Otto Energy Ltd has announced that it has reached an agreement with MV Upstream Tanzania Ltd to farm-out of its 25% participating interest in upcoming Kito-1 well, onshore Tanzania, Energy Global informed.

MV Upstream, a joint venture between Vegas Oil & Gas Ltd and Motor Oil Hellas SA, shall pay to Otto the sum of $2.3m for its interest in the licence as reimbursement of historical costs incurred by Otto.

In addition to paying its 25% participating interest share of well costs, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of the Kito prospect up to an amount of $2m. Costs over and above this capped amount shall be payable by Otto. Well costs are currently estimated at around $10m, Your Oil&Gas News reported.

Otto’s Managing Director, Mathew Allen, stated: “The farm down provides Otto shareholders with meaningful exposure to the high-impact exploration well targeting the 194m barrels.”