Otto Energy : H1 FY22 Results and Half Year Report

14 March 2022

ASX RELEASE

For personal use only

H1 FY22 FINANCIAL RESULTS

Otto Energy Limited (ASX:OEL) (Otto or the Company) is pleased to provide its financial results for the half year ended 31 December 2021.

STRATEGIC DELIVERY

• Continued to advance the Company's strategic plan, built upon the following three pillars:

Pillar 1 - Base asset delivery excellence

1. Base production from South Marsh 71 (SM 71) and Lightning continues to be at or above expectations.

• 1. Green Canyon 21 "Bulleit" well (GC 21) producing intermittently from the MP Sand while awaiting a recompletion in the shallower DTR-10 Sand, expected in mid CY 2022. Recompletion costs are budgeted to be paid out of free cash flow.
• Pillar 2 - Organic growth within existing base
• 1. At SM 71, recompletion potential for the F2 well and re-entry potential for the temporarily abandoned F5 are being targeted for CY 2022, consistent with Otto's current planning and budget.

• 1. Resource progression at Lightning targeted for CY 2022, consistent with Otto's current planning and budget. Seismic data and mapping are ongoing to develop specific well proposals for Green #3 and #4.
• Pillar 3 - Inorganic growth via opportunity capture to enhance value
• 1. Successful sale of 11,000,000 shares of Pantheon Resources Plc (LSE: PANR) (Pantheon) stock in exchange for approximately US$10.5 million. The Company retains 3,272,592 Pantheon shares.

1. Successful discovery at Vick #1 well in Lavaca County, Texas, operated by Forza Operating, Inc. The well encountered 12 feet of net pay in the shallower Yegua formation, as expected. Completion operations are underway in the Yegua interval at approximately 5,450 feet TVD. First production from this well is being expected during Q1 2022.

1. Otto continues to evaluate prospects, assets and corporate entities with respect to whether a purchase and/or consolidation would be a good fit with its portfolio.

Otto Energy Limited ABN: 56 107 555 046	Australian Office: 70 Hindmarsh Square, Adelaide SA 5000
E: [e-mail]	Houston Office: Suite #1080, Two Allen Center, 1200 Smith Street,
T: [phone]	Houston, Texas 77002 T: [phone]
ASX: OEL

For personal use only

FINANCIAL DELIVERY

EARNINGS

• Total WI revenue increased by 57% to US$22.6 million (H1 FY21: US$14.4 million), due to an increase in crude oil, natural gas, and NGL prices during the current half year.
• Net operating revenue increased by 62% to US$18.1 million (H1 FY21: US$11.2 million).
• Production decreased by 21% to 2,431 boe/d at 59% liquids (H1 FY21: 3,068 boe/d at 55% liquids) due to normal production characteristics, combined with the operator of the Lightning field reducing flowrates in May 2021, and again in October 2021, in order to protect the reservoir.
• EBITDAX and EBITDA increased by 299% and 255%, respectively.

• 1. EBITDAX increased to US$17.2 million (H1 FY21: -US$8.6 million) while EBITDA
     increased to US$16.0 million (H1 FY21: -US$10.3 million) as a result of impairment charges for the previous period and a gain on investments for the current period.
• Adjusted EBITDAX and Adjusted EBITDA increased by 73% and 100%, respectively.
• 1. Adjusted EBITDAX increased to US13.6 million (H1 FY21: US$7.9 million) while Adjusted
     EBITDA increased to US$12.4 million (H1 FY21: US$6.2 million) as a result of higher revenues and lower exploration costs.
• Net Income after taxes of US$11.1 million (H1 FY21: -US$14.3 million).

CASH FLOWS

• Net operating cashflow (pre-exploration) of US$10.2 million (H1 FY21: US$8.3 million).
• Net operating cashflow (post exploration) of US$9.1 million (H1 FY21: US$4.6 million).
• Free cashflow (operating net investing) of US$19.7 million (H1 FY21: -US$2.3 million).
• Debt repayment of US$4.6 million during the half-year.

LIQUIDITY

• Balance date cash of US$26.2 million.
• Residual equity interest held in Pantheon valued at US$3.4 million as at 31 December 2021 (US$6.1 million as of 1 March 2022).1
• Debt at balance date of US$6.9 million.

OPERATIONS

1 Based on prevailing PANR share price of 77.30 pence and a 1.33 US$ to GBP exchange rate as of 21 January 2022 and a PSNR share price of 139 pence and a 1.33 US$ to GBP exchange rate as of 1 March 2022.

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For personal use only

	H1 FY22		H1 FY21	% change
Total Oil (Bbls)		231,234		268,580	-14%
Total Gas (Mcf)	1,096,649		1,528,190	-28%
Total NGLs (Bbls)		33,287		41,242	-19%
Total BOE		447,295		564,520	-21%
Total (Boe/d)		2,431		3,068	-21%
Percent Liquids (%)		59%		55%	8%
Total WI Revenue (US$MM)	$	22.6	$	14.4	57%
Avg oil price (US$/Bbl) *	$	70.68	$	38.06	86%
Avg gas price (US$/Mmbtu) *	$	4.59	$	2.33	97%
Avg NGL price (US$/Bbl)	$	33.37	$	12.78	161%
Avg WA price (US$/Boe) *	$	50.58	$	25.54	98%

*Average price does not consider the effects of hedges. If including hedges, the average realized oil price would be US$57.79 and US$42.07 for the Half-Year ended 31 December 2021 and 2020, respectively; the average realized gas price would be US$4.32 and US$2.33 for the Half-Year ended 31 December 2021 and 2020, respectively; and the average weighted average realized price would be US$43.22 and US$27.46 for the Half-Year ended 31 December 2021 and 2020, respectively.

COMMENT FROM EXECUTIVE CHAIRMAN AND CEO, MIKE UTSLER

"We are pleased to be presenting such a robust set of financial results for the half-year. Interim after-tax profit of US$11.1 million and free cash flow of US$19.7 million reflect the improved energy pricing environment and a commitment to our overall strategy framework. The Otto balance sheet is also strong. A net cash position of US$19.3 million positions us well to weather cyclical variation and take advantage of new drilling and/or development opportunities that offer clear risk- weighted value to our shareholders."

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OTTO AT A GLANCE

Otto is an ASX-listed oil and gas exploration and production company focused on the Gulf of Mexico region. Otto currently has oil production from its SM 71 and GC 21 fields in the Gulf of Mexico and gas/condensate production from its Lightning asset in onshore Matagorda County, Texas. Cashflow from its producing assets underpins its strategy and financial stability.

DIRECTORS	CONTACTS
Michael Utsler - Chairman & CEO	Ground Floor 70 Hindmarsh Square
John Jetter - Non-Executive	Adelaide SA 5000 Australia
Geoff Page - Non-Executive
Paul Senycia - Non-Executive	INVESTOR RELATIONS
CHIEF FINANCIAL OFFICER	Michael Vaughan (Fivemark Partners)
E: [e-mail]
Sergio Castro	P: [phone]
COMPANY SECRETARY
Kaitlin Smith (AE Administrative Services)	Mark Lindh (Adelaide Equity Partners)
ASX Code: OEL	E: [e-mail]
P: [phone]
	P: [phone]

Definitions

personal

"bbl" = barrel "bbls" = barrels

"bopd" = barrels of oil per day "Mbbl" = thousand barrels "Mscf" = 1000 standard cubic feet "NGLs" = natural gas liquids "MMscf" = million standard cubic feet "Mmbtu" = million British thermal units

"Mboe" = thousand barrels of oil equivalent ("boe") with a boe determined using a ratio of 6,000 cubic feet of natural gas to one barrel of oil - 6:1 conversion ratio is based on an energy equivalency conversion method and does not represent value equivalency

"MMboe" = million barrels of oil equivalent ("boe") with a boe determined on the same basis as above "NRI" means Net Revenue Interest

"WI" means Working Interest

For

This announcement is approved for release by the Board of Otto Energy Limited.

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For personal use only

Appendix 1 - Reconciliation of non-IFRS financial information

Where indicated, this announcement also contains some non-IFRS financial information, including in the H1 FY22 Highlights. Below is a reconciliation of non-IFRS financial information to reviewed IFRS financial information. EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, and evaluation), EBITDA (earnings before interest, tax, depreciation, and depletion), EBIT (earnings before interest and tax), and Adjusted EBITDAX and Adjusted EBITDA (EBITDAX and EBITDA, respectively, less non-cash items such as impairment, unrealized gain (loss) on derivatives, and unrealized gain on investments) are non IFRS measures that are presented to provide investors with further information and perspective on the overall financial performance and operations of the Company. The non-IFRS financial information is not reviewed, however the numbers have been extracted from the reviewed financial statements. The reviewed Half Year Financial Report accompanies this summary release and is available on the Otto Energy website at www.ottoenergy.com. Please refer to the reviewed financial statements for the IFRS information.

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