Otto Energy has informed that its partner Houston Energy has been awarded the South Timbalier 235 (ST 235) lease under Gulf of Mexico Central Lease Sale 249.
Houston Energy bid a total US$210,999 in relation to the ST 235 lease and was the apparent high bidder in August 2017 as part of Central Lease sale 249.
The bid review process has now been completed and Houston Energy has been awarded the lease.
The lease is adjoining with and immediately south of South Timbalier 224 (ST 224) lease where Otto Energy is currently participating with W&T Offshore in the drilling of the highly prospective ST224 #1 exploration well.
Under an agreement with Otto Energy and others involved in ST 224, Otto Energy has the right to acquire a 25% working interest in the lease from Houston Energy and intends to exercise this option.
Maximum water depth within ST 235 is 60 meters (197 feet). In July 2017 the U.S. Federal Government announced that a 12.5% federal royalty rate would apply for subsequently awarded leases that sit in less than 200 meters of water (656 feet), compared to the previous prevailing rate of 18.75%. ST 235 qualifies for the 12.5% rate, further enhancing economics.
Otto’s Managing Director, Matthew Allen, commented: “Otto Energy is pleased to advise that partner Houston Energy has been awarded the ST 235 lease. This is a further expansion of our footprint in the Gulf of Mexico consistent with our growth strategy and is timely given we are currently drilling the highly prospective ST 224 #1 exploration well. In the event of success at ST 224, ST235 will provide a very attractive follow up with enhanced economics due to its proximity. We are also pleased to be continuing our relationship with our existing high-quality partners in the Gulf of Mexico.”