Otto Energy Ltd has announced that it has reached an agreement with MV Upstream Tanzania Ltd, a joint venture between Vegas Oil & Gas Ltd, and Motor Oil Hellas SA in respect of the assignment of a 25% participating interest in the Kilosa-Kilombero Licence, onshore Tanzania.
Pursuant to the terms of the farm down agreement with MV Upstream:
- MV Upstream shall pay to Otto the sum of US$2.3 million (inclusive of applicable taxes) for a 25% participating interest in the Licence as reimbursement of historical costs incurred by Otto.
- In addition to paying its 25% participating interest share of well costs, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of the Kito prospect up to an amount of US$2 million. Costs over and above this capped amount shall be payable by Otto in accordance with its remaining 25% participating interest. Well costs are currently estimated at around US$10 million.
The transaction is conditional upon customary Tanzanian regulatory and joint venture approvals prior to completion.
Otto’s Managing Director, Matthew Allen said: “Otto is very pleased to welcome Vegas and MOH to the KilosaKilombero joint venture. The Vegas group has an extremely successful track record in exploration, development and production, particularly in Egypt, where the group has operated for more than 30 years and MOH is a substantial business with interests and holdings across all aspects of the downstream value chain. The farm down provides Otto shareholders with meaningful exposure to the high-impact exploration well targeting the 194 million bbl (gross Prospective Resource) Kito prospect, whilst conserving the Company’s balance sheet. The joint venture continues to make preparations for drilling, with final rig selection and permitting continuing ahead of an expected spud date in 2H16. The carried drilling in Tanzania extends what continues to be an active period for Otto post the Company’s recent maiden discovery in the Gulf of Mexico and ahead of its planned multi-well campaign on the Alaskan North Slope.”
Edited from press release by Angharad Lock
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/21062016/otto-energy-farms-out-of-kito-1-well-2665/