Petro-Victory Energy Corp. ("Petro-Victory" or the "Company"), pursuant to the press release dated December 17th, 2024, is pleased to announce the signing of a sale purchase agreement ("SPA"), in a 50/50 partnership with Azevedo & Travassos Petroleo ("ATP"), for the acquisition of 13 oil fields denominated as Polo Porto Carão and Polo Barrinha from 3R RNCE S.A. and 3R Potiguar S.A., subsidiaries of Brava Energia S.A. ("Brava", BVMF:BRAV3)
Key Highlights of the Acquisition
Oil Fields: 13 oil fields with fully operational production facilities comprising 38,301 acres
Location: Onshore Brazil, Potiguar Basin, strategically located adjacent to Petro-Victory's existing assets (See Figure 1)
Production: Current production of 250 barrels of oil per day with a high-impact work program to significantly increase oil production.
Reported Statistics: National Agency of Petroleum has reported volume of oil in place 125 million barrels, recovery factor 13.3%
Total Acquisition Value: USD$15 million (net USD $7.5 million for Petro-Victory)
Payment Structure: The payment will be made in four tranches plus a gross overriding royalty, of which Petro-Victory's contribution will be pro-rated at its 50% working interest.
USD$600 thousand paid at signing
USD$2.9 million to be paid at closing
USD$3.5 million to be paid one year after closing
USD$4.5 million to be paid two years after closing
USD$3.5 million to be paid with a 7% gross overriding royalty
Participation: Petro-Victory 50% working interest and ATP 50% working interest.
Seller: Brava Energia S.A. ("Brava", BVMF:BRAV3)
Richard F. Gonzalez, CEO, commented:
"This acquisition marks a transformative milestone for Petro-Victory, significantly enhancing our oil production capacity and increasing our proven reserves. We expect the updated reserve report will increase our proven reserves by 50%. It also maximizes the substantial investments made by our Subsurface, Engineering, and Operations teams over the past five years in the Potiguar Basin. Through disciplined strategy and technical expertise, we have built a strong position and deep understanding of this oil prolific basin. We are pleased to further strengthen our partnership with ATP through this acquisition, reinforcing our commitment to unlocking the full potential of the Potiguar Basin."
Strategic Rationale
The acquisition aligns with Petro-Victory's strategy to generate accretive shareholder value through disciplined investments in high-impact, low-risk assets in Latin America.
The 13 oil fields acquired in the Potiguar Basin are adjacent to Petro-Victory´s existing assets (see Figure 1). The Potiguar Basin is the most oil prolific basin onshore Brazil, and the newly acquired fields increase Petro-Victory´s production and reserves.
Petro-Victory currently has 3 oil producing fields and 34 exploration blocks in the Potiguar basin. Over the past 5 years, Petro-Victory has reprocessed and merged 12 volumes of 3D seismic data covering more than 1,500 km2 in the Potiguar basin including volumes which cover the acquired fields. Petro-Victory has also performed an extensive hydrocarbon basin analysis, as well as an in-depth Geological, Geophysical and Petrophysical interpretation.
Brava originally purchased the 13 oil fields from Petrobras between the years 2020 and 2022. The fields were discovered in 1976 by Petrobras and have produced 16.5 million barrels of oil to date with a 13.3% recovery factor.
Brava has a certified reserve report from DeGolyer and MacNaughton which we are commissioning to complete a National Instrument 51-101 compliant reserve report. This information will be published when available.
Financial and Operational Impact for Petro-Victory
Increased Production: The acquisition immediately adds 125 barrels of oil per day, net to Petro-Victory's production, with a high-impact workover program in place to significantly enhance production. The transaction includes the transfer of cash generation related to the production and sale of oil as of the signing date which will be credited to the Company at the time of closing.
Acquired infrastructure and equipment:
13 production stations
Tanks: A total of 40 tanks (30, 40, and 60m³)
Pumps: 11 transfer pumps and 6 injection pumps
Infrastructure: Flow lines, power lines, SPDA (Lightning Protection System), and fire-protection system
Automation: Pintassilgo, Serraria, Porto Carão, and Lagoa Aroeira are fully automated and have installed infrastructure for injection capability
Artificial Lift Wells: Equipped with Pump Jacks, Progressive Cavity Pumps, and Electric Submersible Pumps
Cost Synergies: The proximity of the new oil fields to our existing assets enables us to streamline logistics and share services such as maintenance, transportation, administrative support, and resource allocation for personnel, equipment, and technologies. This shared infrastructure significantly reduces overall operational costs. Additionally, the economies of scale lead to a lower per-barrel cost and improved profitability. Furthermore, our larger combined production capacity enhances our bargaining power with suppliers and service providers, resulting in more favorable terms and reduced costs.
Work Program
The work program focuses on maximizing production, improving recovery rates, and optimizing operating costs through the following key initiatives:
Well Reopening & Production Enhancement: Reactivate currently shut-in wells to increase gross production and maximize oil recovery.
Advanced Cased-Hole Technologies: Utilize state-of-the-art wellbore diagnostics to identify and target bypassed pay zones, enhancing production efficiency.
Secondary Recovery Implementation: Increase reservoir pressure and improve recovery factors through secondary recovery methods, such as water injection.
Hydraulic Stimulation: Apply proven hydraulic stimulation techniques to improve production.
Closing Timeline
The transaction is expected to close in the second half of 2025 subject to customary closing conditions and regulatory approvals with the National Agency of Petroleum in Brazil.