Houston Energy has been awarded the South Timbalier 235 (ST 235) lease in the US Gulf of Mexico Central Lease Sale 249, says partner Otto Energy.
Houston Energy bid US$210,999 in relation to the ST 235 lease, which ajoins with and is immediately south of South Timbalier 224 (ST 224) lease, where Otto Energy is currently drilling the ST224 #1 exploration well.
Under an agreement with Otto Energy and others involved in ST 224, Otto Energy has the right to acquire a 25% working interest in the lease from Houston Energy and intends to exercise this option.
Maximum water depth within ST 235 is 60m (197ft). In July 2017 the US Federal Government announced that a 12.5% federal royalty rate would apply for subsequently awarded leases that sit in less than 200m of water (656ft), compared to the previous prevailing rate of 18.75%. ST 235 qualifies for the 12.5% rate, further enhancing economics.
Otto’s Managing Director, Matthew Allen, says: “In the event of success at ST 224, ST235 will provide a very attractive follow up with enhanced economics due to its proximity.”
Meanwhile, Otto Energy, which is headquartered in Australiam, says it has raised A$8.5 million in placement to Australian and international institutional and sophisticated investors. The cash will help pay for two firm development wells at SM 71; drilling of the ST 224 exploration well; and additional growth opportunities, which may include a third well in SM 71, development of a discovery at ST 224, drilling of the large Bivouac Peak prospect, "one of the many new prospects Otto is evaluating in the Gulf of Mexico," or exploration in Alaska, if Otto’s partner secures funding and working capital.