Petro-Victory Divests Espírito Santo Assets in Brazil
Brazilian energy company Energy Platform – EnP Participações SA, through its wholly-owned subsidiary Ecossistemas Energéticos Holdings SA, has entered into a binding Sale and Purchase Agreement (SPA) with TSX-listed Petro-Victory Energy Corp. to acquire its non-operated interests located in the Espírito Santo basin for approximately US$3.3 million.
The assets include a 50% interest in five onshore exploration concessions, including blocks ES-T-354, 373, 441, 477, and 487. In addition, EnP has also purchased the option to acquire a 50% operated interest in the onshore Lagoa Parda, Lagoa Parda Norte, and Lagoa Piabanha oil fields (collectively called the Lagoa Parda Cluster) and infrastructure that includes a natural gas processing unit with a capacity of 1.25 million cubic meters per day (MMcf/d) and a liquid treatment station with a capacity of 25,000 barrels per day (bbls/d).
Under the terms of the SPA, a 10% down payment of US$332,664 has already been paid by EnP for the interests. The remaining US$2.9 million will be payable on closing. Petro-Victory intends to use the net proceeds of the transaction for the payment of its previous acquisition costs, capital expenditure to fund work programs, and for general working capital purposes.
Blocks ES-T-354, 373, 441, 477, and 487 were awarded in the 14th ANP Bidding Round, held in 2018, and are operated by IMETAME Energia Ltda, which holds the remaining 50% stake in the consortium. In April, a discovery of oil in an exploratory well in block ES-T-487 was reported by the current partners, and a discovery assessment plan was submitted in September for consideration. Upon receipt of approval, a test will be carried out to assess the discovery well to determine the block’s commerciality. The 2020 work program also includes drilling of a well in the Sintonia prospect, located in block ES-T-441. Drilling of wells on the other three blocks is expected to commence in 2021.
The Lagoa Parda Cluster is located in the south of the mouth of the Rio Doce, in the municipality of Linhares. The fields were discovered in 1978, with cumulative production of approximately 19 million barrels (MMbbls) of oil to date. The cluster contains four operating wells, and the initial work program includes bringing online the existing 29 wells which were suspended for mechanical reasons. Production from the cluster currently averages around 60 bbls/d net to the 50% acquired interest.
Fort Worth, Texas-based Petro-Victory is engaged in the acquisition, development, and production of crude oil and natural gas resources in Latin America, and currently holds interests in Brazil and Paraguay.
Rio-based EnP is an integrated energy company engaged in exploration, production, refining, and oil and gas infrastructure projects in the state of Espírito Santo.
“This sale allows us to reposition Petro-Victory’s production portfolio during the global pandemic, by providing the capital required to increase our working interests and oil production in our core portfolio of high margin producing assets,” said Richard F. Gonzalez, CEO of Petro-Victory.
The closing of the transaction is contingent upon the receipt of approval of Brazilian oil & gas regulator ANP, which is expected in December 2020.