Otto takes in partner for Palawan contract

Otto Energy Ltd. subsidiary Otto Energy Philippines Inc. has signed a farm-in agreement with Red Emperor Resources NL (Red Emperor) and signed up a drill ship to pursue its gas oil exploration ventures offshore Palawan under Service Contract 55.

The parent firm disclosed to the Australian Securities Exchange (ASX) that its Philippine unit had executed a letter of intent with Maersk Drilling, one of the world’s largest offshore drilling firms, to secure the Maersk Venturer ultra-deepwater drill ship for the Hawkeye-1 exploration well.

“Otto would like to welcome Red Emperor to the SC55 joint venture. Along with our existing partners, TransAsia Oil, Energy Development Corp. 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,” Otto CEO Matthew Allen said.

Red Emperor confirmed it had agreed to join the SC55 venture and earn a 15-percent working interest by participating in the drilling of the Hawkeye-1 exploration well.

The farm-in, along with the $24.5-million funding committed by BHP Billiton and the expression of interest received in January 2015 from PNOC-EC for another 15 percent working interest, ensures that Otto is fully funded and has mitigated significant financial risk associated with the drilling of Hawkeye-1, Allen said.

“Securing a drill ship of the capability of the Maersk Venturer for the drilling of Hawkeye-1 in the third quarter of 2015 is a major event for Otto,” he said.

In a separate statement, Red Emperor, which is also listed in the ASX, said the drilling of the Hawkeye-1 exploration well was expected to commence in early third quarter.

Detailed contractual arrangements with Maersk will be finalized in the coming weeks and further announcement will be made in due course, Red Emperor managing director Greg Bandy said.

The exploration well was designed to reach the top of target reservoir about 1,000 meters below the sea bed floor and intersect the gas oil contact to prove or otherwise the presence of the oil leg, Red Emperor said.

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 meters 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 drill ships in the world. The Maersk Venturer recently completed work for Total Malaysia.