Otto Energy spuds third well at Edirne in Turkey

Otto Energy Limited (OEL) provides an update on its Phase 2 exploration drilling program in the Edirne License, Turkey. The Phase 2 drilling program incorporates up to seven exploration and appraisal wells, including the Kumluk-1 and Kartal-1 gas discoveries; the Ortakci-3 appraisal well; and the Yolboyu-1, Somurcali-1, Ortakci-2 and Bademlik-1 exploration wells.

The program is targeting additional gas volumes which can be commercialized through the Edirne Gas Plant. Each of the wells, with the exception of Yolboyu‐1, is targeting modest volumes and is being drilled within the extensive 3D seismic that has been acquired within the Edirne license.

The third well in the drilling program, the Yolboyu‐1 well spudded on Feb. 12, 2010. The Yolboyu‐1 well differs from the previously drilled wells in the permit. It is a step‐out and deeper prospect covered by existing 2D seismic only and as such is higher risk but has a potential of up to 7.00 Bcf. The prospect, if successful, will require additional infrastructure to enable it to be bought into production including consideration of expansion of the Edirne Gas Plant.

Edirne License Onshore Turkey

Otto holds a 35 percent interest in the Edirne License onshore Thrace Basin of Western Turkey. The Edirne license was originally acquired by Otto in 2004 but is now a non operated asset, operated by joint venture partners Petroleum Exploration Mediterranean Int. (55 percent) and a local Turkish company Petraco (10 percent).

To date, seven gas discoveries have been made on the licence for a total of approximately 10-20 Bcf (gross) of discovered gas. Well testing was successfully completed in June 2008 and testing has continued in June/July 2009.
Otto Energy and its joint venture partners have awarded two contracts for the design and engineering of a gas processing plant and pipeline for the development of the Edirne gas fields in Western Turkey.
The Turkish Energy Market Regulatory Authority (EMRA) granted the JV a wholesale gas license. The JV will be the first to produce and sell onshore Turkish gas directly into the extensive "Botas" gas distribution network, which enables the sale of gas anywhere in Turkey for the best possible price, at a discount to the Botas price.
Negotiations for Gas Sales Agreement are under way, and then development of the field with production expected to commence in Q1 2010. This low cost exploration and development project is teamed with a good fiscal regime and a robust domestic gas price. It will become Otto's second producing asset and source of cash flow.

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