West Perth, North America-focussed Otto Energy has farmed into Talos Energy’s Green Canyon 21 (GC 21) lease in the Gulf of Mexico.
Otto said it would earn a 16.67% working interest in GC 21 through paying 22.22% of the cost of drilling of the Bulleit appraisal well in the lease.
Otto Energy said the well would be drilled by Talos using the Noble Don Taylor drillship, commencing in the mid-second quarter of 2019. First production is expected to be within 12-18 months from spud.
Otto is also undertaking a capital raising for approximately $31 million via an $11 million placement to institutional and sophisticated investors and a fully-underwritten, one for five accelerated non-renounceable entitlement offer to raise around A$20 million ($14.2 million).
The funds raised will be used in conjunction with cash flows from Otto’s 50% owned SM 71 oil field and future cash flows from the Lightning development to fund Otto’s $9.0 million share of the GC 21 drilling program, redeem $8.1 million of the convertibles notes currently on issue and for working capital including contingent development wells.
Otto’s Managing Director, Matthew Allen, said: “Otto is today taking another significant step in accelerating its business growth in the Gulf of Mexico. Participation in drilling of the Green Canyon 21 Bulleit oil discovery, provides Otto access to one of the best drilling opportunities that the Otto team has screened with a high-quality and proven operator in Talos Energy.”
Following the farm-in transaction Talos Energy, as the operator, will hold 50.00% working interest while partners Enven and Otto Energy will hold 33.33% and 16.67% respectively.
Commercial arrangements for oil and gas from the lease to be produced through Talos’s Green Canyon 18A platform are currently being finalized with Talos.Bulleit prospective resources (P50) are 14.5 mmboe. According to Talos, the prospect’s gross prospective resources are expected to be between 10 to 30 mmboe on an unrisked basis.