PERTH, Australia -- Otto Energy has entered into a conditional heads of agreement with BHP Billiton Petroleum to farm out 60% of its interest in Service Contract (SC) 55.
SC55 covers a deepwater block located offshore southwest Palawan Island, in the Philippines.
• BHP Billiton will earn a 60% interest in SC55 by carrying Otto through a 3D seismic program and two deepwater exploration wells
• Otto will retain a carried working interest of 25% in SC55 and will transfer operatorship to BHP Billiton
• BHP Billiton has agreed to reimburse Otto for back costs and pay the full cost of a 3D seismic program and the drilling of two deepwater exploration wells in consideration for the transfer of a 60% interest in SC55
• Otto will retain a 25% working interest
• BHP Billiton will also be appointed operator of SC55
The agreement is conditional on finalizing farm out and joint operating agreements and obtaining all necessary government and joint venture approvals.
The company anticipates that the 3D seismic survey will be carried out and interpreted in 2009 with drilling to follow in 2010.