Wedoany.com Report-Mar 13, Petro-Victory Energy Corp and BlueOak Investments said they have signed a sale and purchase agreement to acquire onshore Brazilian production firm Capixaba Energia LTDA.
The acquisition includes four oil fields in the Espírito Santo Basin, including the Lagoa Parda Cluster, plus two exploration blocks adjacent to major producers.
The transaction price is $17.5 million, including earn-outs, funded by BlueOak and future cash flows. The transaction is expected to close in the second quarter, Petro-Victory said in a news release.
The acquisition includes four oil fields in the Espírito Santo Basin, including the Lagoa Parda Cluster, plus two exploration blocks adjacent to major producers, according to the release.
BlueOak will fund 100 percent of the acquisition and will be the controller, while Petro-Victory will be the operator. Petro-Victory will begin with a nominal equity position at closing and will become a relevant equity holder upon reaching certain thresholds, the company said.
The assets have a current output of approximately 400 barrels of oil equivalent per day (boepd), consisting of 88 percent oil, with expectations to grow substantially within the next 12 to 18 months following a detailed and planned workover and drilling campaign targeting proven reserves, the company said.
Petro-Victory said it formed a joint venture with BlueOak last month to establish the terms and conditions governing the acquisition of Capixaba Energia, which generates strong cash flow and owns critical infrastructure assets, “positioning Petro-Victory and BlueOak for accelerated growth in Brazil’s onshore oil and gas sector”.
Petro-Victory noted that it has previously partnered in the Lagoa Parda Cluster, “gaining valuable technical expertise and industry relationships”. The work program will focus on maximizing production, improving recovery rates, and optimizing operating costs, it said.
Capixaba Energia has a certified reserve report from December 2019. Petro-Victory said a new reserve report is being prepared by an independent reserves evaluator and will be published when available.
The report is expected to increase certified reserves, the company said. The field has produced 38 million barrels to date, with substantial reserves remaining, according to the release.
Petro-Victory CEO Richard Gonzalez said, “I am very pleased to announce our first acquisition in partnership with BlueOak. The acquisition of Capixaba Energia marks a strategic milestone in our expansion, as we establish a hub of production and expertise in the Espírito Santo region. This acquisition strengthens our position in Brazil, firmly establishing Espírito Santo basin as a key area for production growth and complementing our presence in the Barreirinhas and Potiguar basins, where we are already well-positioned. We look forward to unlocking the full potential of these assets and driving long-term value creation with BlueOak”.
BlueOak CEO Meton Morais said, “Our investment in Capixaba Energia, in partnership with Petro-Victory, marks a pivotal step in our commitment to unlocking value in the Brazilian energy sector. Brazil is an increasingly attractive market for oil and gas investment and currently has more sellers than buyers of onshore assets. The Espírito Santo onshore basin offers a unique consolidation opportunity, given that we do not see a major structured and capitalized player investing in the development of its assets. We look forward to a successful partnership with Petro-Victory as we drive growth and create sustainable value through operational excellence and disciplined capital allocation”.
