Hartleys maintains a "speculative buy" recommendation on Otto Energy with a 12-month target price of 6¢ a share. "Otto Energy Limited (OEL) has entered into an agreement with ASX listed Byron Energy (BYE) to farm into three leases in Louisiana and Gulf of Mexico. The agreement gives OEL a relatively cheap entry ($US1.60/bbl for 2P) into two shallow water offshore leases and an onshore lease with an experienced operator. We like the transaction because it is in a prolific hydrocarbon province, is low cost (opex and capex) and close to infrastructure. In addition, the staged nature of the farm-in gives OEL the optionality to spend upon success but also to preserve capital. The base case work program for OEL in 2016 should see the company participating in a minimum of four wells (one in the GoM, two in Alaska and one in Tanzania) and up to six wells. The base case work program will cost $US18 million compared to current cash of $US34 million with additional wells also fully funded. The first of these wells is expected to spud in 1Q 2016 in lease SMI-6."

Bell Potter initiates coverage on Australian Agricultural Co [AAC] with a "buy" rating and a $1.62 a share target price. "Our favourable view on AAC is supported by: (1) favourable demand growth profile of beef as a source of protein in emerging markets as income levels rise; (2) a strategy in place that we estimate can add up to an average $0.26/Kg lwt to AAC's total herd value; (3) an improving ROIC profile in the Northern Beef assets; (4) gaining exposure to a long-duration growth asset, with AAC having demonstrated internally funded compound growth in the asset base of about 4 per cent a year over the last 15 years; and (5) undemanding valuation, with AAC trading at a 11 per cent discount to its adjusted NTA."