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Otto Energy’s share price sank nearly 29 per cent after it bombed on its second well in a week.

The company (ASX:OEL) told investors this morning that it was unable to find sufficient hydrocarbons in its initial exploration well at the “Big Tex” prospect in the Gulf of Mexico to justify bringing the well into production.

The news sent shares down to an intra-day low of 5.9c. They recovered slightly to 6.2c by midday AEST.

Last Thursday, Otto said a well at its Bivouac Peak East prospect was also “non-commercial”.

The Bivouac Peak East prospect is part of a joint venture with Byron Energy (ASX:BYE).

“The Otto team is obviously disappointed with the results of the two wells this past week, but we have immediately turned our attention to the next well in the Hilcorp program as part of our portfolio approach to exploration,” managing director Matthew Allen said.

Otto will plug and abandon the well, which reached a measured depth of 13,722 feet.

Otto Energy (ASX:OEL) shares stumbled on Monday following a second disappointing well.
Otto Energy (ASX:OEL) shares stumbled on Monday following a second disappointing well.

This latest well was part of an eight-well drilling program costing an estimated $US75 million under a joint venture deal with Hilcorp Energy.

“Although this result is a disappointment, it is only a short-term setback,” chairman John Jetter said.

“We have eight more highly prospective wells to be drilled in the next 15 months, seven of which are with our partner Hilcorp in the Gulf of Mexico.

“We remain highly confident in the prospectivity of those projects.”