Otto acquires Santa Rosa licence
Posted: 5 May 2008
Otto Energy, an Australian-based oil and gas company, reported the award of the Santa Rosa Licence, onshore Argentina for a 6 year exploration period.
Highlights:
- The Santa Rosa Licence contains a 220km2 shallow dome structure that will be the initial exploration target.
- Otto will earn an initial 32.48% interest in the licence by spending US$1.4m on drilling 2 onshore wells and has an option to increase to 41.24% for a further US$900,000 in exploration expenditure.
- Joint venture partners Otto Energy and Oromin Explorations Ltd will establish a detailed work program over the coming weeks with a view to drilling as soon as practical.
"We are extremely pleased to confirm the Santa Rosa Licence has now been awarded. This Licence is located in an established, prolific hydrocarbon basin and provides considerable upside for our shareholders should we make a discovery. We look forward to working closely with our joint venture partner to quickly finalise an exploration plan with a view to start drilling in Argentina within the next 12 months," said Otto CEO Alex Parks.
The Santa Rosa Block is a large 7,694 square kilometre onshore
concession located in the oil prolific Cuyana Basin of the Mendoza
Province of Argentina.
Oromin Explorations Ltd, the operator, applied for the concession in September 2000. Due to unforeseen changes in economic, administrative and political circumstances in Argentina, the award suffered lengthy deferrals. The Licence has now finally been awarded by the provincial authorities in Mendoza.
In November 2005 Otto and Oromin agreed to a farm-in arrangement, whereby Otto will initially earn a 32.48% working interest from Oromin in the Santa Rosa Licence.
The farm-in consideration is for Otto to fund the first US$1.4 million of a 2-well drilling program.
Upon farm-in, the interest holders in the Santa Rosa Licence will be Oromin 67.52% (Operator) and Otto 32.48%.
Otto is also entitled to acquire an additional interest of 8.76% in the Licence from Oromin to increase its interest to 41.24% by incurring further expenditure of US$897,381.
Posted by Richard Price, Editor, EnergyME.com
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