In 2015 Ottoenergy (AX:OEL) transformed from producer to pure explorer. With the drop in commodity prices, this was perfect timing. The first well under the new strategy was not successful – its fully carried Hawkeye-1 exploration well (offshore the Philippines) was declared uncommercial in October and it is seeking to exit the area. However, Otto has added to the portfolio with entry into the Alaskan North Slope, a recent deal in Louisiana and drilling in Tanzania in 2016, pointing to an exciting year ahead for shareholders. After some adjustments, our RENAV uplifts slightly to A$0.07/share, but we will revisit it in the new year following further clarity on the GoM options.
2015: A year of change
Otto sold its 33% working interest in the Galoc field, completing in February 2015, for US$108m, subsequently distributing 6.4 cents per share to shareholders. Its first exploration well, Hawkeye-1 (SC55 offshore the Philippines), failed to find commercial gas accumulations and the company is now seeking to exit the area. The well was fully carried, thereby eliminating cash exposure, but it marks the end of an era in an area where Otto was highly successful. Nevertheless, the portfolio holds the opportunity for Otto to add value once again.
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