BHP Billiton has exercised its option to farm-in to Otto Energy‘s Service Contract 55 (SC55), located offshore Palawan, the Philippines.

Under the option, BHP Billiton will earn a participating interest of up to 60% and become the owner of the block by reimbursing Otto‘s expenses and funding one offshore deepwater well by 2012, with an option to drill a second well in a subsequent phase by 2013.

After the farm-in option has been exercised, Otto Energy will retain a 33.18% interest in the block.

Otto Energy will submit the relevant documents to the joint venture partner and the Philippine Department of Energy to approve the transaction.

BHP Billiton secured this option in January 2010 and Otto worked for 16 months to acquire, process and interpret approximately 1,800km² of 3D seismic data in the block.