Otto Energy seeks up to $17.5m in funding

Oil and gas explorer Otto Energy is looking to raise up to $17.5 million, despite current market conditions, to fund the development of its well in the Gulf of Mexico.

Otto, based in West Perth, owns a 50 per cent share of the South Marsh Island oil field, while project operator Byron Energy owns the remaining half.

Otto Energy will issue approximately 231 million shares, priced at 0.6 cents each, to its 12.4 per cent shareholder Molton Holdings to raise $1.4 million.

Otto is looking to raise a further $16.1 million under a one-for-one rights issue, with Euroz Securities acting as underwriter to the offer for up to $10.6 million.

Steinepreis Paganin is acting as legal adviser and Adelaide Equity Partners as corporate adviser.

Otto Energy managing director Matthew Allen said the raising would ensure the business is well positioned for an eventual recovery phase.

“However we do expect that business conditions will continue to worsen in the short term,” he said.

Otto said it would focus on maintaining a strong balance sheet with sufficient liquidity for its development activities during 2020.

The company entered into a trading halt yesterday, and expects to commence trading on March 31.