West Perth-based Otto Energy Ltd is putting the building blocks together to develop itself into an oil and gas explorer of note with the company buying the remaining 50 per cent ownership of its Philippine asset package and announcing a firm rig contract.
West Perth-based Otto Energy Ltd is putting the building blocks together to develop itself into an oil and gas explorer of note with the company buying the remaining 50 per cent ownership of its Philippine asset package and announcing a firm rig contract.
Otto recently acquired 50 per cent of the issued capital that it didn’t own in unlisted NorAsian Energy Ltd, which currently owns interests in offshore Philippines including a 100 per cent interest in the Calauit oil field (SC50), an 80 per cent interest in Offshore Cebu (SC51) and 85 per cent interest in Palawan Ultra Deep Water (SC55).
The acquisition provides Otto with an acreage holding of over 15,000 square kilometres, one of the largest publicly owned holdings in offshore Philippines.
NorAsian has recently signed a three year bare boat charter contract for a new semi-submersible rig to secure the 2007 development of the Calauit oil field.
However, Otto Energy managing director Dr Japp Poll told WA Business News that securing a rig proved a problem for junior miners due to a dearth of units available.
“The difficulty for small companies is that the drilling industry is so active these days that the drill rig owners have the luxury of saying no to all short term sized contracts,” he said.
“They tend to take contracts with often only the bigger companies where there is financial security.
“With the small companies, they will insist on a very substantial sum up-front which is often an impossibility for a small company and I am talking substantial sums of money like US$12.5 million and that is months before the rig even arrives.”
Mr Poll said the bare boat charter would be delivered in mid October 2007 at a total cost of US$11.25 million of which Otto’s share was US$4.1 million.
“It will then be three years plus ours,” he said.
“The timetable allows NorAsian to undertake detailed planning for a full field development program and negotiate and secure long lead-time items, put in place third party contracts for rig management, storage and shuttle tankers, as well as negotiate off take agreements.”
To facilitate the first payment, Otto is seeking to raise $2.25 million through a placement to UK and Asian investors.
Meanwhile, Otto has revised its farm-in agreement with Canada’s Vital Resources whereby Vital, previously Bentley Oil International Ltd, would take a 35 per cent stake in Calauit, previously 30 per cent, and provide 60 per cent of the funding which equates to approximately $16 million of the estimated $26 million required to get the oilfield to production.
Mr Poll said while the Philippines remained the key focus at present, the company had three onshore permits in the Thrace Basin in Turkey with the commencement of a seismic survey at its Edirne License.
He said the company expected to receive a license award for its 32.48 per cent interest in the Santa Rosa Block in Argentina in November with drilling to begin within six months of receiving the award.
The company, as at June 30 2006, has net assets of $8.6 million.
