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Otto Energy to close US$37.4M financing for Philippines oil project expansion

Published: 07:40 01 May 2013 BST

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Otto Energy (ASX: OEL) has been advised by BNP Paribas that all conditions precedent to close the US$37.4 million project financing facility for the Galoc Phase II development offshore Philippines have been met.

The facility will fund future capital expenditure for the US$188 million expansion that will more than double oil production at the project with the first drawdown expected in the current quarter.

Otto has to date been able to fund its 33% operating share of the expansion through cash flows generated from Phase I field production.

Key terms of the BNP facility are:

-    3-year tenor term loan facility expiring 31 December 2015;
-    Principal repayments commencing Q1 2014. Voluntary prepayments may be made without penalty;
-    A competitive interest margin over USD LIBOR; and
-    Galoc project level security provided as is usual for a loan of this nature.

Galoc Phase II development

Good progress continues to be made towards achieving safe production start-up from the Phase II wells, which is anticipated in the fourth quarter of 2013.

Notably, the Ocean Patriot semi-submersible drilling rig is currently in Singapore undergoing planned survey work prior to mobilising to the Galoc field in late May to carry out drilling operations.

Offshore construction planning and equipment deliveries are also tracking to schedule.

Otto had in March updated Proved (1P) Reserves at Galoc to 3.4 million barrels of oil while Proved and Probable (2P) Reserves have also been updated to 4.3 million barrels of oil.

This represents a Reserves Replacement Ratio of 115% for 1P and 98% for 2P Reserves.

The Phase II development of the Galoc will more than double production to 12,000 barrels of oil per day and ensures the field will remain in production beyond 2020.

Otto had US$23.21 million in cash as of 31 March 2013.

 

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