- Otto Energy (OEL) agrees to participate in two onshore prospects in Texas
- The company has farmed into the Schindler Well for around $644,000 and the Eaves Well for roughly $147,000 using existing cash reserves
- Both wells are testing a regionally proven Wilcox play, with Eaves also investigating a shallow Yeuga objective
- The wells will be drilled in the fourth quarter of 2021 on a turn key basis
- Shares were up 9.09 per cent to 1.2 cents each at 2:39 pm AEDT
Otto Energy (OEL) has agreed to participate in two onshore prospects in Texas.
The company farmed into the Schindler Well in Colorado County for around US$900,000 (A$664 million) and the Eaves Well in neighbouring Lavaca County for roughly US$200,000 (A$147 million) using existing cash reserves.
Both wells are testing a regionally proven Wilcox play, with Eaves also investigating a shallow Yeuga objective.
According to OEL, the wells will be drilled in the fourth quarter of 2021 on a turn-key basis to minimise drilling cost exposure.
Notably, the company’s participation in the prospects is the result of Otto’s ongoing efforts to advance its growth strategy.
If successful, the wells are projected to further leverage OEL into what it regards as a “strong” gas market with Henry Hub prompt pricing of US$5.45 per metric million British thermal unit (MMbtu) and an average of US$4.59 per MMbtu for the next 12 months.
Otto Energy Executive Chairman Mike Utsler commented on the news.
“Otto is excited to be participating in these two onshore prospects, which deliver limited cost exposure but excellent potential leverage to the current strong gas price environment,” he said.
“Both prospects have strong associated liquids and significant update.
“We continue to screen a large number of opportunities against our targeted risk-return evaluation framework.”
Otto has assessed the Schindler prospect as having unrisked mean success volumetrics of 21 billion cubic feet (BCF) of gas and 804,000 billion barrels (bbl) of condensate at a 54 per cent geological probability of success.
The company determined the Eaves prospect as having unrisked P50 success volumetrics of 2.5 BCF of gas and 12,500 bbl of condensate at a 75 per cent geological probability of success.
Shares were up 9.09 per cent to 1.2 cents each at 2:39 pm AEDT.