Having received funds from the sale of their share of the Galoc oilfield in the Philippines, as well as funds from BHP for the drilling of the Hawkeye-1 exploration well in SC55, Philippines, Otto Energy is now sitting flush with circa $30m USD in the bank. At current exchange rates, that is approximate 4.0c a share cash backing, putting Otto’s shares on the ASX well below cash backing at current prices of around 3.0-3.2cps.
Not only is the market valuing Otto below cash backing, it is also applying a zero valuation on it’s remaining assets in the East Africa Rift System and the recently farmed into acreage in Alaska.
It is feasible that a large seller (Acorn) is holding the price down with low oil prices impacting the desire for buyers to step up to the plate. Unfortunately should Acorn continue to sell below the 5% holding for substantial holder disclosures, we won’t know if or when they have finished selling. The positive however is that while the shares continue to trade at a steep discount to cash backing, the risk in investing is drastically reduced.
Happy times for the patient investor should you believe in the Otto story!