Otto, BHP farm-out talks discontinued

Otto Energy says it will wait until market conditions improve to re-initiate talks with potential partners for its Philippines prospects, after a last chance to salvage a BHP Billiton deal was called off.

The oil and gas company had continued talks with BHP after a farm-out heads of agreement deal lapsed early last month.

"The company still intends to re-initiate farm-in discussions with potential partners for all its Philippines prospects when market conditions improve," Otto said in a statement.

BHP was to earn a 60 per cent interest in Service Contract 55, located in the Philippines.

The mining major's exit prompted Otto to revise down its capital raising target by $3.5 million to $31.5 million.

Shares in Otto were up 0.2 cents to 7.1 cents at 13:19 AEST.