Otto Energy Limited (ASX:OEL) Releases Quarterly Report Ended 31 March 2010
Otto Energy Limited (ASX:OEL) Releases Quarterly Report Ended 31 March 2010
Perth, April 22, 2010 AEST (ABN Newswire) - The quarter ended 31 March 2010 has seen Otto Energy Limited (ASX:OEL) (PINK:OTTEF) deliver one of the busiest operational periods in the company's short history.

First sales gas from the Edirne licence in Turkey was delivered on 8 April 2010 under the previously announced gas sales agreement. Phase 2 exploration and appraisal drilling has commenced with the first three wells encountering gas. A fourth well is currently being drilled.

The Galoc oil field has now produced a total of 4.3 mmbbls of crude oil and delivered 12 offtakes to customers. The field continues to produce in line with expectations and Otto is working with the Operator to continue to improve facility performance and plan for the appraisal and development of the remainder of the field.

Otto has completed its 600 km2 and 1,800 km2 3D seismic surveys in Service Contract 55 offshore Palawan and its 900 km 2D seismic survey in Service Contract 69 in the Visayan Basin in the Philippines. All recent seismic campaigns undertaken by Otto have been completed without a safety incident continuing our impeccable safety record.

The farm-out market for the Company's remaining Philippines permits continues to strengthen and Otto has received numerous expressions of interest in this acreage. Otto continues to work towards securing further farm-outs of our acreage in 2010.

Geographic focusing has seen Otto exit the investment of the Cento and Bastiglia blocks in Italy in April 2010.

Otto is debt free, has equity in two producing areas, one offshore oil and the other onshore gas, and a significant interest in high potential Philippine exploration acreage that is attracting attention from the farm-out market. 2010 continues to hold significant promise for our shareholders.

OPERATIONAL HIGLIGHTS

Galoc Production

- Production for the quarter of 767,315 bbls of crude oil gross (December quarter 747,767 bbls) achieved by the Galoc Oil Field. Two offtakes delivered to customers. Payments of US$10.512 million received by Otto from Galoc Production Company (GPC) after deduction of operating/lifting costs

- Development planning for potential facilities upgrade options and Phase 2 drilling being undertaken by the Operator

Turkey Development

- First sales gas delivered into the BOTAS national gas grid from the Edirne Gas Plant on 8 April 2010

- Gas gathering and tolling agreements executed with joint operators

- Phase 2 exploration and appraisal drilling commenced with the first three wells encountering gas

Exploration and Development

- 1,800 km2 3D seismic acquisition completed in Service Contract (SC) 55 in the Palawan Basin of the Philippines and the service contract area has been extended by an additional 880 km2 of previously unlicensed acreage partially covered by the new 3D seismic

- 900 km of 2D seismic has successfully been acquired in Service Contract (SC) 69 in the Visayan Basin of the Philippines

- Otto withdrew from the Cento and Bastiglia blocks in Italy as part of the narrowing of Otto's geographic focus

FINANCIAL HIGHLIGHTS
 
--------------------------------------------------------------------------
                                        March    December Movement Change%
                                        2010     2009
                                        Quarter  Quarter 
Production (net to Otto)          bbl  144,102  140,431    3,671    2.6%
Lifting's (net to Otto) (1)       bbl  121,646  129,327   (7,681)  (5.9%)
Receipts from GPC                US$m   10.512   10.355    0.157    1.5%
Outstanding GPC Receivable       US$m    8.933   19.311  (10.378) (53.7%)
Closing Cash Position (2)         A$m   23.011   18.763    4.248   22.6%
Expenditure (excl GPC costs) (3)  A$m    6.334    2.308    4.026  174.4%
--------------------------------------------------------------------------
(1) Receipts from GPC are subject to timing and payment conditions on oil deliveries and may therefore not correspond to lifting's sold in the quarter

(2) Closing cash position does not include unspent monies of A$16.582 million held in escrow to fund the acquisition and processing of the 1,800 km2 3D seismic in SC 55.

(3) Expenditure does not include GPC operating costs - these are deducted prior to remitting funds to Otto

PRODUCTION AND DEVELOPMENT ASSETS

GALOC OIL FIELD

- Service Contract 14C, Palawan Basin, Philippines

- OEL 18.78% Indirect Interest (Held via 31.38% interest in GPC which has a 59.84% interest in the Galoc Block SC14C)

- Operator: Galoc Production Company WLL (GPC)

Production:

- Continued high facility uptime of 83% was experienced in the March quarter (December quarter 78%). The Rubicon Intrepid FPSO (Floating Production Storage and Offtake) vessel was required to disconnect from the mooring and riser system on 12th January due to poor weather. The FPSO was successfully reconnected without incident on the 27th of January and continued producing throughout the quarter.

- Production to date from the Galoc field is 4.3 mmbbl gross (0.81 mmbbl to Otto)

Offtakes:

- Two offtakes of Galoc crude oil were completed in the quarter with approximately 647,746 barrels gross (December quarter 688,000 bbls) being delivered to customers. The difference between offtake and production volumes represent movements in crude oil inventories on the Rubicon Intrepid FPSO vessel at the end of the quarter

- The next lifting was successfully completed in the first week of April 2010 for a total of 352,000 barrels

Phase 1 Facilities Upgrade Options:

- Otto continues to work with the Operator GPC to determine the most economically effective options to increase facility reliability and uptime. Improvements in operating procedures have seen significant improvement in facility uptime in the last two quarters. A facility upgrade will only be undertaken if it is supported by an economic outcome.

Phase 2 Potential Development:

- Interpretation and mapping of the recently reprocessed seismic data commenced in the quarter. Planning has commenced for potential Phase 2 drilling

TURKEY

- Edirne Licence, Thrace Basin

- OEL 35% Interest

- Joint Operators: TransAtlantic Mediterranean Int. Pty Ltd (55%) and Petraco (10%)

First Gas announced

- First sales gas was delivered into the BOTAS national gas grid on 8th April 2010

- Commissioning and optimisation of the Edirne Gas Plant will be ongoing over the coming weeks with expected production post commissioning to be in the range of 10 - 14 mmscf per day.

Gas Gathering (Tolling) Agreement

- Gas gathering and tolling arrangements have been executed with the joint operators of the Edirne Gas Plant to process the gas produced from the Edirne gas fields

Exploration

- Phase 2 exploration and appraisal drilling commenced in 2010 with seven committed wells to be drilled. The first three wells have intersected gas shows with evaluation ongoing

- Due to poor weather, a number of wells have been substituted based on ability to access drilling sites. The revised drilling sequence for Phase 2 and results to date are summarised below.
----------------------------------------------------------------------------
Well        Target Working Interest(%) Remarks     Spud Date     Outcomes
Kumluk-1     Gas        35.00         Exploration  15/01/2010 Gas discovery
Kartal-1     Gas        35.00         Exploration  31/01/2010 Gas discovery
Yolboyu-1    Gas        35.00         Exploration  12/02/2010 Gas potential,
                                                            evaluation ongoing
Somurcali-1  Gas        35.00         Exploration  27/03/2010    Currently
                                                                 drilling
Camurbaba-1  Gas        35.00         Exploration
Buyukhoyuk-1 Gas        35.00         Exploration
----------------------------------------------------------------------------

EXPLORATION ASSETS

PHILIPPINES

Service Contract 55

- OEL (through its wholly-owned subsidiary NorAsian Energy Ltd) 85% Interest and Operator

- Area 9,880 km2

- Work commitments in current sub-phase completed. Next sub-phase commences August 2010 and includes drilling of one deepwater exploration well by August 2011

Upon successful completion of the 600km2 3D seismic program covering the Hawkeye prospect processing of the data is underway. Final products will become available in the second quarter for subsurface interpretation.

Otto has also completed the acquisition of a further 1,800 km2 of 3D seismic covering SC55 in March 2010. This seismic data will be processed over the coming months and initial results from this seismic data are expected to be available late in 2010.

The service contract area has been extended by the Philippine Department of Energy by an additional 880km2 of previously unlicensed acreage partially covered by the new 3D seismic.

Service Contract 50

- OEL (through its wholly-owned subsidiary NorAsian Energy Ltd) 85% Interest and Operator

- Area 1,280 km2

- Work commitment in the current sub-phase requires two wells in the Calauit field by March 2011

Several development concepts are being evaluated by Otto to develop the 1.50 mmbbl (1C Contingent Resource) to 15.00 mmbbl (3C Contingent Resource) Calauit field. Ongoing activities include monitoring rig market and actively seeking partners to participate in this development.

Service Contract 51

- OEL (through its wholly-owned subsidiary NorAsian Energy Ltd) 80% Interest and Operator

- Area 3,320 km2

- Work commitment in the current sub-phase requires drilling of 1 Exploration well by December 2010

SC51 contains the Argao prospect which is a drill-ready prospect. Otto is actively seeking partners to participate in drilling this prospect.

Service Contract 69

- OEL (through its wholly-owned subsidiary NorAsian Energy Phils Inc) 70% Interest and Operator

- Area 7,040 km2

- Work commitment in the current sub-phase requires undertaking a 2D Seismic programme by November 2010

Following a comprehensive Information and Education Campaign in the Visayan region, Otto successfully completed the acquisition of 900 km of 2D seismic in the block.

ITALY

- Centro Bastiglia Permits, Po Valley

- OEL Earning 50% Interest

- Operator Ascent Resources Plc (50%)

Otto withdrew from the Cento and Bastiglia blocks in Italy.

CORPORATE

SHAREHOLDERS

Otto's issued capital as at 31 March 2010
---------------------------------------------
        Class                        Number
Fully paid ordinary shares      1,070,184,721
Unlisted Options1                 116,605,350
Performance Shares2                 2,500,000
---------------------------------------------
1 Exercisable between 5 and 60 cents per share

2 Convert to 2.5m shares if Edirne gas sales occur in commercial quantities prior to 30 June 2010

ESTIMATED CASH OUTFLOWS

Otto's free cash reserves at the end of the quarter were A$23.011 million (31 December: A$18.763 million). This excludes A$16.582m (US$15.172m) remaining in escrow to fund the SC 55 seismic acquisition and processing.

Expected cash outflows in the coming quarter are as follows:
-------------------------------------------------------
                June 2010    March 2010   December 2009
                 Quarter      Quarter        Quarter
                   A$m          A$m           A$m
                 Forecast      Actual        Actual
Philippines
- SC 14C           0.2           -              -
- SC 50             -            -              -
- SC 51            0.2           -              -
- SC 55 (1)        0.4          3.2            0.1
- SC 69            3.2          0.5             -
Turkey             3.3          0.8            0.5
Italy              0.2           -             0.0
Argentina           -            -             0.1
Administration     1.1          1.8            1.5

Total              8.6          6.3            2.3
-------------------------------------------------------
(1) Excludes A$5.4 million (US$4.8 million) spent on acquisition of the 1,800 km2 3D seismic in SC 55 in the quarter.

CORPORATE APPOINTMENTS

Exploration Manager - Mr Paul Senycia MAppSc (Geophysics), BSc Hons

Otto is pleased to announce the appointment of Mr Paul Senycia to the role of Exploration Manager. Mr Senycia has more than 25 years of experience in Australasia, North & West Africa, North America and Europe. Mr Senycia also has significant experience in all facets of the upstream oil and gas exploration business including executing seismic and drilling programs, capturing new venture opportunities, joint venture relationship and farm-in/out management. Mr Senycia has recently held positions of Exploration Manager with Oilex Ltd and Head of Evaluation with Woodside Energy Ltd.

For the complete Otto Energy quarterly report, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/62684-ASX-OEL-20100419.pdf

About Otto Energy Limited

Based in West Perth, Otto Energy Limited (ASX: OEL) is an international exploration and production company that has assembled a balanced portfolio of oil and gas assets in the Philippines, Turkey, Italy and Argentina.

As of mid 2008, Otto expects to receive revenue from production at the Galoc Oil Field in the Philippines which will be used to fund further development and exploration across all of the Company’s highly prospective assets. Otto is opportunity rich with an exploration portfolio that includes additional discoveries that are under development, approximately 20 drillable prospects covered by new 3D seismic and well over 60 exploration leads which are being matured as follow-up potential. Consequently, Otto has an active exploration and appraisal drilling program in 2008/2009.

 


Contact

Matthew Allen
Chief Financial Officer
Tel: +61-8-646-8800
Email: info@ottoenergy.com



Related Companies

Otto Energy Limited         

ABN Newswire This Page Viewed:  (Last 7 Days: 10) (Last 30 Days: 29) (Since Published: 6324)