MANILA, Philippines - Australia’s Otto Energy Ltd. has completed the sale of Galoc Production Co. (IPC) to Nido Petroleum Ltd., the company said in a disclosure to the Australian bourse.
Nido paid Otto Energy $77.4 million for the transaction, bringing Otto’s cash reserves at $106 million from $28.6 million as of Feb. 13, 2015.
Otto chief executive officer Matthew Allen said the Galoc sale is for the best interest of the company given depressed oil prices.
“Delivering financial close of the GPC sale is a significant milestone for Otto in this environment of depressed oil prices. Otto has a very strong balance sheet and is well advanced on prospective exploration activities in both the Philippines and Tanzania. Pleasingly, we have the financial capacity to undertake these high impact exploration activities and to pay a significant capital return to Otto’s loyal shareholders,” Allen said.
In September, Otto Energy announced it had executed a sale and purchase agreement to divest 100 percent of the shares in GPC to Risco Energy Investments Pte Ltd. for $101.4 million.
However, the company received a superior offer from Nido Petroleum for the same transaction but at a higher price of $108 million.
The Galoc joint venture partners commenced drilling for the Galoc Phase two development in June 2013.
The Galoc oil reserve is at estimated 25 million barrels with the second phase development completed. The second phase development allowed production at the Galoc field to increase to around 9,700 barrels per day from about 5,000 to 6,000 barrels per day.
Other partners are Nido Production Ltd., Oriental Petroleum & Minerals Corp., Linapacan Oil Gas & Power Corp. Philodrill Corp. and Forum Energy Philippines.
Allen said Otto would utilize the cash reserves to undertake the forward exploration programs for Service Contract 55 in the Philippines, and two licences onshore Tanzania.
SC 55 is located near the Malampaya gas field in offshore Palawan. It includes the Cinco Well.
In terms of potential resource, the Department of Energy estimates that SC 55 has some 2.2 trillion cubic feet of gas.