Otto gets taste for Italian

OTTO Energy has taken over a farm-in deal belonging to ASX-hopeful Deltana Energy to acquire a 50% stake in the Bastiglia-Centro exploration permits of Italy’s Po Valley region from United Kingdom company Ascent Resources.
Otto gets taste for Italian Otto gets taste for Italian Otto gets taste for Italian Otto gets taste for Italian Otto gets taste for Italian

The permits were originally supposed to be the cornerstone project of Deltana, which has recently withdrawn its $12 million IPO due to a lack of investor interest.

Deltana chief executive Geoffrey Bone told PNN that the company planned to re-launch a revised prospectus with a view to list in either February or March.

Bone said the failed IPO meant it was unable to make payments to Ascent for the farm-in deal.

"Jaap Poll, one of our former directors, recommended the project to Otto - it's a good project and they have the money for it," he said.

"In the end it worked out okay for us, because we had always intended to farm-down our stake and this way we still have a right to claw back 15%"

Otto chief executive Alex Parkes said the Bastiglia-Centro exploration permits were considered highly prospective and relatively low risk.

“This new acquisition is a perfect fit for Otto as we continue to build our portfolio of onshore and offshore oil and gas assets with a pipeline of projects that span across exploration, development and production,” he said.

“The Gazzata prospect alone could be worth up to $A200 million to Otto in the event of a commercial discovery, and there is significant follow-up potential in a variety of different play types, some of which could hold up to 1 trillion cubic feet gas resource potential.”

With drilling to start next September, the first well, Gazzata-1, will target more than 100 billion cubic feet of prospective gas resources.

In order to earn its 50% stake, Otto has agreed to spend at least $10 million in the two permits, by purchasing $3.65 million worth of existing seismic and paying to drill the Gazzata-1 well at an estimated cost of $6 million.

In addition, it will reimburse Deltana $400,000 in direct costs.

Deltana has an option to acquire a 15% working interest from Otto – exercisable up to March 31 – by sharing the terms of the farm-in on a pro-rata basis.