OSX-3 FPSO New Charter Agreement

Monday, November 26, 2018

Dommo Energia press release

Rio de Janeiro, November 26th, 2018 - Dommo Energia S.A. ("Dommo Energia" or "Company") (B3: DMMO3; OTC: DMMOY), pursuant to article 157, paragraph 4th of Brazilian Corporate Law no 6,406/76 and CVM Instruction no 358/02, announces to its shareholders and the market in general that on November 26th 2018 the Company, upon approval from its Board of Directors, executed a new amendment to the charter agreement ("New Charter") with OSX 3 Leasing B.V. ("OSX 3") to extend the existing charter for a period of up to 20 years. OSX 3 is the owner of the FPSO OSX-3 ("FPSO") that serves as the production facility on the Tubarão Martelo Field ("TBMT"), which currently produces around 6,000 bbls/day. Furthermore, along with the New Charter the Company and OSX 3 have cancelled the option to acquire TBMT that was held by OSX 3 following the judicial recovery.

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Under the terms of the previous charter agreement ("Old Charter"), which had been negotiated as part of Company's restructuring of its indebtedness while still under judicial recovery (as disclosed in the Material Fact released on July 24th, 2017), OSX 3 had the option to notify the company at any time of its intent to remove the vessel from TBMT. Furthermore, as an additional protection to OSX 3, the Company granted a call option which enabled OSX 3 to acquire TBMT for USD 1,00 under certain conditions.

The terms of the Old Charter made it difficult for Dommo Energia to carry on with its planned and approved investments in TBMT given the uncertainty regarding the permanence of the FPSO as the production facility on the field. The New Charter was negotiated by the parties in order to give Dommo Energia the necessary visibility and long-term commitment to keep investing in TBMT to further increase its production capacity.

As a result of the New Charter, the Company will be able to resume its planned and approved investments in TBMT ("Revitalization"). The Revitalization consists of the upper completion of the fifth well, 4HP, which has already been drilled and needs to be connected to the FPSO, as well as workover activities in the four producing wells, known as 2HP, 6HP, 8H and 44HP. The goal of the Revitalization is to increase the production of TBMT to an estimated 10,000 bbls/day by late 2019. The company estimates the cost of the Revitalization to be USD 80.0MM ("Revitalization Expenditures"), which should be disbursed over the next 12-18 months and will be funded from existing cash balances and future cash generation.