- Otto joins W&&TT Offshore in farming into Houston Energy’s ST 224 lease in the Gulf of Mexico for a 25%% working interest.
- A rig will be contracted shortly with drilling by operator , W&&TT Offshore , expected to commence in Q4 2017 .
- The ST 224 lease contains a large amplitude supported,, high condensate to gas r atio ( CGR ),, gas condensate prospect delineated by 3D seismic . The prospect sits in shallow water and has a relatively shallow target depth , both of which enhance project economics .
- Several existing production platforms fall within tie – back distance of the proposed well making development of any discovered hydrocarbons both quick and cost effective.
Otto Energy Limited is pleased to announce it has farmed in to the South Timbalier 224 lease in the Gulf Of Mexico shelf, for a 25%% working interest . ST 224 contains a large , amplitude supported, high CGR , gas condensate exploration prospect located in the prolific Bul. 1 trend which is expected to be drilled in Q4 2017 . The prospect is surrounded by analogue high CGR discoveries which present a similar amplitude expression on 3D seismic data making this a very attractive low risk exploration opportunity. Otto intends to release further information on the prospect, including prospect volumetrics , closer to the drilling date.
The prospect sits in approximately 170 feet of water and has a relatively shallow target depth. Several existing production platforms fall within tie – back distance of the proposed well, enhancing economics and making development of any discovered hydrocarbons both quick and cost effective. Additional follow up drilling potential exists on the lease..
Under the terms of the participation agreement, Otto will be required to fund 25% of the initial test well in the ST 224 lease (up to casing point)) to earn a 25%% working interest in the ST 224 lease . The financial commitment is currently e stimate d at US$$22.7MM (Otto share of dry hole costs ), including funds to evaluate the well using wireline techniques and in a failure case to P&A the location . Otto will also pay US$$ 81 ,250 in back costs..
There is no promote on the exploration well payable by Otto. Should a development proceed at ST 224, Houston Energy will be entitled to a backin after payout at the point where Otto recovers its share of all exploration costs.