Otto Energy has advised that since re-commencing oil production at the Galoc Oil Field on February 25, 2009 production rates have averaged in excess of 16,000 barrels per day. This flush production is anticipated to continue over the next several days whereupon the field production is likely to return to its pre-shutin (December 2008) rates of around 13,000 to 14,000 barrels of oil per day.

Otto holds a 31.38% shareholding in Galoc Production Company (GPC) which has a 58.29% working interest in the Galoc license. Otto's share of the outstanding GPC debt over the Galoc Field is currently US $8.8 million (non-recourse and net of cash collateral. The cash collateral will fully over Otto share of the recourse portion of the GPC debt).

Following the recommencement of production, GPC has agreed with its banks a revised loan repayment schedule for the non-recourse portion of the debt over the Galoc Field. Under the revised repayment schedule GPC will make two cash instalments with the balance of the outstanding debt intended to be fully repaid by June 30, 2009 through the cash sweep mechanism (from the GPC equity account). The first cash instalment was paid by GPC on February 27, 2009 (Otto share US $1.6 million) and a second instalment will be paid no later that March 27, 2009 (Otto share US $1.6 million).

Tags: Otto Energy Limited