Otto Energy provides update on SM 71 project in the Gulf of Mexico

2/5/2018

LONDON -- Otto Energy Limited has advised that the Ensco 68 drilling rig has been repositioned over the SM 71 F1 well and operations to complete the F1 as a producing well in the D5 Sand have begun. This marks the end of drilling operations which began in early December 2017. During this time two new wells were drilled in the initial development phase of the SM 71 project, both of which were successful.

The SM 71 F1 well was drilled to a depth of 7,477 ft MD in April of 2016 and logged a total of 151 ft of True Vertical Thickness (TVT) net hydrocarbons in four discrete sands. The primary target in the F1 well was the D5 Sand, a prolific oil producing sand in other portions of the SM 73 salt dome field. The F1 well logged 91 ft TVT net oil pay in the D5 Sand and the joint venture committed to construction of a manned tripod production facility on that basis.

In November 2017, the SM 71 F platform was set on location and the Ensco 68 drilling rig was mobilized to begin drilling operations.

The SM 71 F2 well was drilled to a total depth of 8,615 MD in late December and logged a total of 203 ft TVT net oil in four sands including the D5 Sand (130 ft TVT Oil pay) and the previously untested B65 Sand. After the drill pipe became stuck below the D5 Sand, casing was run across the B65 Sand (54 ft TVT ft net oil pay) and the F2 well will serve as the initial take point in the newly discovered B65 Sand reservoir.

Otto announced that a third well, the SM 71 F3, would then be drilled to further develop the D5 Sand. In January 2018, the F3 well was drilled to a depth of 7,714 ft MD and logged oil in five sands, including 175 ft TVT of oil in the D5 Sand. Casing was run and cemented to total depth and the F3 will be completed in the D5 Sand as part of the completion program at SM 71.

Completion operations on all three wells will take about 6 weeks. Modern sand control techniques common to the Gulf of Mexico will be utilized to optimize production rates and provide longevity to each well. During completion work, only limited flowback will be possible and production rates will be established only as each well is placed into production. Piping and instrumentation work on the SM 71 F Platform is nearing completion and production start-up will begin in March 2018. The wells will begin producing sequentially as the new facility is brought on line.

Otto holds a 50% working interest (40.625% net revenue interest) in South Marsh Island Block 71 through a wholly owned subsidiary Otto Energy (Louisiana) Inc. The operator, Byron Energy Inc., a wholly owned subsidiary of Byron Energy Limited (ASX: BYE) holds the remaining 50% working interest.

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