RIO DE JANEIRO, July 1, 2015 /CNW/ - Petro Rio S.A. ("PetroRio" or the "Company") (BM&FBOVESPA: PRIO3, TSX-V: HRP) hereby announces the signing of a purchase and sale agreement to acquire 20% of the rights and obligations of the concession contracts for the Bijupirá and Salema ("BJSA") Fields with Petróleo Brasileiro S.A. ("Petrobras"). In January 2015, PetroRio announced the execution of a purchase and sale agreement to acquire 80% of the rights and obligations of the concession contracts for these fields with Shell Brasil Petróleo Ltda ("Shell"). Therefore, after the approval of the transaction by regulatory agencies and satisfaction or waiver of all closing conditions, PetroRio will hold 100% stake in BJSA Fields and will be their operator.
The total transaction price is US$ 25 million, subject to adjustments, payable in cash. Of this amount, 20% will be paid with the Company´s own funds and 80% will be funded through structured finance facilities. This transaction includes the 20% stake held by Petrobras in the BJSA Fields and equipment related to their operation.
The BJSA fields are located in the Campos Basin, in water depths of 480 and 850 meters. The concessions cover an area of 40,000,000 m2, with a daily production of 22,000 barrels of oil and 325,000 m3 of associated gas, which are equivalent to 24,000 boe/day. The oil extracted from the fields is light oil (from 28° to 31° API). The BJSA Fields are located just 80km northeast of the Polvo Field, PetroRio's production asset, which will allow important synergy gains between the Company's operations.
The BJSA Fields acquisition is an important milestone for PetroRio, since it corroborates the Company´s growth strategy through the acquisition of fields already in production. It is estimated that the production from the BJSA Fields shall increase substantially PetroRio´s current levels of production. The conclusion of this agreement confirms PetroRio among the most important emerging companies of the local oil industry, consolidating its position as one of the largest independent producers in Brazil.
PetroRio is focusing in the development of a solid growth platform aiming at generating value for its shareholders. It has been achieving excellent results in the operation of Polvo Field, which can be proved by the efficient understanding of the reservoir, improved production curve (more stable and with fewer interruptions) and excellent levels of operational efficiency. The quest for increased operational efficiency coupled with the reduction in production costs will be PetroRio's priority in the BJSA Fields operation.
The conclusion of the purchase and sale transaction between PetroRio and Petrobras is subject to certain conditions precedent, including approval of the assignment of rights by Brazil's Council for Economic Defense (CADE) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP).
The Company's GDSs will continue to be traded under the ticker symbol HRP in the TSX-V until the change to the new ticker symbol, PRJ, is concluded.
Sedar Profile # 00031536
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
PetroRio is one of the largest independent companies in the oil and gas production in Brazil. It is the operator of the Polvo Field, located in the Campos Basin, where it holds a 60% participating interest. The Polvo Field has Brazil's seventh largest daily production of barrels of oil equivalent (boe). PetroRio is the owner of "Polvo A" fixed platform and a 3.000HP drilling rig, currently in operation in this Field, being the platform connected to the "Polvo FPSO" vessel, with capacity to segregate hydrocarbons and water treatment, oil storage and offloading. Polvo Field license covers an area of approximately 134km2, with several prospects with potential for further explorations. In January 2015, PetroRio announced the proposed acquisition of 80% of the Bijupira and Salema Fields located at the same basin, Campos Basin, at a distance of approximately 80 km from the Polvo Field. In June 2015, PetroRio announced the proposed acquisition of the remaining 20%. The Bijupira and Salema Fields will allow PetroRio to triple its current production volume. The BJSA acquisition is subject to the approval of Brazil's National Agency of Petroleum, Natural Gas and Biofuels (ANP).
The Company´s corporate culture seeks to increase production through the acquisition of new production assets, the re-exploration of assets, increased operational efficiency and reduction of production costs and corporate expenses. PetroRio's main objective is to create value for its shareholders with growing financial discipline and preserving its liquidity, with full respect for safety and the environment. For further information, please visit the Company's website: www.petroriosa.com.br.
This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our drilling and seismic plans, operating costs, acquisitions of equipment, expectations of finding oil, the quality of oil we expect to produce and our other plans and objectives. Readers can identify many of these statements by looking for words such as "expects", "believe", "hope" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. By their nature, forward-looking statements require us to make assumptions and, accordingly, forward-looking statements are subject to inherent risks and uncertainties. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements.
The following risk factors could affect our operations, as well as our ability to complete the proposed acquisition: the contingent resource and prospective resource evaluation reports involving a significant degree of uncertainty and being based on projections that may not prove to be accurate; inherent risks to the exploration and production of oil and natural gas; limited operating history as an oil and natural gas exploration and production company; drilling and other operational hazards; breakdown or failure of equipment or processes; contractor or operator errors; non-performance by third party contractors; labor disputes, disruptions or declines in productivity; increases in materials or labor costs; inability to attract sufficient labor; requirements for significant capital investment and maintenance expenses which HRT may not be able to finance; cost overruns and delays; exposure to fluctuations in currency and commodity prices; political and economic conditions in Namibia and Brazil; complex laws that can affect the cost, manner or feasibility of doing business; environmental, safety and health regulation which may become stricter in the future and lead to an increase in liabilities and capital expenditures, including indemnity and penalties for environmental damage; early termination, non-renewal and other similar provisions in concession contracts; and competition. We caution that this list of factors is not exhaustive and that, when relying on forward-looking statements to make decisions, investors and others should also carefully consider other uncertainties and potential events. The forward-looking statements herein are made based on the assumption that our plans and operations will not be affected by such risks, but that, if our plans and operations are affected by such risks, the forward-looking statements may become inaccurate.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, we do not undertake to update such forward-looking statements.
Barrels of Oil Equivalent: Disclosure provided herein in respect of barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
These press releases may also interest you