OEL - (Otto) Multi based, Gambling Stock.

[shasta]

hey shasta,
intra day high, sure, but hardly a big move. i hope we see some strength tomorrow but i don't feel great about it. when we hit 12 cents after the news BHP were having a look (12 months or so ago) we had a few more prospects (turkey was looking like the business, and SC 51 looked to be a good farm in - neither really worked out). are we now a one hit wonder?
i don't think so. galoc 2 is a gimme, and 69 is shaping up. lotto may come in with duhat. galoc 1 still has a lot to run given recent p1 upgrades. i think the market has this one wrong, but i'm not confident we'll see a turnaround soon. OEL is clearly an unloved stock. i feel we will be rewarded, but i can't see it happening soon given today's action. i hope i'm wrong. and i'm sure boysy agrees (that i'm wrong, that is).
-j

When the market realises the true value of the deal to OEL, ie how much cash they getting back, OEL will be re-rated, the SC55 project is now significantly derisked, with BHP assuming operatorship, but a rig must be secured, im sure BHP has the contacts to sort this out.

What counts against OEL is the lack of a serious drilling campaign to provide continual newsflow, its a steady as she goes oil producer with a narrow focus.

The African partnership could provide something out of left field, so they are still looking for opportunities...

[boysy]

Cash back from bhp on sc 55 past costs should more than cover the market cap increase today. You have to wonder what otto have to do right to get mr markets approval

[boysy]

You have to think a large sum of money should be heading Ottos way based on the amount of money they have put into Seismic done to date on sc 55.

400 km 2D prospect specific Oct 2006
963 km 2D regional data June 2007
600 km 3D Dec 2009

so as per farm in condition all of these costs will be reimbursed to otto makes you think if yesterdays sp increase would cover the back costs heading our way.

[boysy]

http://www.energynewspremium.net/Sto...toryID=2391589

Otto expanding its horizons
Tuesday, 17 May 2011
Marija Stojkovic

OTTO Energy’s outgoing managing director Paul Moore is set to leave the company on a path to growth with new opportunities in east Africa and material exposure both to a high impact exploration campaign and phase two oil development, offshore Philippines.
Moore, who took up the helm at the Perth-based oil producer in July 2009, has spent the last two years consolidating the company’s portfolio, shedding non-core assets while also building up its current business to lead the company into the next phase of growth and development.

The company has exited Argentina, Italy and Turkey and is also in the process of relinquishing its SC50 permit in the offshore Palawan Basin, Philippines.

Speaking to EnergyNewsPremium Moore said the company had cleaned up its portfolio to focus on core assets including SC55 and SC69 in the offshore Palawan and Visayan Basins, as well as pushing hard on the phase two development for its producing asset, Galoc.

He said the company’s “growth timeline” would begin with the phase two development of Galoc to prolong the existing asset and hopefully grow that business.

“We then have got the onshore exploration in Leyte, which if it works would be really good, and we’ll supplement our onshore portfolio provided we’re successful in our bidding ... negotiations in east Africa.

“So that’s our next horizons ... with the whole company we see being underpinned by this high quality exploration in deepwater in the Philippines.”

Otto recently secured BHP Billiton to farm-in to its SC55 permit after almost a three year journey to secure a farm-in partner for the highly prospective deepwater block in the Philippines.

BHP was the company’s farm-in partner in 2009 before pulling out of negotiations due to market conditions at the time. However the company was lured back to the permit in January 2010 and just last week exercised its option to farm-in for a 60% interest.

Under the farm-in deal, BHP will earn up to 60% interest and assume operatorship of the block by reimbursing Otto’s past costs and funding one offshore deepwater well by 2012.

Otto will retain a 33.18% interest in the block, while BHP will also have an option to drill a second well in a subsequent phase by 2013.

Broker and analyst Hartleys said BHP’s decision to farm-in to SC55 has derisked the potential of the target structures within the permit.

SC55 contains a number of gas and condensate targets with total unrisked potential mean recoverable resources at the Nido carbonate level of 19 trillion cubic feet of gas and 670 million barrels of condensate.

The leading drilling candidate is the Cinco prospect, a Nido carbonate gas/condensate target.
Otto has compared Cinco to Shell’s Malampaya gas field and estimated a mean gross success case recoverable resource of 2.1Tcf of gas and 74MMbbl of condensate.

Malampaya had initial proven reserves of 2.5Tcf of gas and 81MMbbl of condensate.

Hartleys estimates Cinco has a 15% chance of success which results in a risked value of 7 cents per share to Otto based on a net present value of $10 per barrel of oil and 50c per thousand cubic feet gas.

However, the broker said given BHP would likely require an internal probability of success greater than 25%, it believed its success estimate for Cinco was conservative.

A number of other targets on the same trend as Cinco have also been delineated including Uno and Tres. Uno has an estimated mean gross recoverable resource of 850 billion cubic feet of gas and 29MMbbl of condensate while Tres, which requires further work to mature it to prospect status, is estimated to contain mean gross recoverable volumes of 4.4Tcf and 116.MMbbl.

“The on trend targets have been estimated [in the success scenario] to contain an additional 17Tcf of gas and 600MMbbl of condensate,” Hartleys said. “This implies risked potential of 60c per share for OEL and unrisked upside of $4 per share.”

The timing for the first well is yet to be set but the licence obligations require a well to be drilled before August 2012.

Harleys said BHP had a commitment to drill in a nearby permit before the end of the year so a well in SC55 could be drilled sooner as part of a multi-well program.

While it is too early to speculate on whether the exploration program was a success, Moore said there was LNG development potential given the mid-case recoverable resource estimate.

According to the company, a minimum of 4Tcf of gas would be required for a shore-based LNG development while 1.5Tcf of gas would be suitable for a floating LNG development.

Otto begins African Safari

As part of the company’s growth plans, Otto has begun targeting new opportunities within east Africa that offer high quality exploration, development and productions prospects.

Moore said the east African Rift Valley area had received significant market interest and had become an emerging area over the past few years.

“The Rift Valley area has seen significant ... large oil discoveries over the last 10 years ... and so what you’re seeing is the emergence of a new hydrocarbon province of significant scale, and for us, we were looking for an area that was emerging where we could drill onshore or relatively shallow offshore.”

Under an Area of Mutual Interest agreement with private Africa-focused company Swala Energy, Otto has made expressions of interest for permits in Kenya and Burundi with news on that front expected this quarter.

The news from Otto is expected to keep flowing in the coming months with the results from Duhat-1 in SC51 on the island of Leyte, recording of the Lampos 3D seismic survey in SC69 and a decision on the Galoc phase two development due before year end.

With plenty of news flow to come, Hartleys has recommended Otto as a buy with a revised price target of 18c. The broker previously forecast a 12-month price target of 14c.

Shares in Otto have been on a rollercoaster ride this year, dropping from a high of 11c in January to a low of 7.7c in March. Last week its shares shot up to 11.5c on news of the BHP farm-in and yesterday closed at 10.5c.

[jdg]

thanks for that, boysy. a very good read.

-j

[boysy]

latest news from Duhat they have gotten stuck once again but promising gas shows a bit sad we have to read this through the PSE instead of ottos releases to the market. PSE put out a daily drilling report looking like they will have significant problems getting this one to TD.

http://www.pse.com.ph/html/NewsRoom/..._2011-0035.pdf

[boysy]

And it gets more interesting from the latest report from today it looks like they tried to run wireline logging equipment but failed once again due to mechanical issues

http://www.pse.com.ph/html/NewsRoom/..._2011-0039.pdf

[shasta]

OEL -3D Seismic acquisition commences in SC69, Offshore Visayas, Philippines

http://stocknessmonster.com/news-ite...E=ASX&N=544664

More newsflow & activity for OEL!

[boysy]

Yes and we should hear more about galoc in the coming few months lets hope all parties can afford their share. Wouldnt mind if Otto upped their stake in galoc if the price was good enough looks as though nido will be in a tight spot unless gindara comes good.

[shasta]

Yes and we should hear more about galoc in the coming few months lets hope all parties can afford their share. Wouldnt mind if Otto upped their stake in galoc if the price was good enough looks as though nido will be in a tight spot unless gindara comes good.

OEL - SC69 3D Seismic Completed

http://stocknessmonster.com/news-ite...E=ASX&N=546431

Otto will now move to process the newly acquired seismic data. This will take approximately six months, prior to interpretation.

I would have thought 6 months was a bit of a stretch?

Is this the industry norm?