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CALGARY, AB, Aug. 2, 2021 /CNW/ - Petro-Victory Energy Corp.
(TSXV: VRY) ("Petro-Victory" or "Company") is delighted to announce
a significant expansion of its portfolio and certified reserves
through the acquisition of the remaining 50% working interest in
the São João oil field in the Barreirinhas Basin.
Highlights
- Increases the Company's pre-tax 2P Reserves PV10 value by
US$23,296,000
- Cash consideration US$865,000
paid over 14 months
- Company total 2P Reserves now 3,561,000 BO with a PV10
valuation of US$113,682,000
(CAD$15.42 /share)
- Builds upon the initial 3-well work program at São João which
delivered 170% ROI on its initial investment over fourteen
months
- An updated development plan has been submitted to ANP that is
expected to achieve >500 BOPD by re-entering and perforating
multiple pay zones over 9 existing wells
Acquisition Terms
Petro-Victory has executed binding purchase agreements and made
an initial payment to increase its working and operating interest
in the São João field, in the Barreirinhas Basin onshore
Brazil, to 100% for cash
consideration of US$865,000, to be
paid over 14 months. In addition to cash consideration,
Petro-Victory will transfer its 50% working interest in the
non-strategic Carapitanga oil field (247-acres, 1 well, 2.25 BOPD
production) to the current operator EPG. The transaction is
subject to approval by Agência Nacional do Petróleo (ANP) and final
sale agreements will be filed with ANP within thirty days.
Reserves Impact
On May 3rd, 2021, Petro-Victory
announced independently certified 2P Reserves of 2.8 million BO and
a 2P PV10 valuation of US$90,386,000
which covered 3 of the Petro-Victory fields in Brazil (Andorinha, Carapitanga, and São
João).
This acquisition increases Petro-Victory's ownership to one
hundred percent (100%) Working Interest in the São João oil field
and full operational control to efficiently execute the Company's
field development plan. Further, the acquisition results in a
26% net increase in certified 2P reserves of 734,000 BO and a 2P
PV10 valuation increase of US$23,296,000. Total certified reserves after
this transaction are as follows:
- Net 1P Reserves of 1,579,000 BO with a PV10 valuation of
US$49,614,000 or CAD$6.73 /share (increase of 43%)
- Net 2P Reserves of 3,561,000 BO with a PV10 valuation of
US$113,682,000 or CAD$15.42 /share (increase of 26%)
- Net 3P Reserves of 4,901,000 BO with a PV10 valuation of
US$155,841,000 or CAD$21.14 /share (increase of 22%)
São João Acquisition and Development – The
Petro-Victory Way
With the São João acquisition, Petro-Victory continues to
demonstrate disciplined execution of its strategy to acquire and
develop under-valued assets to create significant shareholder
value. On September 5, 2018 the
Company purchased a 50% non-operating interest in the São João
oil field for US$135,000 and managed
a work program across three wells in concert with the former field
operating partner Oeste de Canoas. From May 2020 through July
2021, Petro-Victory's 50% non-operating interest in São
João generated 7,742 barrels of oil, US$390,000 revenue, and US$232,000 operating profit at an average Brent
BO price of US$50 and average
netbacks of US$30 over the
term. Petro-Victory captured a 170% ROI on its initial
investment over fourteen months.
In 2020, the Company assessed, analyzed, and updated the São
João geological and geophysical data which contributed certified
2P Reserves of 787,000 BO with a PV10 value of US$25 million. Now, as outlined above, the
Company has acquired the remaining 50% interest, increasing its
ownership to 100% in São João for US$865,000 plus the divestment of the
non-operating Carapitanga field.
The Company's 100% working interest ownership of São João
contributes 2P Reserves of 1,574,000 BO with a PV10 value of
$50,068,000 from an investment of
approximately US$1,000,000 which
translates into a pre-tax 2P Reserve-Based Book Value return of
4,900%. The Company projects that the 2021-2022 workovers of
the existing 9 wells will generate cash flow to achieve 100%
payback of acquisition costs within 12 months as the Company
increases BO netbacks generated by greater operating
efficiencies.
Current São João Oil Field Operations
Throughout 2021, the São João Oil Field has averaged production
of 37 BOPD from 3 wells and has been producing as expected
throughout the year. The transaction will deliver a net increase in
current production of 16.5 BOPD to the Petro-Victory production
portfolio.
As previously announced, on November
19th, 2020, Petro-Victory conducted production tests at the
SJ-11 well. The first production test was completed over 47 days
during late October to early December
2020, where the well produced 1,308 BO without any
artificial lift. SJ-11 was brought online again in February 2021 and produced 372 BO over 21 days,
again without any artificial lift. The decision was made to suspend
the well and start the workover process to install a progressive
cavity pump (PCP) system to provide artificial lift for the SJ-11
well. This work is now complete, and the well is currently
producing, for the long term, at a rate of 10 BOPD.
Production at the SJ-06 well (where a PCP system was
successfully installed in October
2020) has been consistent and producing as expected. From
January-May 2021 it averaged a rate
of 26 BOPD.
São João Oil Field Development Plan
An updated development plan for the São João field has been
submitted to ANP that will achieve >500 BOPD by re-entering and
perforating multiple pay zones over 9 existing wells.
Petro-Victory will update the market on the progress of the
upcoming workover at SJ-01 as well as its other work program items
in the near future.
Richard F. Gonzalez, Chief
Executive Officer of Petro-Victory commented:
"With the Sao Joao acquisition, the Petro-Victory Energy team
continues to execute its disciplined business plan by acquiring
under-valued producing assets, adding significant, materially
measurable shareholder value. With this acquisition,
Petro-Victory now has 100% Working Interest and 100% operating
control in all 19 of the Petro-Victory oil fields. This
privileged position enables the Company to successfully execute our
development and work programs with maximum cost efficiency and
production. Acquiring the São João Oil Field contributes
significantly to Petro-Victory's near-term production, revenue
growth and shareholder value. We appreciate, value and honor
the continued trust our shareholders place in us."
About Petro-Victory Energy Corp.
Petro-Victory Energy Corp. is engaged in the acquisition,
development, and production of crude oil and natural gas resources
in Brazil. The company holds
operating and working interests in nineteen (19) licenses totaling
129,524 acres in two (2) different producing basins in Brazil. Petro-Victory generates accretive
shareholder value through disciplined investments in high impact,
low risk assets. The Company's Common Shares trade on the TSX
Venture Exchange ("TSXV") under the ticker symbol VRY.V.
Cautionary Note
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this release.
Advisory Regarding Forward-Looking Statements
In the interest of providing Petro-Victory's shareholders and
potential investors with information regarding Petro-Victory's
future plans and operations, certain statements in this press
release are "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable
Canadian securities legislation (collectively, "forward-looking
statements"). In some cases, forward-looking statements can be
identified by terminology such as "anticipate", "believe",
"continue", "could", "estimate", "expect", "forecast", "intend",
"may", "objective", "ongoing", "outlook", "potential", "project",
"plan", "should", "target", "would", "will" or similar words
suggesting future outcomes, events or performance. The
forward-looking statements contained in this press release speak
only as of the date thereof and are expressly qualified by this
cautionary statement.
Specifically, this press release contains forward-looking
statements relating to but not limited to the Company offerings,
our business strategies, plans and objectives, and drilling,
testing and exploration expectations. These forward-looking
statements are based on certain key assumptions regarding, among
other things: our ability to add production and reserves through
our exploration activities; the receipt, in a timely manner, of
regulatory and other required approvals for our operating
activities; the availability and cost of labor and other industry
services; the continuance of existing and, in certain
circumstances, proposed tax and royalty regimes; and current
industry conditions, laws and regulations continuing in effect (or,
where changes are proposed, such changes being adopted as
anticipated). Readers are cautioned that such assumptions, although
considered reasonable by Petro-Victory at the time of preparation,
may prove to be incorrect.
Actual results achieved will vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors. These and additional risk factors
are discussed in our Final Prospectus dated July 11, 2014, as filed with Canadian securities
regulatory authorities at www.sedar.com.
The above summary of assumptions and risks related to
forward-looking statements in this press release has been provided
in order to provide shareholders and potential investors with a
more complete perspective on Petro-Victory's current and future
operations and such information may not be appropriate for other
purposes. There is no representation by Petro-Victory that actual
results achieved will be the same in whole or in part as those
referenced in the forward-looking statements and Petro-Victory does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities law.
SOURCE Petro-Victory Energy Corp.