Otto Energy strikes more oil in Gulf of Mexico

Otto Energy ASX OEL oil gas pay zone gulf of mexico
Otto Energy and Talos Energy are preparing the Bulleit well for future production after hitting additional oil pay in the deeper target sands.

Oil and gas junior Otto Energy (ASX: OEL) has announced its Bulleit appraisal well in the US Gulf of Mexico is being suspended as a future producer after hitting more oil pay in the deeper target sands.

According to the company, its Texas-based partner and well operator Talos Energy (NYSE: TALO) intersected about 110 feet of net true vertical depth (TVD) oil pay in the deeper exploration target, the MP sands, while drilling to a total measured depth of 15,675ft.

This follows the joint venture’s earlier discovery of 140ft of net TVD oil pay in the shallower DTR-10 sand target in May. Evaluation of wireline data confirmed this previous find as a commercial discovery in June.

Located in the offshore Green Canyon 21 lease, the Bulleit well is operated by Talos with Otto earning a 16.67% working interest by paying 22.22% of the costs to drill the well.

According to Otto, the oil pay discovered in the MP interval is expected to be in a high-quality reservoir that is consistent with similar wells in Talos’ nearby Green Canyon 18 oilfield.

Logging evaluation of this deeper sand included the recovery of fluid samples that will be used to optimise the development plans for the discovery, the company reported.

Talos is planning to complete Bulleit as a production well in the first half of 2020 and tie it back to its operated Green Canyon 18 offshore production facility, located about 16km west of Bulleit in Gulf of Mexico waters.

According to Otto, current operations involve running a production liner and suspending the well for production, as well as releasing the drilling rig.

Drilling challenges

The partners suffered a few setbacks in its attempts to drill to this deeper target.

Poor hole conditions and compromised drilling operations led to delays as the drilling required side-tracking.

To top it off, the drilling rig needed to be disconnected as Hurricane Barry swept past in July.

Otto managing director Matthew Allen said he was pleased at Bulleit’s successful outcome given it was a “very challenging well to drill”.

“This is Otto’s fourth commercial discovery in the Gulf of Mexico and will be a highly important well in delivering the planned 5,000 bopd production target by the end of 2020,” he said.

“Combined with Otto’s existing production assets already on stream, the completion of the GC21 field in the first half of 2020 will see Otto deliver on this important milestone target,” Mr Allen added.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.