Lightning, Matagorda County Texas

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

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.

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

The operator, Hilcorp, subsequently ran production tubing and other downhole equipment required to complete the well for production.

On 7 March 2019 (US CST) the well was perforated over a 28-foot zone in the lowest intersected pay zone being the Tex Miss 3 interval and underwent initial flow-back tests to determine flow rate calculations and liquids yields.

On 20 May 2019 Otto advised that the hot tap into the sales pipeline has been completed and the well opened to the sales line. Production rates are expected to vary over the next few weeks as the operator assesses the optimal rate to achieve the maximum economic ultimate recovery.

Otto has commenced a process to develop maiden reserve volumes on the Lightning discovery as production stabilises and data is gathered. It is expected that these maiden reserves will be reported
upon the completion of the initial 60 day running in period.