ASX-listed, US-focussed E&P company Otto Energy Limited has successfully raised A$8.5 million through a placement, attracting strong interest from new and existing institutional and sophisticated investors.
The company reported it has received commitments from qualified institutional and sophisticated investors in Australia and internationally through a placement of 243 million new shares at A$0.035 per share.
The heavily oversubscribed placement was strongly supported by the company’s larger shareholders, including all of the company’s directors, as well as several new professional and sophisticated investors.
Otto said the A$8.5 million capital raise, in conjunction with its cash balance of US$16.2 million will go towards funding:
• Two firm development wells at SM71 in the Gulf of Mexico;
• The drilling of the ST224 exploration well in the GoM; and
• Additional growth opportunities, which may include a third well in SM 71, rapid development of a discovery at ST 224, drilling of the company’s large Bivouac Peak prospect, one of the many new prospects Otto is evaluating in the Gulf of Mexico or exploration in Alaska if Otto’s partner secures funding and working capital.
Otto’s managing director, Matthew Allen, said the response from investors to the company’s equity raising has been exceptional.
“The Placement to sophisticated and institutional investors closed heavily oversubscribed with bids well above the expected target, reflecting the market’s confidence in our Gulf of Mexico development and growth strategy.
“Existing shareholders will be given the opportunity to participate through the share purchase plan on the same terms as the placement.
“We are very grateful for the support received from both existing and new investors – as well as the strong support of our major shareholder, Molton Holdings and look forward to shareholder support throughout the share purchase plan offer period. We also thank Morgans Corporate for their hard work in ensuring the success of the raising.”
The company said it will undertake an SPP to its existing eligible shareholders, providing them with the opportunity to subscribe for up to a maximum of $15,000 worth of shares at the Placement price of $0.035 per share.
The SPP will provide an opportunity for smaller Shareholders to take positive action and increase their shareholding ahead of a likely unmarketable parcel share sale facility being considered for early 2018.