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- Otto Energy (OEL) is on track for 2020 production in the Gulf of Mexico
- The company aims to deliver 5,000 barrels of oil equivalent by the end of the year
- Throughout the development phase, Otto says its balance sheet will remain strong
- The company claims it has a prudent approach to managing oil price risks during this important development phase
- Otto Energy is up 22.7 per cent on the market today, selling shares for 2.7 cents apiece
Otto Energy’s (OEL) CEO Matthew Allen, has updated the market on its 2020 vision.
Gulf of Mexico
The company is currently building an exploring and production business in the Gulf of Mexico.
In 2019, Otto set out a strategy to build a presence in Mexico and has since delivered three independent discoveries that will all be on production during 2020.
“Otto identified an opportunity to become the non-operating partner of choice in one of the highest margin oil and gas provinces in the world and to pursue this strategy at a time of limited capital available within the industry,” Matthew said.
The company said it aims to deliver 5,000 barrels oil equivalent of production, by the end of 2020.
Throughout the development phase, Otto says the balance sheet will remain strong. It has taken a prudent approach to managing oil price risk during the important development phase.
“Otto established a hedging program as part of its facility with Macquarie which saw the business successfully hedge the majority of its PDP production through until 2022 at around USD$56 per barrel, Matthew explained.
This allows the business to operate with some protection from oil price fluctuations whilst maintaining flexibility for new discoveries.
“By the end of Q3 2020 with all current developments successfully completed, Otto expects to be one of only a handful of ASX listed oil and gas companies that are generating significant operating free cash flow,” Matt added.
Lightning Field Operation
The company has also reported that the operator of its Lightning Field in Texas, Hilcorp Energy, has successfully completed the Green number two well.
A 48 hour well test was completed and cleaned up well. The well flowed on a constrained choke setting at a maximum rate of 5.9 oil volume (MM) standard cubic feet per day of gas and approximately 170 barrels per day of condensate and little water.
Production from Green Well 2 is expected to occur before the end of February.
Otto Energy is up 22.7 per cent on the market today, selling shares for 2.7¢ apiece at 12:50 pm AEDT.
