Material Fact - BS-4 Block: Mandatory Withdraw Notice from Barra Energia

CNPJ/MF: 08.926.302/0001-05

Public Company - B3: DMMO3

Rio de Janeiro, October 20th, 2017 - Dommo Energia S.A. ("Dommo Energia" or "Company") (B3: DMMO3; OTC: DMMOY.PK), in accordance with Article 157, paragraph 4th, of Brazilian Corporate Law No. 6,404/76 and CVM Rule No. 358/02, informs the shareholders and market that on the hereby date expires the deadline granted through the notice executed by Mr. Renato Bertani, hereinafter designated as Executive Officer of Barra Energia do Brasil Petróleo e Gás Ltda. ("Barra"), by which informs Dommo Energia regarding its intention to exercise alleged option to require, with non-offer of payment of price or damages, that the Company completely excludes itself from the Joint Operating Agreement ("JOA") related to the BS-4 Block, as well as from the BS-4 Consortium agreement and from the Concession Agreement of the BS-4 Block ("Notice"). According to the Notice, the basis of such requirement would be Dommo Energia's inability to remedy its default until the 60th (sixtieth) day after default notices were delivered, having Barra, on purpose, not mentioned the fact that the Operator of BS-4 Consortium, Queiroz Galvão Exploração e Produção S.A. ("QGEP" or "Operator"), remains, at least for 1 (one) year, on default regarding the beginning of the BS-4 Block production. Barra has not mentioned in the Notice the breaches held by Dommo Energia, nor indicated the prior defaults notices sent to the Company.

The Notice has alleged its intention to assign the rights of Dommo Energia to Barra and QGEP regarding BS- 4 Block and that the Company should, on a 5-business-day deadline as of its receipt, to execute documents related to the assignment of rights, to be filed before the Brazilian National Agency of Petroleum, Natural Gas and Biofuels ("ANP").

The Notice's allegations are not valid, undermine Brazilian legal system and were out of their real context with regard to the Company and BS-4 Consortium other parties. Further, mentioned allegations have disregarded the investments held by the Company until the present moment of the project.

As previously disclosed by the Company, the continuous delays of the FPSO Petrojarl I arrival, due to the mismanagement of its building by the Operator, successively delayed the production of BS-4 Block under the Early Production System ("EPS"). Such delays have been significantly depriving the Company of inflow of funds, and are the reason for the default alleged by Barra.

Operator's default, whose delays the beginning of the production, stands in violation to the mentioned JOA and to the Development Plan filled before ANP. Besides, it infringes the rules of Brazilian Public Law and Brazilian Civil Code. Such default is object of a procedure filed by the Company before ANP through the administrative procedure 48610.009971/2016-39, filed on August 3rd, 2016, being the Company's rights all

reserved. However, the Company has been attempting to deal with the Consortium focusing on the avoidance of loss of value to all the parties.

Bearing in mind that Dommo Energia has been deprived of information regarding the development of BS-4 project, the Company has been aware of the status of the project only through the QGEP's disclosures by material facts, notices to the market and financial statements.

Dommo Energia has been intensifying its efforts on the search of interested parties to partially or totally acquire its share in BS-4 Block. Barra's decision to notice Dommo Energia negatively impacts the current deal with third parties and, specifically, may damages the Company regarding the deal which was disclosed on the October 17th, 2017 Material Fact. The Company has evidences that Barra was aware of the developments of the deal between the Company and third party, subject of the aforementioned Material Fact. Therefore, Barra has acted in bad faith and against the laws when took the risk, on purpose, to affect the deal of the Company.

The bad faith and contractual disloyalty of Barra to Dommo Energia are clear when looking upon the agreement held in the BS-4 Consortium, which provides: (i) the release of more than US$ 14 million of Dommo Energia's property, that were deposited in an escrow account in order to guarantee the FPSO Petrojarl I's charter, in favor of QGEP and Barra, divided pro rata, in order to discharge certain installment of default cash calls due to Operator's default; (ii) the grant by QGEP and Barra of corporate guarantees in the name of Dommo Energia to guarantee the execution of the new agreed terms and conditions of the FPSO Petrojarl I charter agreement - such remunerated guarantee to the partners with interests of 10% per year; (iii) will be created an additional guarantee to the charter agreement originated from the 80% of the project's revenues, to be applied to discharge the cash calls. Therefore, even though having the best guarantees to preserve the value of its share, Barra acts against the commitments held by itself to hijack its share of the BS-4 Consortium.

Dommo Energia informs that, in order to authorize the extinguishment of the judicial recovery procedure, the judge of the 4th Corporate Court of Rio de Janeiro stated that "from the recognized credits, none of those which have expired since the approval of the plan until the hereby date [08/02/2017], are not on default". Barra has not appealed from this decision, certainly because recognizes that, at least until August 2nd, 2017, there were no default by Dommo Energia before the BS-4 Consortium, since in certain months the cash calls on delays were (and still are) resulted from the prior Operator's default to begin the EPS. Further, previous delays have happened, especially when the Company was under judicial recovery and have been always discharged.

The announced measures noticed by Barra are against the Brazilian legal doctrine on this regard, since such measures, if taken, as Barra makes them to be seem, would cause the unfair enrichment of Barra itself and QGEP in face of the Company. Company has invested in the project over US$ 500 million, to be necessarily reimbursed to the Company as part of damages and losses in case Barra intends to becomes the owner of current Company's share. Even Barra's attorneys-at-law are authors of an article stating that the practice that Barra intends to take is illegal and ineffective in Brazil. Besides the illegal practice, it makes the notice quaint. (Costa, Leonard P.; Xavier, Fernando Fernandes; Belchior, Bruno. Available

on: http://www.mondaq.com/brazil/x/319630/Oil+Gas+Electricity/Enforceability+Of+The+JOA+Forfeiture+ Mechanism+Under+Brazilian+Law. Accessed on October 18th, 2017 at 7.30 p.m.)

The Company, in the last days, has attempted to contact the management of Barra with the aim of withdrawing the Notice, in order to avoid the exposition of the illegality thereto. However, the attempt did not succeed, being known that most of the legal representatives of Barra live overseas and also that Barra is not operating in Brazil.

The elusive will and the opportunistic manipulation of Barra to illegally enrich in face of Dommo Energia, when attempting to ban the Company as a player in the oil and gas Brazilian industry, also infringes the Brazilian antitrust law. Dommo Energia is a Brazilian company that, besides all the financial challenges in the last years - on the contrary of Barra, produces oil, pays royalties to ANP, creates high qualified technical vacancies and has a shareholders' base composed by individuals who believe in its technical and overcoming capacities.

Rio de Janeiro, October 20th, 2017 Paulo Narcélio Simões Amaral

Chief Executive Officer and Investor Relations Officer

This document contains Company-related statements and information that reflect the current vision and/or expectations the Company and its management have regarding its business plan. These include, among others, all forward-looking statements that involve forecasts and projections, indicate or imply results, performance or future achievements, and may contain words such as "believe," "foresee," "expect," "consider," "is likely to result in" or other words or expressions of similar meaning. Such statements are subject to a series of expressive risks, uncertainty and premises. Please be advised that several important factors can cause the actual results to diverge materially from the plans, objectives, expectations, estimations, and intentions expressed in this document. In no event shall the Company or the members of its board, directors, assigns or employees be liable to any third party (including investors) for investment decisions or acts or business carried out based on the information and statements that appear in this presentation, or for indirect damage, lost profit or related issues. The Company does not intend to provide to potential shareholders with a revision of the statements or an analysis of the differences between the statements and the actual results. Each investor must conduct and rely on its own evaluation, including of the associated risks, in making an investment decision.

Paulo Narcélio

Victor Rosenzvaig

Cinthya Coutinho ri@dommoenergia.com.br

+55 21 3916-4545

Cibele Flores cibele.flores@dommoenergia.com.br

+55 21 3916-4505