Otto Energy to sell oil asset for US$6M
Key points
- Otto Energy agreed to sell its 50% working interest in South Marsh Island 71 for up to US$6 million in total cash.
- The deal transfers decommissioning liabilities and delivers an upfront US$2.5 million cash payment at closing.
- The company aims to monetize assets while preparing a separate sale process for its Lightning oil field.
Otto Energy (ASX:OEL) agreed to sell its 50% stake in the South Marsh Island 71 oil field to Byron Energy for an expected US$6 million in total cash proceeds.
The transaction marks a divestment of Otto's main undertaking, requiring shareholder approval under ASX rules at a meeting scheduled for Dec. 18.
Byron will take over all plugging, abandonment, and decommissioning obligations secured by an approximate US$2.9 million bond.
The company stated that it will receive US$2.5 million at closing while retaining production revenue until 2,928 hours accrue.
Following the announcement, the Otto Energy share price was up at $0.0070.
Separate from the transaction, the company confirmed plans to begin a formal sale process for its Lightning asset this month.
The group also scheduled a shareholder vote on Nov. 13 for a 100:1 share consolidation and an $20 million capital return.
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