Otto Energy Ltd

The revised entitlement issue raised about A$16.2m from 76.5% take-up, and the shortfall was placed, bringing the total to about A$21.2m at 5c. Funds the cash needs flagged earlier.

capital raising announcement

Talks with BHP Billiton on farming out SC55 have been discontinued, following the lapse of the heads of agreement on 31 March. Otto plans to seek partners for its Philippine prospects again when market conditions improve. Ends the deal it had valued at about US$150m.

farm in farm out agreement

The BHP Billiton heads of agreement for SC55 lapsed on 31 March as conditions were not met, though talks continue. The capital raising is restructured to up to A$31.5m: entitlement issue cut to 5c, underwriting reduced to A$15.7m, and a second placement at 7c added. Reverses the 20 March plan.

farm in farm out agreement

Otto raises about A$35m at 7c a share: A$5.2m placement of 73.9m shares plus a fully underwritten 3-for-4 entitlement issue for A$29.7m. Proceeds fund Italy and Argentina wells, Edirne, and repaying shareholder and director loans, now enlarged to US$7m and A$1.53m. Priced well below the 10c market price.

capital raising announcement

Galoc has averaged over 16,000 bopd since restart, likely settling at 13,000-14,000 bopd. GPC agreed a revised repayment schedule with its banks: Otto's US$1.6m instalments on 27 Feb and by 27 March, balance repaid by 30 June 2009. Otto's share of debt is US$8.8m.

production update

Galoc production restarted at 21:30 on 25 February after about ten weeks shut, with a new hold-back mooring. Output is expected to return to about 14,000 bopd. The vessel must still disconnect ahead of typhoons (Otto 18.28% indirect).

production update

Ikihoyuk-2 in Turkey reached 500 m and found 27 m of net gas pay between 395 m and 482 m, with 26% porosity. It will be completed for production, not tested now. It is the largest of the six Edirne gas discoveries and is earmarked for early development (Otto 35%).

drilling result

Otto has signed the agreements formalising its Santa Rosa farm-in in Argentina, earning 32.48% (Oromin 67.52%, operator) by funding the first US$1.4m of a US$4.1m work program. Drilling is targeted in the first half of 2009. This resolves the open JV agreement question.

farm in farm out completion

Gazzata-1 in Italy's Po Valley is deferred to no earlier than mid-March 2009, from January. Otto asked for the delay until Galoc production is re-established gives more certainty on finances. Otto has already spent over US$2m on equipment and site works. Target is over 100 Bcf prospective gas.

drilling scheduled

Otto signs a conditional heads of agreement for BHP Billiton to earn 60% of deep-water SC55 by funding 3D seismic and two wells, plus back costs. Otto keeps a carried 25% (down from 85%) and BHP becomes operator. Seismic 2009, drilling 2010. Resolves the SC55 farm-out thread.

farm in farm out agreement

Galoc output has settled at 13,000-14,000 bopd, and revenue is below budget. GPC is on a bank 'cash sweep' (Otto's share US$10.4m non-recourse debt) so dividends to Otto are delayed to about mid-2009. Otto took a US$5m, 12% loan from two shareholders, and may raise equity in Q1 2009. Gazzata-1 still January.

debt financing

First oil achieved at Galoc on 9 October 2008 from the Galoc-3 well; Galoc-4 follows in days. This resolves the repeated delays since May. It is Otto's first producing asset (18.28% indirect); operator expects about 20,000 bopd gross.

production update

Otto's own uncertified estimate puts Edirne contingent gas at 8.5 bcf mid case (3.7-14.3 bcf), from six discoveries in six structures, plus 15.7 bcf prospective. First gas still expected mid-2009; Otto estimates US$5-10m a year net (35%).

resource reserve update

The Edirne partners awarded plant design to Uhde Shedden and pipeline design to Boral. Turkey's regulator advised the venture meets the wholesale gas licence requirements, a step towards selling into the national grid. First gas is expected mid 2009 (Otto 35%).

contract award

An independent report commissioned by operator Oromin puts Santa Rosa's unrisked prospective oil at 45-381 million barrels, most likely 131.6m. It is an unrisked, undrilled wildcat estimate. Otto's farm-in (32.48% for US$1.4m) still awaits due diligence and a JV agreement; drilling is expected Q1 2009.

resource reserve update

Arpaci-2A's first zone (340-348m) flowed dry gas at 2.4 MMscf/d, confirming the Arpaci redrill after the plugged Arpaci-2. Two shallower pay zones are still to be tested. Surface facilities are expected by mid 2009 (Otto 35%).

flow test result

Arpaci-2A, the redrill of Arpaci-2 and last 2008 Edirne well, reached 525m and found three potential gas intervals between 160m and 350m, about 20m net gas sands on preliminary logs. Flow testing of the deepest zone is next (Otto 35%).

drilling result

Typhoon Fengshen forced the Galoc FPSO to disconnect on 20 June 2008, delaying first oil again. Reconnection is unlikely before 27 June and first oil is now expected in early July. Only minor commissioning work remains. Otto's interest is 18.3%.

production update

Otto placed 38.46m shares at 39c to raise $15.0m via Euroz. 14.7m shares issue now, 22.95m await FIRB approval, 0.77m to director John Jetter need shareholder approval. Funds go to Argentina, Italy, Philippine surveys and working capital until Galoc cash flow.

capital raising announcement

Otto's subsidiary NorAsian is awarded Area 8 as Service Contract 69 in the Philippines for 7 years, resolving the pending award. NorAsian holds 70% as operator, TransAsia 30%. It sits between the two SC51 sub-blocks, with a minimal committed work programme.

asset acquisition disposition

The Santa Rosa licence in Argentina has been awarded for a 6-year exploration period, resolving the long wait. Otto earns 32.48% by spending US$1.4m on two onshore wells, with an option for 41.24% for a further US$897,381. Oromin is operator.

farm in farm out completion

Ortakci-1 found about 20m of net gas pay, Otto's sixth Edirne discovery from six wells since 2004. It lies in the largest mapped structure, so it improves the outlook for western Edirne. Drilling and testing should finish by end June 2008 (Otto 35%).

drilling result

Kuzey Arpaci-1, second Edirne well, found over 40m of net gas pay between 297m and 505m, more than double what was hoped. Otto calls it its fifth gas discovery in Turkey. The gas fields are close together and could share a central hub (Otto 35%).

drilling result

Ikihoyuk-1, first of five 2008 Edirne wells, found gas intervals totalling about 28m of pay between 323m and 468m, well above expectations. It is the 4th well Otto has drilled there since 2004, all gas discoveries. Flow testing comes after the campaign (Otto 35%).

drilling result

Otto confirms it will earn the full 50% of the Bastiglia-Cento permits in Italy, because Deltana did not exercise its 15% option by 31 March 2008. Gazzata-1, targeting over 100 bscf, is planned around September 2008.

farm in farm out completion

Ikihoyuk-1, the first of five 2008 Edirne gas wells, has spudded. Planned to 520m depth over about 10 days, it targets shallow gas. The programme targets 10-20 bcf combined, with production aimed for mid 2009 (Otto 35%).

drilling spud

Galoc-4 flowed at a stabilised ~6,150 bopd, the better of the two wells, both at the high end of pre-drill expectations. Weather delays should cost Otto under US$2 million. First commercial oil remains April 2008.

flow test result

Galoc-3 flowed dry oil at a stabilised ~5,200 bopd, limited by rig facilities, in line with expectations. Gross field output is expected over 15,000 bopd (Otto ~3,000 bopd) from first oil in April. The FPSO now arrives in March.

flow test result

The Galoc deal is complete: Otto now holds an 18.28% indirect interest through 31.38% of GPC, with Vitol owning the other 68.62%. The second horizontal well is drilling and the FPSO arrives in February. Full production is expected April 2008 at 15-18,000 bopd.

farm in farm out completion

Otto will earn 50% of the Bastiglia-Cento permits in Italy's Po Valley from operator Ascent Resources. It pays about A$3.65m for seismic plus 100% of the roughly A$6m first well, Gazzata-1, planned around September 2008, targeting over 100 bscf. Deltana holds an option over 15%.

farm in farm out agreement

Otto agrees to buy an 18.28% indirect stake in the Galoc oil field, Philippines, via 31.38% of operator GPC. Gross 2P reserves are 23.4 MMbbl, with first oil expected April 2008. Funded by a 226m-share placement at 30c ($67.8m); completion needs shareholder approval.

asset acquisition disposition

NorAsian, with partner TransAsia, is ranked preferred bidder for Philippines Area 8, a 7,440 sq km block between the SC51 sub-blocks. NorAsian would hold 70%, as operator, and TransAsia 30%. Seven-year term, one firm well in year 7; terms still to be finalised.

regulatory community update

Otto's first volume estimate for the Marantao prospect in SC55 (Otto 85%) gives mean prospective resources of 1,812 bcf gas plus 567 MMbbl oil, or 1,323 MMbbl if all oil. These are unproven estimates, not discoveries. Otto aims to farm down in early 2008.

resource reserve update

The sale of 30% of Edirne and 60% of Catalca and Ortakoy to Incremental is complete, with US$5.5m received. Edirne 3D seismic is 65% done, and a five-well drilling campaign is scheduled to start December 2007. Otto says it is funded through Turkish work to first production.

farm in farm out completion

Otto placed 36.73 million shares at 30c to raise $11.02m, up from the 16c placements earlier in 2007. 25.9m shares ($7.77m) issue now; 10.83m ($3.25m) need shareholder approval. Funds go to Philippines seismic, rig charter payments and long-lead items.

capital raising announcement

Otto finished the Philippines seismic ahead of schedule and under budget, with data due September/October. SC51 3D covers Argao (up to 270 MMbbl recoverable) and Cabilao (up to 150 MMbbl). The 261 km of SC51 2D is deferred after an NGO challenged the environmental permit.

drilling result

Otto regains Vital's interests, lifting stakes to 99% in SC50 (Calauit), 80% in SC51 and 85% in SC55. Vital exits SC51/55 with no refund and keeps 1% of SC50. Vital issues 4 million shares to Otto in lieu of remaining fees. Otto will seek new farm-in partners after seismic.

farm in farm out agreement

Otto lifts its stake to 70% in SC51 and 75% in SC55 after Vital cut its farm-in from 30% to 10% in each. Vital keeps its 35% of Calauit. Otto plans an accelerated seismic program and an Argao well by year end.

farm in farm out agreement

Otto sells Incremental a further 30% of Edirne and 60% of Catalca and Ortakoy for US$5.5m (about A$7.3m), leaving Otto 35% in Edirne and 20% in the others. Otto says cash rises to about A$15m. This cuts its stake but funds the Turkish gas development.

farm in farm out agreement

Otto placed 16.3m shares at 16c to raise $2.6m from two Swiss-managed oil and gas funds, escrowed for 12 months. This follows the $6.0m placement of February and dilutes existing holders; completion is due about 15 March 2007.

capital raising announcement

Otto arranged a placement of 37.5m shares at 16c to raise $6.0m, said to be heavily oversubscribed and scaled back. Completion is expected around 7 February 2007. Funds go to Philippines, Turkey and Argentina work and working capital, and the placement dilutes existing holders.

capital raising announcement

Bati Umur-1, the December 2005 discovery, flowed gas at up to 3.6 million cubic feet per day from 365-370m. Operator expects a sustainable 2.5-3 MMcf/d. This confirms the well's production potential and supports a feasibility study targeting production in late 2007.

flow test result

Otto calls Koyustu-1 a future producer with about 17.5m net gas pay, against a 10m pre-drill estimate. Testing of the main zone was skipped to keep the well suited for production. The rig is moving under 2km to Bati Umur-1.

drilling result

Koyustu-1 found gas, flowing about 2 MMcf/day for 6 hours from the 324-331m interval, drilled to 617m. The main 245-255m zone is to be tested next. The CEO calls it the first hydrocarbons Otto has flowed to surface.

flow test result

Alexander Parks, a petroleum engineer, is appointed CEO from 4 December 2006, and Bruce Elsholz becomes CFO. Managing director Jaap Poll moves to executive director to assist the new CEO, a change of top management as Otto moves toward production.

director officer appointment

The $2.25m placement is complete: 15m shares at 15c with 7.5m free 20c options, issued 5 October 2006. Funds go to the first Bare Boat Charter payment for the Calauit rig. Shares quoted now total about 105.5m.

capital raising announcement

NorAsian confirmed a 3-year rig charter (US$11.25m over 12 months, Otto share US$4.1m), delivery 15 October 2007, for Calauit. Vital's farm-in is revised to 35% of Calauit. Otto is placing 15m shares with options to raise $2.25m for the first payment.

material agreement

The company is now Otto Energy (code OEL unchanged), as approved by shareholders on 18 August. Rufino Bomasang, former head of PNOC-EC and NorAsian chairman, joins the board. David Riekie becomes alternate to Ian Macliver.

director officer appointment

Rights issue completed: 29,048,125 shares at 15c issued with about 14.5m free 20c options, raising roughly $4.36m. This funds the NorAsian acquisition, so the shortfall was successfully placed.

capital raising announcement

NorAsian contracted Veritas to shoot 400 km of 2D seismic over the large Marantao reef prospect in SC55 in September 2006. Otto holds 42.5% of SC55 now, rising to 85% if the 18 August vote passes; Vital funds most of the cost.

contract award

Ottoman agreed to buy the other 50% of NorAsian (Philippines SC50, SC51, SC55) from AustralAsian for 15m shares, 7.5m options and A$2.5m cash, plus later production-linked shares. Bentley farms in for 30% for about US$9.5m. A $4.36m rights issue at 15c funds it.

business combination

Arpaci-1 reached 509m total depth. Logs showed several zones of potential interest, but pressure data suggests gas saturations may be low, so detailed flow testing is recommended. An early mixed signal, not a confirmed discovery like Bati Umur-1.

drilling result

Ottoman placed 9,000,000 shares at $0.20 to raise $1.8 million, each with a free attaching option exercisable at $0.20 by 1 December 2006. Funds go to Thrace Basin drilling, Philippines costs and working capital; 3 million shares and all options need shareholder approval.

capital raising announcement