Shares in Otto Energy (OEL) rose by 11% today after the Australian oil and gas company announced that it had acquired an 18% interest in the Galoc Oilfield in offshore Phillippines from Goloc Production Company.
Otto's share of the profits generated from the Galoc field production in 2008 is anticipated to be more than $US30m.
Drilling of the Galoc development wells is already underway and the field is expected to commence production in April 2008 at a gross production rate of approximately 18,000 barrels of oil per day (bopd), with Otto's beneficial share approximately 3,300 bopd.
"The Galoc Field acquisition is an excellent strategic fit for Otto's Philippines portfolio and further strengthens the company's vision to becoming a significant oil and gas producer," said CEO of Otto Energy, Alex Parks.
"With near-term production expected in April 2008, the Galoc Oil Field will provide cash flow to expedite the progress of Otto's other longer term exploration activities in the region."
GPC has a debt finance facility in place, thus Otto's share of the project is fully funded through to first oil.
Alex parks said revenues generated from the Galoc oil field will be used to fund Otto's other "aggressive exploration programs" in the Philippines.
Completion of the agreements is subject to necessary shareholder approvals at the Company's annual general meeting.
5.5 million Otto shares changed hands today, more than 7 times its average daily volume.
The stock rose by 4 cents to close at 37 cents.
