North America-focused Otto Energy is seeking to raise $11 million via a share placement and $20 million through a one-for-five rights issue, both at an issue price of 5.3 cents per share.
North America-focused Otto Energy is seeking to raise $11 million via a share placement and $20 million through a one-for-five rights issue, both at an issue price of 5.3 cents per share.
The offer price represents a 7 per cent discount to its last closing price of 5.7 cents each.
In a statement, Otto said the capital raised would be used in conjunction with cash flows from Otto’s 50 per cent-owned South Marsh 71 oil field and future cash flows from the Lightning development to fund Otto’s $US9 million ($12.71m) share of the Green Canyon 21 drilling program in the Gulf of Mexico.
In conjunction with the capital raising announcement, the company said it made a binding offer to farm-in to the Green Canyon 21 lease and would earn a 16.67 per cent working interest by funding 22.22 per cent of the costs to drill the initial Bulleit appraisal well.
It said the funds raised would also go towards redeeming $US8.1 million ($11.44) of the convertibles notes currently on issue, and for working capital including contingent development wells.
The South Marsh 71 oil field is located in Gulf of Mexico, while the Lightning development is in Texas.
Managing director Matthew Allen said the company was taking another significant step in accelerating its business growth in the Gulf of Mexico.
“Participation in drilling of the Green Canyon 21 ‘Bulleit’ oil discovery provides Otto access to one of the best drilling opportunities that the Otto team has screened with a high quality and proven operator in Talos Energy,” he said.
“Otto has successfully identified and captured farm-in’s to some of the best opportunities available within its core focus area since establishing the Gulf of Mexico only three years ago.
“Discoveries at the South Marsh Island 71 and Lightning projects have established Otto’s production and cashflow generating base with significant, high-impact drilling planned for the remainder of 2019 that is set to continue the rapid delivery on our stated strategy.”
Morgans Financial acted as lead manager and underwriter to the rights issue with Allens acting as legal adviser and Adelaide Equity as corporate adviser.
Euroz Securities Limited and Argonaut were appointed co-managers to the rights issue.
