Results for the First Quarter of 2020

Dommo Energia S.A. Management, in compliance with legal and statutory provisions, presents its results for the first quarter of 2020 (“1Q20”), as well as relevant subsequent events to the market. The data in this report refer to the 1Q20 period compared to 1Q19, except when otherwise specified.

The volume of 431.1 thousand barrels of oil produced in 1Q20 decreased by 19.1% and 17.9% when compared to 1Q19 (532.6 thousand barrels) and 4Q19 (524.9 thousand barrels), respectively. Such decline is due to the temporary programmed interruption of 15 days in production, during the month of February, as informed to the National Agency of Petroleum, Gas Natal and Biofuels - ANP.

The volume commercialized of 661.1 thousand barrels, in turn, was 29.9% and 81.1% higher than in 1Q19 (509.0 thousand barrels) and 4Q19 (365.1 thousand barrels), respectively, due to two co-loading operations, one in early January and the other in late March, on larger sized vessels, when compared to 4Q19, a period in which two offloading operations were also carried out, but on smaller sized vessels.

The COVID-19 pandemic has caused significant changes in energy fuel supply and demand patterns, with oil prices, in particular, experiencing significant volatility and decline since the beginning of 2020. The Company's results for the quarter reflect these changes, evidenced by the lower revenue and profitability, as well as negative Adjusted EBITDA in 1Q20.

1Q20 net revenue was strongly impacted by the sharp contraction in Brent crude oil prices, which peaked at US$ 68.91 per barrel in January and ended March at US $22.74 per barrel. In relation to 1Q19, the higher volume commercialized partially offset the average Brent quotation 20.4% lower in 1Q20, resulting in a 7.3% decrease in net revenue. When compared to 4Q19, despite the 81.1% higher volume commercialized, net revenue increased by 29.3%, due to Brent's average price 18.6% lower in the period, and mainly due to the strong decline in Brent in March, the month in which the second offloading of the quarter occurred.

Message from Management
Since 2018 the Company has been facing challenges in the return to normalcy as well as in the management of fiscal and regulatory liabilities from previous periods. The challenges and liabilities should be diligently considered by potential investors and current shareholders, and special attention is called to Financial Statements’ Notes 1.3 (Going concern), 16 (Provisions) and 18 (Contingencies), where investors can find more details. It should also be noted that since December 2018 the balance sheet of the Company is characterized by negative shareholders equity, and therefore the value of the Company’s liabilities is currently higher than the value of its assets. As always, Management will continue to exert itself in the defense of the interests of Dommo Energia and its shareholders.

On November 26th, 2018, the Company signed an amendment to the FPSO OSX-3 charter agreement (“New Charter”2 ) with a 20-year term and new conditions, including a daily charter rate of US$ 129,315.00. Thus, the analysis of the main financial performance indicators as of 2019 in relation to the previous periods must take into account the different conditions related to the chartering of the platform.

On February 3, 2020, the Company informed the market in general, through a Material Fact3, about the signing of a Farm-out Agreement and a Joint Operation Agreement for the Tubarao Martelo Field. This transaction is still subject to approval by other regulatory bodies and government authorities.

Regarding the Tubarao Martelo Field Revitalization plan, in February the offshore campaign was started, with the interconnection campaign of well 7-TBMT-4HP to FPSO OSX-3.

E&P ASSETS
The Company's E&P assets portfolio in the oil and gas sector is currently comprised of offshore blocks located in the Campos Basin and Santos Basin.

TUBARAO AZUL FIELD
Oil production started in January 2012 at TBAZ, which remained in production until mid-2015, with approximately 6.5 million barrels of oil extracted. Considering that no economically feasible alternative was found to continue the activities in TBAZ, located at Campos Basin, it was requested the concession’s return to ANP, as per the Material Fact disclosed on September 20th, 2016. Dommo Energia, as operator, began in 2017 the processes of decommissioning of the field and abandonment of the wells, having completed this last activity in the 1Q18. TBAZ’s decommissioning process is currently ongoing.

TUBARAO MARTELO FIELD
TBMT encompasses the concession areas of BM-C-39 and BM-C-40 exploration blocks and is located in the Campos Basin, at a water depth of 110 meters, in the north coast of Rio de Janeiro State. The Company is the asset operator, having acquired 100% of the exploration and production rights in 2007, in the 9th Bidding Round of ANP. The production began on December 2nd, 2013 and has surpassed 16.0 million barrels of oil produced. TBMT’s production is currently performed with three producing wells.

The new terms and conditions established in the New Charter, signed on November 26th, 2018, gave the Company the necessary visibility and long-term commitment to keep investing in TBMT to further increase its production capacity. As a result, the planned and approved investments in TBMT are being resumed, with the beginning of the revitalization plan (“Revitalization”), with the objective of increasing TBMT’s production to an estimated 10.0 kbbls per day, split in two campaigns. The first phase, in progress, consists in the completion of 7-TBMT-4HP, which is drilled but not connected to the FPSO OSX-3, the workover of 7-TBMT-2HP and the acquisition of a backup ESP. The second phase addresses the remaining three producing wells and will consist of workover activities as they become necessary.

On February 3, 2020, the Company released a Material Fact4 informing the market in general that, upon approval by its Board of Directors, it entered into a Farm-out Agreement (“FOA”), a Joint Operating Agreement (“JOA”) and other ancillary documents with Petrorio O&G Exploracao e Producao de Petróleo Ltda. about 80% of the Tubarao Martelo Field. The Administrative Council for Economic Defense - CADE, approved the transaction in February, however, the conclusion of the transaction is still subject to the approval of other regulatory bodies and government authorities.

ATLANTA E OLIVA FIELD – BS-4 BLOCK

The BS-4 block (“BS-4”), comprised by Atlanta and Oliva fields, is located at Santos Basin post-salt area, approximately 185 km from the coast, in a water depth of about 1,550 meters.

As disclosed by Dommo Energia through the Material Fact on October 23rd, 20175, there is an arbitration procedure (“Arbitration”) managed by London Court of International Arbitration – LCIA, concerning the Company and the other consortium partners ("Consortium"). On September 25th, 2018, the Company received the arbitration judgment issued by the Arbitration Court (“Decision”) in respect to the first phase of the Arbitration, which stated, among other things, that the notification issued by one of consortium partners on October 10th, 2017 (“Notification”), was effective at the time it was issued. The Notification intended to exercise, without offer of payment, the option to demand the Company’s exclusion from the Joint Operating Agreement – JOA, the Consortium agreement and the Concession agreement, all related to BS-4.

The first phase of the Arbitration did not include the analysis of evidence, having the Decision foreseen that, in any additional phase(s) of the Arbitration, through the fact-finding exercise, Dommo Energia may still seek to annul the exclusion and the transfer of its stake in BS-4 and argue for an indemnity for losses and damages against the consortium partners.

The aforementioned Decision is not definitive and there is the possibility that the Notification effectiveness, which determined Dommo exclusion from the Consortium, to be annulled in a subsequent step of the Arbitration, with the production of evidence supporting such annulment. Nevertheless, the Decision issued and eventual future decisions of subsequent steps will only be considered legally valid, effective and enforceable under Brazilian territory after the homologation procedures of foreign judgement, handled by the Brazilian Superior Court of Justice, Superior Tribunal de Justiça – STJ, under the Federal Constitution and the prevailing legislation. After the eventual homologation by STJ, the effective transfer of the stake in the asset, partially or entirely, by Dommo Energia could occur only after ANP’s approval.

On April 8th, 2019, the Company disclosed a Material Fact6, announcing to its shareholders and the market in general that, on April 4th, 2019, filed before the Cour d'appel (Court of Appeals), Paris, on the basis of Article 1520 of the French Civil Procedure Code, a lawsuit pleading for the arbitration award, rendered on September 24th, 2018 in the arbitration procedure between the companies consorted for the operation of Block BS-4, to be considered null and void.

On June 24th, 2019, the Company disclosed a Material Fact7 about the notification of a decision by ANP’s Board of Directors, made on June 19th, 2019, authorizing the assignment of the Company’s stake on Block BS-4 to the consortium partners, based on the use of the mandate clause included in the JOA. The Company understands that the decision is based on incorrect and misleading assumptions and information presented by the partners.

In order to annul said ANP decision, Dommo Energia filed, on August 26th, 2019, an arbitral proceeding (“Arbitral Procedure”) against ANP and the other consortium partners, as disclosed in the Notice to the Market8 on August 27th, 2019. The Arbitral Procedure, as established in ANP’s Concession Agreement, is administered in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce ("ICC Regulation"), under the terms of its regulation. Brazilian law is applicable to the Arbitral Procedure, which will have its seat in the city and state of Rio de Janeiro.

The Company has adopted and will continue to take all legal measures applicable to the defense of its interests and those of its shareholders.