Oil and gas junior Otto Energy (ASX: OEL) has announced its Bulleit appraisal well in the US Gulf of Mexico has hit oil in the shallower target sand.
The company resumed trading on the ASX today upon revealing logging data that indicated the well, which lies in about 1,200 feet of water in the offshore Green Canyon 21 field, hit 235 feet (71.63m) of gross true vertical depth pay across two main pay sands with a 50-60% net to gross ratio and excellent rock properties.
Otto managing director Matthew Allen said these initial results are “very encouraging compared to the pre-drill estimates”.
“We are excited about the remaining deeper exploration target of the well – the MP sand,” Mr Allen added.
The Green Canyon 21 lease is operated by Houston-based well partner Talos Energy (NYSE: TALO) with Otto earning a 16.67% working interest by paying 22.22% of the costs to drill the Bulleit well.
The Bulleit prospect has been described as having similar seismic attributes to the analogous MP sand section in Talos’ Green Canyon 18 field, which has produced about 39 million barrels of oil equivalent to date.
Pending results of the deeper, main objective test in the MP sands, the Bulleit well is expected to be completed and tied back to Talos’ Green Canyon 18A platform, located 16km away.
Lightning production commences
Otto also announced on Monday that gas and condensate production has commenced from its Green-1 well at the Lightning field in Texas.
The company has a 37.5% working interest in the leases covering the field via a farm-in deal made with US-based private operator Hilcorp last year for eight wells on the US Gulf Coast.
In February, drilling of Green-1 was completed and the well was confirmed as a commercial discovery with a minimum of 180 feet (54.86m) of net pay.
According to Otto, production rates are expected to vary over the next few weeks as Hilcorp assesses the optimal rate to achieve the maximum economic ultimate recovery.
Otto is now beginning to develop maiden reserves on the Lightning discovery as production stabilises and data is gathered. These reserves are expected to be reported upon the completion of the initial 60-day running-in period.
Lightning is the second field Otto has on production, following the offshore SM 71 field in the Gulf of Mexico.
Mr Allen said the addition of Lightning was another step towards the company’s strategic goal of 5,000 barrels per day of oil equivalent by the end of 2020.
By early afternoon trade, Otto shares were up 9.26% to $0.059.