Otto will divest 100% of the shares in its Galoc Production Company, the holder of its 33% interest in the oil field, to Risco for $US101.4 million ($A113.5 million).

"The divestment of the Galoc Interest on such favourable terms is an excellent result for Otto and is consistent with the focus on unlocking value for shareholders," Otto CEO Matthew Allen said.

"Prior to the divestment, the underlying value of the Galoc interest was not being adequately reflected in Otto's share price.

"Proceeds from the sale will allow Otto to fund its exploration activities for the next two years and pay a proposed capital return to shareholders."

Risco has already paid a $10.14 million deposit on the acquisition and will assume all production rights and liabilities associated with the interest extending from July 1, 2014.

Otto will seek shareholder approval for completion of the sale before the year is out, with the board unanimously recommending the transaction in the absence of a superior proposal.

The company proposes to focus extra attention on a "highly prospective exploration program" onshore east Africa, as well as an expansion of its acreage there post completion.

The company will also direct focus to its service contract 55 offshore the Philippines.

Funds from the sale will go towards exploration, new business development, and working capital activities for two years, as well as a capital return of 6c per share to shareholders.

Speaking further on the Galoc sale, Otto chairman Rick Crabb said the sale was coming at a beneficial time.

"The board has carefully considered where the asset is currently positioned in the life-cycle of an oil field, as well as the possible future risks and rewards of developing any identified field/near-field upside that could offset naturally declining production rates," he said.

"The board determined that a divestment now was in the best interests of shareholders."