Otto executes LoI with BHP Billiton to terminate farm-out

Offshore staff

SYDNEY, AustraliaOtto Energy Ltd. has executed a letter of intent with BHP Billiton Petroleum (Philippines) Corp., proposing to terminate the farm-out agreement between the two parties over Service Contract 55 (SC55), offshore the Philippines.

The letter of intent contemplates the reassignment of BHPB's 60% working interest to Otto, taking Otto’s working interest to 93.18%, subject to approval of the reassignment by the Philippines Department of Energy (DOE).

BHP Billiton is to pay $3 million to Otto upon DOE approval of reassignment and a further $24.5 million upon drilling of a well.

Once a definitive agreement is executed, Otto intends to submit a 2014 work program and budget to the DOE, outlining the intention to undertake drilling of the Hawkeye-1 exploration well in Sub-Phase 4, which is a turbidite clastic reservoir target in 1,690 m (5,545 ft) of water with top reservoir estimates at 2,732 m (8,963 ft).

12/02/2013

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