sc55 expressions of interest and rig offers

Oil & Gas Weekly had the following comments to make on RFE and Otto in Sunday's issue. Also understands Otto has already received expressions of interest in farming in to SC 55 and offers of rigs that could drill the Hawkeye prospect. Will be an interesting 2014.

"Red Fork Energy and Otto Energy are both producers of hydrocarbons. But there the similarity ends.
Red Fork is a resource play producing tight oil and gas from 53 operated and a number of non operated wells drilled into the Mississippi Lime in north Oklahoma. The wells all involve horizontal sections and fracture stimulation. Otto produces conventional oil from just four wells also with horizontal but free flowing sections in the Galoc field offshore the Philippines.
Red Fork’s development capital associated with the drilling of 38 wells in 2013 was in excess of US$130 million. Otto anted up US$36 million for two development wells at Galoc. Red Fork expects its 2013 exit production rate of between 2,600 and 2,700 barrels of oil equivalent a day. Otto will produce 4,000 barrels a day net to its 33% Galoc field interest.
Red Fork plans to drill up to 45 wells in 2014, Otto will not be drilling any more wells on the Galoc field. It will study the data from the recently drilled development wells to determine the optimum location for a possible Galoc North exploration well.
Red Fork will not be cash flow positive in 2014 and will need another mix of cash flow, debt and equity to fund its drilling program. Red Fork said it expected to be able to fund development from cash flow in 2015. Well maybe. Otto will enjoy some US$80 million in positive operating a cash flow in 2014 and be able to pay off its US$36 million in Galoc debt by June/July.
Red Fork is unlikely to be profitable until 2016/2017 if then. Otto is already a profitable oil producer. Red Fork’s share price has fallen some 55.7% this year Otto’s share price is up just 2.5%. Not difficult to see why the market has had second thought this year about Aussie juniors in the US chasing their fortunes in US shale plays."