Update on the Otto Energy oil project

Otto Energy Limited is pleased to provide the following update and information on the Company’s flagship South Marsh Island Block 71 (“SM 71”) oil project.
Production from the SM 71 F platform began from the F1 and F2 wells on March 23 and 25, 2018 respectively. The SM 71 F3 well commenced producing on April 6 2018. All three wells have been on production since April 6, 2018. From March 23 2018 to April 25, 2018 (0700 hours US CDT), the three wells have combined to produce a total volume of 83,000 barrels of oil and 55.5 mm cubic feet of natural gas (41,500 bbls and 27.7 mmcf Otto’s 50% share).
As previously advised, the pipeline carrying oil to sales from the SM 71 F platform was shut in for maintenance by the pipeline operator, Crimson Gulf, LLC for four days from April 19, 2018.
During the shut-in period several improvements were made to the oil and gas production system on the platform. Most of these improvements were focused on resizing valves to optimize production levels and minimize downtime on the platform. All three wells were returned to production on April 22, 2018 at a combined rate of 4,650 bopd and 3,200 mcfgpd which is over 90% of the platform’s throughput capacity. These rates are considered ideal for the current operating conditions and uptime is expected to be 96%. This rate of production also optimises drawdown on each of the wells and should maximise the ultimate long term recovery from the reservoirs. Based on these rates, Otto’s daily sales would be approximately 2,325 bopd and 1,600 mcfgpd on a 50% working interest basis (1,890 bopd and 1,300 mcfgpd on a 40.63% NRI basis (after Federal royalties of 18.75%).
Otto’s Managing Director, Matthew Allen, commented, “The production levels at SM 71 are very pleasing, particularly in the current price environment. With the project value calculated from the expected cash flows from SM 71, Otto’s market capitalisation currently represents around two times EBITDA so we see significant upside for investors.”
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