declaration of Commerciality
GPC is pleased to advise the Extended Test undertaken at the Galoc Field has been concluded. The data obtained during the Extended Test has proved invaluable in providing sufficient confidence in reservoir performance to justify commencement of long term production.
Production will be continued from the existing 2 wells, meanwhile assessment of the potential for additional incremental development is underway. Performance of the reservoir, production facilities and uncertainty in the oil price over the next 3-6 months will be key considerations in this assessment.
