Petro-Victory Energy Corp. ("Petro-Victory") (TSXV: VRY) is pleased to announce that it has entered into a definitive option agreement and assignment of interest with Azevedo Travassos Petroleo S/A ("ATP")
Azevedo & Travassos Petroleo S/A (ATP) is a Brazilian company engaged in the exploration and production of crude oil and natural gas. ATP started its operations in the Potiguar Basin in 1984, becoming the first Brazilian private company to explore oil and gas in the region. Currently, ATP enhances its portfolio of oil and natural gas production assets through M&A operations, acquisition of third-party fields, and operational partnerships. Its parent company, Azevedo & Travassos S/A, is listed on the Brazilian Stock Exchange, trading its shares under the tickers AZEV3 and AZEV4.
The agreement signed between Petro-Victory and ATP includes a work program to be carried out on two 100% owned and operated Petro-Victory concessions located in the Potiguar Basin, in the state of Rio Grande do Norte, the Andorinha Field and POT-T-281 block.
ATP will pay 100% (one hundred percent) of the work program, which initially consists of drilling and completing the AND-4 and AND-5 wells in the Andorinha field and a workover in the CR-2 well located in the POT-T-281 block.
ATP will receive 75% (seventy-five percent), Petro-Victory will receive 25% (twenty-five percent) of the net income generated by the production of these wells, until the CAPEX for the work program provided by ATP is fully recovered. Thereafter, the net income generated by the production of these wells will be split 50% (fifty percent) to each company.
Petro-Victory remains operator of the Andorinha field and the POT-T-281 block. ATP may, at its sole discretion, offer its engineering services, construction and assembly of oil production facilities and well drilling, completion and maintenance services.
The agreement also establishes the commitment to hire a third-party independent engineering firm to certify the reserves of the Andorinha field and the POT-T-281 block after the completion of the work program. ATP will have an option to buy 50% of both assets at a pre-determined price of USD10.00 (ten US dollars) per barrel of proven reserves (1P) and USD4.00 (four US dollars) per barrel of probable reserves. This option must be exercised within 9 (nine) months from today's date, provided that this period is sufficient to finalize the new reserve report after the completion of the work program.
The partnership between Petro-Victory and ATP creates potential for growth and further developments with the aim of extending market reach and capturing new synergies between the two companies and their operating assets.
