As a result, the Perth-based company said it now had a 70% interest in SC51 in the Visayan Basin, and 75% of SC55 in the Southwest Palawan Basin.

Otto said the move would allow Vital to focus on SC50, where the Calauit field is due to start production in early 2008 at a rate of between 12,000 and 15,000 barrels of oil per day.

“Vital are very supportive of the accelerated exploration program in SC51 and SC55 but understandably wish to concentrate their resources on SC50 program over the more imminent development at Calauit,” Otto chief executive Alex Parks said.

“Otto intends to proceed with the 2D/3D program at its new equity position and intends to shoot the various seismic programs around mid-2007.”

As a result of the farm-down, Vital now has 10% stake in each permit, where it will pay a total of $US200,000 ($A248,000) towards a seismic program, reduced from $600,000. In addition, it will pay 13.75% (instead of 41.25%) of the initial wells to be drilled in each permit.

The transaction will not affect Vital’s 35% farm-in stake to SC50, where it has agreed to pay 60% of the $US20 million Calauit development on top of a $1.125 million entry fee.

Once the seismic program is complete, Otto said it may seek an additional farm-in partner to participate in the drilling of SC51 and SC55.