Lightning, Matagorda County Texas

On 4 February 2019 Otto advised that the initial exploration well, Green #1, testing the Lightning prospect in Matagorda County Texas, has reached final total depth of 15,218ft MD (15,216ft TVD). A quad combo wireline logging suite, including dipole sonic, has subsequently been acquired over the target Frio-Tex Miss sand intervals which are Oligocene in age.

Through participation in the drilling of the Lightning exploration well, Otto has earned a 37.5% working interest in the leases covering this prospect.

Petrophysical evaluation of the logging data indicates the presence of a total net hydrocarbon filled sand interval of 180 feet. This petrophysical evaluation has been undertaken using historical parameters for production performance in the play trend. Dependent upon porosity and water saturation cutoffs applied, there is potential for an additional 150 feet of net pay in the well.

Pre-drill prospective resource estimates for the Lightning prospect, as first announced on 4 December 2018, assumed a P50 net hydrocarbon bearing reservoir thickness of 31 feet with a P10 net hydrocarbon bearing reservoir thickness of 75 feet. Estimates of reserves will take some months to calculate and will be further refined with production data. Otto will update the market as soon as these numbers are available.

Further evidence supporting the presence of movable hydrocarbons occurred during drilling where strong gas shows, including C5+, were recovered at surface. Indications during drilling showed several sand intervals have the potential for liquids yields significantly higher than the pre-drill estimates. Fluid composition and liquids yield will be determined during well clean-up operations and ultimately production.

The Operator has run a 5½” production liner in the well and is commencing preparations for completion and subsequent tie back to a nearby sales pipeline. The drilling rig will be released and mobilized to the drilling location for the next prospect in the Gulf Coast program with Hilcorp, Don Julio 2, in the coming week. A completion rig will be used to install production equipment and bring the well into operation.

The development plan is to deliver production into one of two nearby multi-phase sales pipelines via a 4” export line to be laid from the well. Otto expects these operations to take approximately 45 days with first production from the well by the end of March 2019.