The company said a placement of 38.46 million shares would be issued at a price of $0.39 per share to raise the capital.

The placement shares are proposed to be issued in tranches: 14.7 million shares will be issued immediately; 22.95 million shares for two of the company's existing international investors will be issued subject to receiving Foreign Investment Review Board approval; and 0.77 million shares are proposed to be issued to Otto's recently appointed director John Jetter.

Otto said the proceeds will fund drilling preparation in the newly-awarded Argentinean permit; fund costs associated with its 50% farm-in to two permits in Po Valley Italy; and fund site surveys in the Philippines in preparation for drilling.

The remaining proceeds will be used as working capital until first cash flows have been received from the offshore Philippines development, Galoc.

In other company news, Otto and joint venture partner Incremental petroleum have encountered gas in the uppermost primary objective of the Arpaci-2 well in their Edirne gas project in Turkey.

However, the well has been plugged back due to high pressures and substantial mud losses in the well bore.

Otto said Arpaci-2 will be redrilled with an amended casing and drilling mud program to accommodate the high gas pressures in the next few weeks.

Otto Energy has a 35% stake in the Edirne gas project, Incremental has 55% and Turkish partner Petraco 10%.