Otto Energy : Quarterly Activities and Cashflow Report

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QUARTERLY REPORT

THREE MONTHS ENDED 30 SEPTEMBER 2020

COMMENT FROM MANAGING DIRECTOR AND CEO

On 14 September 2020, the Company announced the appointment of new Chief Executive Officer and Managing Director, Mr. Michael Utsler. Mr Utsler is an oil and gas executive with more than 40 years of experience in senior international oil and gas sector roles.

"I am excited to be joining the Otto team, which is comprised of a first-class organisation with an outstanding set of assets. Our base business in the Gulf of Mexico is strong and projected to deliver substantial free cash flow over the coming years. This will position Otto to strategically focus on value return to our shareholders."

"Production from Green Canyon 21, our first deepwater project, assists in diversifying our portfolio and is an excellent example of how we can leverage existing deepwater infrastructure for early first production. Further, our production is a good mix of oil and gas volumes, with access to quality markets."

"In the next few months, we will be outlining a strategy and roadmap for leveraging and growing value. I look forward to sharing this journey with all of our shareholders."

32 Delhi St West Perth WA 6005, Australia | PO BOX 1414, West Perth WA 6872 Australia	1
T: [phone] F: [phone] E: [e-mail]	ASX Code: OEL

Otto Energy Limited QUARTERLY REPORT

STRONG OPERATIONAL PERFORMANCE

• Sales revenues totalled US$6.6 million for the September quarter (+50% over prior quarter).
• Average daily production for the September quarter was approximately 2,907 Boe/d (- 6% over prior quarter).
• Reserves upgrade - 1P Reserves increased 31% to 4.8 MMboe; 2P Reserves increased 13% to 8.1 MMboe and 3P Reserves increased 15% to 11.7 MMboe (all net to Otto).
• Longer life - These reserve upgrades extend forecasted 3P operating life to 14 years.

COST EFFICIENCIES AND BALANCE SHEET RESILIENCE

• Strong operating and financial position, despite the global challenges caused by the COVID-19 pandemic, with low cost, high margin production at SM 71 and Lightning.
• Cash balance at the end of the September quarter was US$14.3 million; debt balance reduced by US$2.3 million during the quarter to US$18.4 million.
• Hedge gains - Ongoing benefits from robust hedging program with realised hedge gains of US$0.7 million during the September quarter.
• Cost efficiency delivery - Cost reduction initiatives implemented with September quarter office operating costs reduced by 25% compared to September 2019 quarter.

GREEN CANYON 21 INTO PRODUCTION

• First production - "Bulleit" discovery commenced production on 15 October 2020.
• Progressive ramp-up- Production to be increased until the well reaches steady state rate.
• Aggregate production growth - Ramped-up GC 21 output is forecast to drive significant growth in Otto group production over FY21.
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32 Delhi St West Perth WA 6005, Australia | PO BOX 1414, West Perth WA 6872 Australia	2
T: [phone] F: [phone] E: [e-mail]	ASX Code: OEL

Otto Energy Limited QUARTERLY REPORT

SUMMARY OF OPERATIONS

1. Production began on 15 October 2020
2. Spud well in October 2020
3. After paying 25% of drilling costs, as a promote

Otto Energy Location and Formation - Gulf of Mexico

32 Delhi St West Perth WA 6005, Australia | PO BOX 1414, West Perth WA 6872 Australia	3
T: [phone] F: [phone] E: [e-mail]	ASX Code: OEL

Otto Energy Limited QUARTERLY REPORT

PRODUCTION ACTIVITIES

• Average price does not consider the effect of hedges. If including hedges, the average realized oil price would be US$42.12 and US$35.06 for the September and June quarter, respectively, while the total weighted average price would be US$27.01 and US$21.01 for the September and June quarter, respectively. See Commodity Price Risk Management discussion.

Otto's hydrocarbon sales for the quarter equate to 2,907 Boe/d, a 6% decrease over the prior quarter. This decrease was predominately driven by our Lightning field production which was shut-in for approximately one week in early-August 2020 for planned maintenance. While our SM 71 field was also shut-in twice during the quarter, due to Hurricanes Laura and Sally, overall production was higher than the previous quarter due to curtailed production in April 2020 in response to the sharp decline in oil prices. Production levels at Lightning and SM 71 have since returned to normal as oil prices have recovered and all storms have dissipated.

32 Delhi St West Perth WA 6005, Australia | PO BOX 1414, West Perth WA 6872 Australia	4
T: [phone] F: [phone] E: [e-mail]	ASX Code: OEL