Otto Energy Limited (ASX: OEL) today, on 29 March 2019, updated that its securities will be placed in a trading halt under Listing Rule 17.2 and are expected to remain so until the earlier of the commencement of regular trading on Tuesday, 2 April 2019, or when the announcement is provided to the market regarding a notification in relation to the outcome of the institutional component of the capital raising.
As per the ASX Listing Rules, the company is not aware of any reason why a trading halt should not be granted, nor any other information necessary to inform the market about the suspension from the trading.
Also, the company, through a presentation on Capital Raising, stated that it is undertaking a ~A$31 million equity raising via an A$11 million placement and an underwritten 1 for 5 entitlement offer. Hence, roughly 582.6 million fresh shares will be issued under the equity raise plan. New shares issued under the equity raising plan will rank pari-passu with existing ordinary shares.
The offer will be priced at A$0.053 per new share, which represents a 7.0% discount to the close on 26 March 2019 of $0.057 and a 5.4% discount to the TERP of $0.056. The funds raised from this placement and rights issue will be used in conjunction with cash flows from Otto’s 50% owned SM 71 oil field and future cash flows from the Lightning development to redeem 8.1 million of the 8.2 million convertible notes on issue1 (Principal of US$8.1 million plus interest) ~A$12 million, to participate in drilling of the Bulleit appraisal well in the Green Canyon 21 lease in the Gulf of Mexico of ~A$13 million; and infusion into the working capital including contingent development wells of ~A$6 million.
As regards the timetable for this non-renounceable entitlement offer is concerned, the institutional entitlement offer and bookbuild have opened today, i.e. on 29 March 2019 and this offer and bookbuild will close on 1 April 2019. The record date for determining eligible shareholders shall be 2 April 2019. The Retail Entitlement Offer closes on the 23rd April 2019.
Concerning the Green Canyon 21 Farm-in, the subsea development is planned to start production in 2020. The Talos will complete the well as a subsea tieback with a smart completion; tying back to Talos operated GC 18A-Platform. There is also an adequate capacity for a second well if warranted for the acceleration. The date of the first production is estimated by Talos to be 12 to 18 months from the spud. The Talos expects initial production rates from the MP sand to be between 8,000 and 15,000 boepd based on the nodal analysis.
On the price-performance front, the stock has posted returns of -19.72% over the past six months. OEL’s shares last traded at a price of A$0.057. It had a 52-week high price of $ 0.083, with an average volume of 5,958,653.
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