OEL
Before understanding why you should invest in Otto Energy, first you need to understand the driving forces behind rapidly increasing prices in the oil market that is driving up share prices with huge increases. This has led to large profit margins and 100% plus increases in penny stocks like 88 energy, pantheon, etc. That is just to name a few. One of the reasons for this can be attributed to politics. This is not a political post, but it is important to note that politics do play a role in stock prices. With the current US administration, there is a fear of no longer allowing new permits for drilling, something that the Biden administration has already committed itself to. This can lead to high demand for companies that have permits, and potential to find oil, especially those with Alaskan oil permits, something that Otto Energy has (22.5% working interest in the area). This company is not a one trick pony however with drilling sites in the Gulf of Mexico, one that has proven production (C). This is their SM71 drill site in all of its glory.
88 Energy and Otto Energy-Contrast and Comparison
To summarize what happened with 88 Energy recently, let’s just say that 88 Energy had a promise of a potentially significant discovery (Still does, but their season is over and this led to their decline in price. They will return in the fall however and try again. Oil seasons can be complicated, but to put it bluntly these are harsh areas to drill in). Otto energy which is drilling in the same area as Merlin one site of 88 Energy but is closer to potential connection points and trafficking areas which makes their sites potentially more ideal for recovery of said oil. There are known pipelines in the area (Think Trans Alaska pipeline; F), and major corporations like Conoco Phillips nearby as well. They sold one of their projects here to Patheon with (0.5%) royalties on any oil discovered (G), which will be a nice revenue source for passive income in the company as they have other projects that may be more rewarding that they need to fund. 0.5% doesn’t sound like a lot, but this can lead to $5 million or more in royalties (341 million barrels of recoverable oil (F) with the low-price estimate of $3 a barrel and then 0.5% of that amount), something that can make or break an oil company when needing to raise capital for the next venture. These companies live and die by a need to raise capital to fund projects, and this is amount they get with no additional effort on their part.
Point One-Potential High Demand, Low Supply of Shares
Attractive investment point one. On their website they list the top 20 share holders with HBSC custody being number one with an estimated 43.03% of the total existing shares. The other remaining 19 shareholders bring up the total percent to 60.39% leaving 39.42% for shareholders like me and you (B). Now this can be scary due to the fact that there are some major whales in this game, but this is great for short term investors because if this price goes from $0.018 to $0.18, these people are not selling. They are in it for the long-term game for their projects that are years out. Which means for the little guy, there is a lot less supply and a lot more demand.
Point Two- The Close Catalyst of Talitha’s Results
Attractive investment point two. With the upcoming catalyst of Pantheons Talitha which was purchased from Otto energy, these share prices are not astronomical, or insane, they are in fact very reasonable. The results are expected by April 20th, but already things are going very well. There is always the hope that the share prices can reach higher, and I myself am ever more the dreamer. Realistically speaking however, let us look at the facts. This is not Otto energy’s discovery it is Pantheons. The royalties will be significant for Otto Energy as they will benefit greatly in the long run as the passive income will fund future projects, but it will not be an immediate gush of funds that comes with a major discovery. This will still be great news for Otto Energy and their future, however. The hype in combination with low supply of shares could create the perfect storm for significant share prices increases.
Point Three- With Continuation of Point One, Less Shares Than 88Energy and More Stability
Attractive investment point three. Less shares than that of 88 Energy (D&E for comparison). 88 Energy saw a sharp rise in price due to a potential major discovery. That rise would have been significantly higher, but they have 12.17 billion shares in their public float (E). Their OTC ticker EEENF went as high as $0.089 (E) before their demise and fall. If you sold before the bad news however, if you bought $10,000 early in the excitement that would have been more than $40,000 in the short term. Those are amazing returns. The difference between Otto Energy is that they have significantly less shares than that of 88 Energy (Potential for higher demand and less supply). Otto Energy has 1.41 billion in their public float (D). They also lack the history of hugely disappointing shareholders year after year like 88 Energy has. Having a fraction of the shares with potential good news and increase in trade volume does not make it unreasonable to believe that they could reach $0.10 or beyond. I do not know this for a fact as the market is unpredictable but it’s what I believe.
Point Four-Short Term and Long-Term Investors Unite
Attractive investment point four. They are great as both a short term and long-term investment. In the short term, the news on the upcoming Talitha well is April 20th, something to build up hype towards. Long term, if it is a success, they make royalties that give them income towards future successful projects, and potential discoveries to be made in areas where they can continue with their permits and not get shut out by politics. Something that may become unbelievably valuable in the coming years for those in the oil industry. With major whale shareholders holding 60% of the share prices and increase demand, this price could be astronomical in the short few years down the road with an increase in investments and a growing market cap to boot.
Potential Downside
As always, investing is risky, and oil companies are notoriously risky investments. Just ask those who bought 88 Energy before the fall with bad news. Any news that goes the wrong direction and Otto Energy could temporarily be sub penny again. That means potential huge losses. 88 Energy is a recent and fresh example because those who invested at peak hype lost 80% the next day. That means at the wrong time, your $10000 would be $2500 in valuation. So, invest at your own caution. With Otto Energy they have 1.41 Billion shares in their public float, only a fraction of what 88 Energy had. The good news as well is April 20th (Otto Energies potential catalyst) is nine days away and it’s still early to get in on the hype train as either a short term or long-term investor. Their news should be a lot better as well as Talitha well is much more promising and is further along than Merlin-1 was.
Disclosure
I am not a financial advisor, and these are my own personal opinions. I plan to invest and own a significant portion (for me, you won’t see me in the top 20 lol) of Otto Energy. I also plan to recover my initial investment when the share price is high enough and sit on the remainder as a long-term investment. I believe in this company and their potential for future growth and am extremely excited by their future prospects!
References
A-http://www.ottoenergy.com/site/projects/exploration-and-appraisal/alaskaB-http://www.ottoenergy.com/site/investors/top-20-shareholdersC-http://www.ottoenergy.com/site/projects/productionD-https://www.marketwatch.com/investing/stock/ottefE-https://www.marketwatch.com/investing/stock/eeenf?mod=over_searchF-https://www.*.co.uk/companies/news/945740/pantheon-resources-starts-flow-testing-talitha-a-as-weather-eases-in-alaska-945740.htmlG-https://www.reddit.com/r/OttoEnergy/comments/mmu3o7/for_those_that_are_disputing_the_05_royalty_ive/
