SP still does not reflect value of the cash flow or the upcoming exploration
BUY RECOMMENDATIONS
Otto Energy (OEL)
The oil producer is on the cusp of substantially increasing its cash flow from a 50 per cent share in South Marsh Island operations (SM71) in the Gulf of Mexico. We don’t believe the good news is reflected in the company’s current valuation. The shares closed at 7 cents on May 16.
Last edited by Rabbi; 23-05-2018 at 07:05 PM.
Reason: incomplete
I suggest the Saudis will only want the oil price to stabilize, as they have the big IPO on the horizon.
Last time they increased production they were eating into their foreign reserves when the oil price crashed.
It's taken them some time to eat into the glut so they won't want inventories to get high again.
A bit of a balancing act really. I suppose they want the price at a level where they can make money but the US shalers
have barely got their heads above water.
Well reserves update going down well like the bit where reserves have tripled with scope for more if the B65 sand plays ball. Oil through to 2037 sounds good as well ....
Well reserves update going down well like the bit where reserves have tripled with scope for more if the B65 sand plays ball. Oil through to 2037 sounds good as well ....
OEL has a lot further to run in my opinion as they have some exciting exploration targets coming up starting with Bivouac peak at the end of the month.
They seem to have the right strategy of farming into prospects with relatively high chances of success, and teaming up with respected operators.
The SP will probably dip after the capital raising, as some investors take profits on the heavily discounted entitlement price. Good time to buy if you are looking for
an entry point to a well run company with good underlying cash flow.
Nice one Boysy, good to join you again in a stock - I know you've been in and out of this Co and know it like the back of your hand.
After losing a bit of confidence in HZN's ability to pull off PNG, I wanted more leverage to oil. I swapped out a good chunk and I bought some OEL a few weeks back at 6.6 cents and it quickly sunk to 5.9 cents. Managed to nab a few more around then before the good news came in:
- Hillcorp farmin : This is exactly the type of transaction I like. Low risk appraisal drilling to development within a reasonable timeframe. Good equity stake in it too and relatively fair price by the looks.
- SM71 upgrade. Wow. I was concerned about the lack of reserves at SM71 on an EV/2P basis but this has eliminated that completely turning Otto into a very undervalued Co based on this field alone. At $117m market cap (before raising) and SM71 reserves of 6.6m bbls (heavily oil), we're looking at less than $20 per bbl. That's very attractive, especially with the low operating costs and further upside to prove up some of the possible reserves.
Otto can't seem to miss a trick atm.
Aiming to oversubscribe on the raise but I imagine it will be heavily scaled back.
money for Jam re the retail offering thinking of doing much the same re oversubscribing - wonder if they will take more money should the retail offering exceed the $7M they are after. Think the upside to the GOM and proximity to existing infrastructure isn't yet being accounted for in the valuation of the co. Think this will run much further in the short term heading into BP and Big Tex drill ....
Time is a great teacher, but unfortunately it kills all its pupils
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Originally Posted by boysy
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