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Otto secures farm-in partner and drillship for Hawkeye drill offshore Philippines

02nd March 2015

Otto Energy has signed a farm-in agreement with Red Emperor Resources NL for Red Emperor to earn a 15 per cent working interest in SC55, offshore the Philippines, whilst Otto has also executed a letter of intent with Maersk Drilling to secure the Maersk Venturer ultra-deepwater drillship to drill the Hawkeye-1 exploration well

Otto Energy has signed a farm-in agreement with Red Emperor Resources NL for Red Emperor to earn a 15 per cent working interest in SC55, offshore the Philippines, whilst Otto has also executed a letter of intent with Maersk Drilling to secure the Maersk Venturer ultra-deepwater drillship to drill the Hawkeye-1 exploration well
Otto now plans to spud Hawkeye-1 in the third quarter of this year

This farm-in, along with the USD 24.5m funding committed by BHP Billiton and the expression of interest received in January 2015 from PNOC-EC for a further 15 per cent working interest, ensures that Otto is fully funded and has mitigated significant financial risk associated with the drilling of Hawkeye-1.

“Otto would like to welcome Red Emperor to the SC55 joint venture,” said Otto CEO Matthew Allen. “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.”

Otto Energy Investments (a 100 per cent subsidiary of Otto and operator of SC55) (OEIL) has entered into a Letter of Intent with Maersk Drilling to secure the Maersk Venturer ultra-deepwater drillship to drill the Hawkeye-1 exploration well.

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).

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 of around 11 Tcf and 400 MMbbl of condensate) also identified on 3D seismic.

With drilling now to occur in Q3 2015, Otto shareholders will participate in this exciting and material opportunity.

Red Emperor Farm-in Red Emperor has agreed to farm-in to SC55 and earn a 15 per cent working interest by participating in the drilling of the Hawkeye-1 exploration well.

Maersk Venturer is one of the most modern and advanced drillships in the world, this rig has the required capability 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. The Maersk Venturer is one of the newest drillships in the world, capable of operating in up to 3,600 metres of water, with dual drilling derricks, high capacity mud pumps and bed space for 230 personnel. The Maersk Venturer has recently completed work for Total Malaysia. Detailed contractual arrangements with Maersk Drilling will be finalised in the coming weeks.

All required long lead items have now been procured and stored in yards in Labuan, Malaysia. Drilling of Hawkeye-1 is expected to commence in Q3 2015.

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