Sector News

Otto Energy acquires Borealis Petroleum

August 6, 2015
News
Otto Energy Limited (ASX:OEL) has acquired 100% of the issued capital of Borealis Petroleum Pty Ltd to earn an interest, through staged capital injections, in a substantial acreage position on the highly prospective, oil prone, onshore Alaskan North Slope held by Great Bear Petroleum Operating LLC. Otto will now control Borealis Petroleum Pty Ltd and its subsidiary, Borealis Alaska LLC.
 
Otto had previously announced it entered into a Letter of Intent to invest US$4 million into Borealis as part of a larger capital raise by Borealis. Otto has terminated the LOI and acquired 100% of the issued capital of Borealis for consideration of A$1.2 million to be paid for by the issue of Otto shares. A total of 17,518,250 Otto shares will be issued.
 
Otto has taken this decision following drilling progress to date at the Hawkeye-1 exploration well and the recently completed SC55 farm-in option agreement with Pryce Gases Inc., which have collectively de-risked Otto’s short term capital expenditure program.
 
Through its agreements with Great Bear, Borealis has the right to acquire an 8% and 10.8% working interest (equivalent to 58,334 net acres) in two areas of Alaskan North Slope exploration acreage held by Great Bear through a staged purchase arrangement of up to US$20 million.
 
Consideration paid to Great Bear to complete the entry and the forward capital investment program will involve the following:
 
  • US$4 million paid on 4 August 2015;
  • US$2.5 million to be paid on 10 August 2015;
  • US$7 million to be paid on 30 September 2015;
  • Additional 3D seismic data acquisition; and
  • Future work program of two appraisal wells and 1 exploration well (each with a capped exposure to Borealis of US$2 million).
 
This drilling program is targeting existing proven geological play types, which if successful have the potential to yield significant recoverable resources.
 
In addition, Borealis has an option to acquire an interest in a further 22,804 acres for a purchase price of US$25 million. This acreage includes a very recently drilled exploration well by Great Bear in early 2015 (Alkaid-1) and numerous exploration prospects (including the Phecda prospect).
 
Otto’s Managing Director, Matthew Allen said: ‘Otto is very pleased that we have been able to accelerate our investment in the partnership with Great Bear. The Alaskan North Slope is one of the world’s most prolific oil and gas exploration and production areas. With the ability to participate in multiple appraisal and exploration wells in the coming year, this acquisition positions Otto with significant exposure to the highly prospective and proven Alaskan North Slope.’
 
Source: Oil Voice

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