Australia-listed Otto Energy Ltd. has received $21.3 million from BHP Billiton Petroleum in relation to drilling costs for the recently completed Hawkeye-1 drilling operation offshore Southwest Palawan.
Otto Energy said the initial payment represents the bulk of the contribution by BHP Billiton of up to $24.5 million toward the cost of the Hawkeye-1 well for Petroleum Service Contract 55.
The final payment will be received in the last quarter of this year once the total well cost is confirmed.
Otto managing director Matthew Allen said completion of Hawkeye drilling operations ahead of schedule and below budget has left Otto with a very strong balance sheet.
He said Otto currently has over $30 million in available funds to pursue its growth strategy.
During the initial drilling works, Otto Energy had uncovered a variable quality of hydrocarbons reservoir.
Otto informed Exploration & Production Corp., a subsidiary of Trans-Asia Petroleum Corp., that the hydrocarbons, mainly gas, are between 2,710 and 2,737 meters in reservoir of variable quality.
The well has been drilled to its final total depth of 2,920 meters, Otto said.
While the volume of hydrocarbons inferred from the well results is not of economic significance, Hawkeye-1 proved the presence of a petroleum system in the contract area.
The hydrocarbon size discovered was, however, at the very low end of expectations and is not economic to develop.
While the result at Hawkeye was disappointing, Allen earlier said Otto is still a well-funded explorer and is preparing for upcoming exploration programs in its Alaskan and Tanzania assets.
Otto has secured an attractive entry into the Alaskan North Slope oil province and it also has a fully funded exploration drilling program in Tanzania in 2016, including the drilling of the exciting Kito prospect.