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Directors dig in for Otto support

OIL and gas company Otto Energy will rely further on its directors for support after it reduced its capital raising efforts amid uncertainty from a lapsed BHP Billiton deal.

Otto this week announced its intention to raise $31.5 million through a placement and rights issue, $3.5 million less than the planned amount revealed last month.

Investors did not take too kindly to the lower capital raising and drove Otto's share price to an all-time low of 6.2 cents at close of trade last Monday.

The lower raising amount was a result of Otto lowering its share price issue under the pro-rata non-renounceable entitlement issue from seven cents to five cents to raise a maximum of around $21.2 million, down from $29.7 million.

An Otto spokesperson told WA Business News the lower share price was a result of the lapsed heads of agreement with BHP, which was looking to earn a 60 per cent interest in an exploration project in the Philippines.

The expired agreement prompted a change in conditions to the underwriting deal with Euroz Securities, which has now agreed to underwrite $15.7 million of the rights issue.

Euroz had originally agreed to underwrite the entire rights issue.

Meantime, shares issued under the placement component remain at seven cents. Otto's board of directors, including prolific chairman Rick Crabb, have agreed to subscribe to $800,000 worth of shares, subject to shareholder approval.

Fat Prophets resource analyst Gavin Wendt said the move should give confidence to Otto's shareholders.

"If directors are putting their hard-earned money into the company, that's designed to show confidence," he said. "I think shareholders will sit up and notice."

It's not the first time Otto directors have financially supported the company.

Last month, Otto revealed four of its directors, including Mr Crabb, had agreed to provide a $1.53 million short-term unsecured loan facility to the company.

The news coincides with two major share transactions undertaken by Mr Crabb, who sold around $3 million worth of Paladin Energy stock on market.

Mr Crabb is the chairman of Paladin.

This week, Mr Crabb showed his support for another chaired company, Ashburton Minerals, subscribing to $100,000 worth of stock that were not taken up with the company's rights issue.

The Otto spokesperson said talks between the company and BHP over the Philippines exploration project is continuing. Otto has already raised $5.2 million from an initial placement completed late last month.

Otto's major shareholders, Santo Holding AG and Molton Holdings, have agreed to subscribe to $4.3 million worth of shares.

Funds raised will be used to advance Otto's Erdine gas project in Turkey, fund upcoming exploration wells in Italy and Argentina and repay director and shareholder loans.

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Otto Energy (OEL)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 29/06/18

1 year TSR5 year TSR
73rdOtto Energy160%11%
146thWalkabout Resources89%8%
608thMount Ridley Mines-20%32%
683rdInca Minerals-38%-24%
776thKin Mining-63%0%
722 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

07/06/18
$9k Sold
07/05/18
$27k Bought
02/02/18
$0 Other
Total value as at the date of the transaction
Source: Morningstar

Revenue

283rd↓Otto Energy$36k
334th↑Mount Ridley Mines$7k
336th↑Kin Mining$7k
338th↓Inca Minerals$6k
339th↑Walkabout Resources$6k
507 listed resources companies ranked by revenue.
Source: Morningstar

Remuneration from Otto Energy

110thMatthew Allen$718k
708thJohn Jetter$112k
471stIan Macliver$85k
Ranked by total remuneration from all listed WA companies

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