Otto Energy Ltd has signed a farm-out agreement for a 15 % interest in the SC55 block, offshore the Philippines, with Red Emperor Resources NL.
Red Emperor, listed on the ASX and AIM , has agreed to farm-in to SC55 and earn a 15% working interest by participating in the drilling of the Hawkeye-1 exploration well, by paying 15% of the well costs for the drilling and testing of the well.
Red Emperor’s well cost exposure is capped at US$5.625m, beyond which Red Emperor has the option to reduce equity from the 15% working interest level.
This farm-in, along with the US$24.5m funding committed by BHP Billiton and the expression of interest received in January 2015 from PNOC-EC for a further 15% working interest, ensures that Otto is fully funded and has mitigated significant financial risk associated with the drilling of Hawkeye-1, Otto has said.
Otto has also executed a letter of intent with Maersk Drilling, one of the world’s largest offshore drilling companies, to secure the Maersk Venturer ultra-deepwater drillship to drill the Hawkeye-1 exploration well.
The Maersk Venturer was commissioned in 2014 and was built at the Samsung Heavy Industries yard in Korea.
Capable of operating in up to 3,600 metres of water and with dual drilling derricks, high capacity mud pumps and bed space for 230 personnel, the Maersk Venturer is one of the newest and most capable drillships in the world. The Maersk Venturer has recently completed work for Total Malaysia.
Hawkeye Exploration Prospect Hawkeye is a large turbidite clastic prospect identified on modern 3D seismic acquired in 2010. The Gross Prospective Resource Best Estimate for Hawkeye is 112 MMbbl (Net Prospective Resource 74 MMbbl to Otto).
Otto says that success at Hawkeye will unlock a significant new hydrocarbon play in the deepwater Southern Palawan with material follow-up potential in the carbonate leads and prospects (Gross Prospective Resource Estimate ~11 Tcf and ~400 MMbbl of Condensate) also identified on 3D seismic.
Drilling is scheduled for the early third quarter of 2015.
Matthew Allen, Otto’s CEO said: “Otto would like to welcome Red Emperor to the SC55 joint venture. Along with our existing joint venture partner, TransAsia Oil and Energy Development Corporation and PNOC-EC, the SC55 joint venture looks forward to delivering the highly important Hawkeye-1 exploration well on behalf of the Philippine Department of Energy.
“Securing a drillship of the capability of the Maersk Venturer for the drilling of Hawkeye-1 in Q3 2015 is a major event for Otto. We are now finalising preparations to begin drilling and we look forward to updating our shareholders during 2015 as this activity is undertaken”.