WEST PERTH, Australia, April 27 (UPI) -- Otto Energy Ltd., a company with headquarters in Australia, said it made an oil discovery in the Gulf of Mexico that was productive enough to keep drilling.
The company said it ran through columns of oil at its SM-71 well in the Gulf of Mexico and decided to deepen its drilling activity to ensure the entire targeted region will be evaluated. The cost to drill deeper, the company added, is within the original spending target.
Matthew Allen, the company's managing director, said he was "very encouraged" by the results so far. Otto Energy describes the prospect as part of a regional "low cost, high-chance-of-success" opportunity in the Gulf of Mexico.
Eight fields started production in the Gulf of Mexico last year and four more are expected to enter into operations in 2016. A report from the U.S. Energy Information Administration finds new production from the region increases the rate of production by more than 25 percent by the end of next year.
Onshore declines, the EIA said, should be offset by gains in the Gulf of Mexico in part because the offshore areas are less sensitive to short-term volatility in crude oil prices. The federal report estimates output from the Gulf of Mexico will account for about 20 percent of total U.S. crude oil production by next year.
Otto Energy said it expects more data to come in later in the week that it will use to plot a long-term strategy for the field.