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- Otto Energy (OEL) agrees to participate in two new exploration wells in Louisiana state waters, with spudding expected in May
- The Mosquito Bay West and Oyster Bayou South exploration wells will be drilled from a barge rig in about 2.7m of water
- The company will earn a 30 per cent working interest in both wells by paying 40 per cent of exploration well costs, after which it will be required to pay 30 per cent of future costs
- The wells are expected to cost Otto US$1.7 million (A$2.34 million) each on a dry hole cost basis, which will be funded from existing cash reserves
- Shares are trading 13 per cent higher at 1.7 cents
Otto Energy (OEL) has agreed to participate in two new exploration wells in Louisiana state waters, with spudding expected in May.
The Mosquito Bay West and Oyster Bayou South exploration wells in the southern US state will be drilled from a barge rig in about 2.7m of water.
The wells are targeting a number of locally productive Discorbis and Amphistegina Miocene Age sands, with each well having a number of separate objective sands.
The company will earn a 30 per cent working interest in both wells by paying 40 per cent of exploration well costs, after which it will be required to pay 30 per cent of future costs.
The wells are expected to cost Otto US$1.7 million (A$2.34 million) each on a dry hole cost basis, which will be funded from existing cash reserves.
The company expects the Mosquito Bay West well to have a 77 per cent chance of success, and the Oyster Bayou South to have a 52 per cent chance.
If successful, production will be processed and transported to market through an existing facility.
Executive Chairman Mike Utsler said the company was pleased to participate in the new wells.
“Otto is excited to be participating in two new, relatively low risk, high impact exploration wells that the Operator intends to drill during Q2 2022,” he said.
“In the event of the success of these wells, the ability to tie back and begin production given access to existing infrastructure would expect us to realise production from Q3 2022.”
Otto shares were trading 13 per cent higher at 1.7 cents each at 1:24 pm AEDT.
