Otto Energy raises cash for its SM-71 oil projects in the Gulf of Mexico

Offshore drillingAustralian oil and gas company Otto Energy Limited raises 8.2 million USD for its SM-71 oil projects in the Gulf of Mexico. The company will raise the cash through an issue of secured convertible bonds. The company already signed binding agreement with the main shareholder for the issue of convertible notes, but final decision will be taken at the General Meeting of Shareholder, which is scheduled for July 2017. The notes issue has been agreed on very attractive terms, with a conversion price of 0.055 AUD per share which represents an 89% premium to the 30 day VWAP (volume weighted average price), an interest rate of 14% and a success fee.

The cash will will be used to develop the company’s oil project located in the South Marsh Island 71 license (SM-71) off Louisiana, USA. The construction of the platform is already underway and the production is expected to start by the end of 2017.

“We are very pleased that an existing major shareholder, Molton Holdings Limited, has agreed to financially support the SM-71 development in the Gulf of Mexico through to production. The issue of convertible notes with the conversion price set at a substantial premium to the current share price demonstrates the growth potential from the SM-71 development and future exploration”, said the Managing Director of Otto Energy, Matthew Allen. “With the SM-71 development funded, Otto can now utilize some of its existing cash reserves of 14 million USD for the next stage of growth through participating in exploration drilling of conventional new ventures in the Gulf of Mexico/onshore Louisiana and Alaska”, added he.

According to the estimated of the developer, the initial flow rates from the completion of the first development well at SM-71 project are ,1500 to 2,000 bopd.

Otto Energy Limited is an oil and gas exploration and production company with a regional focus on North America. It currently has petroleum assets in Alaska, Louisiana and Tanzania.