RIO DE JANEIRO–(BUSINESS WIRE)–Petro Rio S.A. (“Company” or “PetroRio”) (B3: PRIO3), in addition to the Material Facts of March 25, 2019 and October 2, 2019, informs its shareholders of the execution of a Share Purchase Agreement with Petrobras for the acquisition of the entirety of the oil and gas exploration, development and production rights and obligations equivalent to its 30% interest of the Frade consortium, which is located in the Campos Basin, in the northern shore of Rio de Janeiro, and of Frade BV, which owns the offshore assets operating in the Field.
The cost of the acquisition is US$ 100 million, to be paid in two installments: (i) a down payment of US$ 7.5 million at signing; and (ii) US$ 92.5 million upon closing, subject to adjustments. Furthermore, an additional US$ 20 million is to be paid contingent to a potential new oil discovery not included in the previously disclosed Revitalization Plan of the Frade Field.
This transaction gives PetroRio – through its subsidiaries – the entirety of the Field’s production, enabling Frade’s Revitalization Plan upon closing. The acquisition further ensures that after its conclusion, PetroRio will fully benefit from the profitability derived from the cost reduction and production enhancement initiatives.
The acquisition once again reaffirms PetroRio’s strategy of growth through acquisitions of producing assets and provides a pathway through which the Company can create value by use of its C.R.P. technology, responsible for its success to date. This technology consists of three core pillars: cost reduction (C), reservoir management (R) and production increase through redevelopment (P), thus increasing oil recovery rates and extending the useful life of the assets, while ensuring that safety and the environment remain as top priorities.
Frade’s incorporation into PetroRio’s portfolio will provide further opportunities to the teams working on the Company’s array of projects, realizing their potential and guiding their willingness to improve. These challenges are underlying components of the Company’s C.R.P. technology.
This acquisition will result in the addition of approximately 27 million barrels to the Company’s 2P reserves and the increase of approximately 6 thousand barrels to the Company’s daily production, based on the Field’s trailing three months’ performance.
The conclusion of the acquisition is subject to certain conditions precedent, such as approvals by the Brazilian antitrust council (CADE) and the country’s Petroleum, Gas and Biofuels Agency (ANP), as well as internal approvals.
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PetroRio is one of the largest independent companies in the oil and gas production in Brazil. The Company´s corporate culture seeks to increase production through the acquisition of new production assets, the redevelopment 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, since 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.