Australia-based international exploration and production company Otto Energy Limited informed that it had executed the agreements approving the farm-in into the Santa Rosa Block exploration licence in Argentina, and had approved the Exploration Work Program and Budget totalling US$4.1 mln with the view to start drilling in the first half of 2009.
The Santa Rosa Block is a large onshore concession located in Mendoza Province of Argentina. In November 2005, Otto and Oromin Explorations Limited agreed to a Letter of Intent to farm-in to the Santa Rosa Block, whereby Otto Energy Limited would earn a 32.48% shareholding interest in an Oromin-owned British Virgin Islands company Cynthia Holdings Ltd that wholly owns an Argentinean company Exploraciones Oromin SA, which in its turn is the 100% holder of the rights to explore and produce from the Santa Rosa Block.
The farm-in consideration is for Otto to fund the first US$1.4 mln of the approved Exploration Work Program and Budget, after which it contributes its pro rata equity share. The interest holders of the Santa Rosa exploration licence are Oromin 67.52%, who is the Operator, and Otto, with 32.48%. Otto is entitled to take an equivalent direct interest in the Santa Rosa Block, subject only to Argentinean government approvals.