Petro-Victory Energy Corp. ("Petro-Victory" or the "Company" or "PVE") provides an operations update to the shareholders.
2024 Advancement Highlights:
São João Field, 3-well, workover campaign was completed in April 2024, total oil sales volumes for the three months ended June 30, 2024 was 5,814 bbls up 99% from prior quarter.
Best Estimate - Development Pending Risked Contingent Gas Resources located at the São João Field added 50.1 billion cubic feet (1.4 billion cubic meters) of gas or 8.4 million barrels of oil equivalent ("MMboe") and NPV10 USD $97.3 million.
The Company updated its reserve report with 6.9 MMboe and NPV10 USD $257.7 million ($40.05/boe) 2P reserves.
The Company announced a partnership with Azevedo Travassos Petróleo S/A ("ATP") to develop the Andorinha field and Block 281.
Partnership with Azevedo Travassos Petróleo
Block 281: Petro-Victory will re-enter and perform a workover on the CR-2 well in Block 281. The workover will commence in October as part of the ATP Partnership. ATP will pay 100% of the workover program and recover the cost through the net income generated by the production of the CR-2 well: 75 percent ATP and 25 percent PVE, after which, the two companies will split the net income generated by the production 50/50.
Andorinha Field: Petro-Victory will drill two additional in-field wells at the Andorinha field beginning in December through the ATP Partnership, ATP will pay 100% of the drilling work program and recover cost through the net income generated by the production of the two wells: 75 percent ATP and 25 percent PVE, after which, the two companies will split the net income generated by the production 50/50.
Commercial Outlook: Upon the completion of and based on the results of the CR-2 workover and the Andorinha drilling program, a new reserve report will be obtained, and ATP will have the option to purchase 50% ownership in the Andorinha field and Block 281 at a price of USD $10 per proven barrel and USD $4 per probable barrel. The option to purchase must be exercised within nine months following the completion of the work program.
High Impact Exploration:
Drilling Prospects: Six additional high-impact exploration drilling prospects have received environmental and drilling licenses. A new prospective resource report will be completed in September. The Company is carefully evaluating all options for financing the high-impact exploration drilling prospects including but not limited to strategic partnerships or equity investments.
Acquisition of Mature Fields:
Collaboration with international group: In August, Petro-Victory entered into an MOU ("Memorandum of understanding") Collaboration with XP Group, an international oil and gas operator, to evaluate, acquire, and enhance production in mature oil and gas fields in Latin America. This collaboration further strengthens Petro-Victory's position to increase production through the acquisition of mature producing fields across Latin America.
Message to shareholders
Richard F. Gonzalez, CEO of Petro-Victory Energy Corp. commented: "With the completion of the three-well workover program at the São João Field, total oil sales volumes for the three months ended June 30, 2024 was 5,814 bbls, an increase of 99% over the first quarter 2024 sales volumes. The São João Field had no production, no reserve report, and no facilities prior to Petro-Victory entering in April 2020. The field has since produced more than 50,000 barrels of oil and has 1.9 MMboe in 2P Reserves and Best Estimate - Development Pending Risked Contingent Gas Resources of 8.4 MMboe.
"Consolidated production from the São João, Andorinha, and Trapiá fields during the second quarter averaged 64 barrels of oil per day (bopd) and generated an average of USD $144 thousand in oil revenues per month with an average netback per month in the quarter of USD $72 thousand or USD $37.08 per barrel representing a 50% margin. In July and August we have averaged 48 bopd.
"Production growth continues to be a priority for Petro-Victory and future production volumes are expected to increase disproportionately from production expense as the Company executes on the development plan in the second half 2024 and beyond, thus decreasing the production cost per barrel and increasing operating netback margins.
"The Company has focused on establishing strategic partnerships and joint ventures during the period with an emphasis on monetizing existing assets and reserves.
"The ATP partnership is progressing exceptionally well. The teams' combined experience and expertise are highly complementary. The synergies not only enhance our current projects but also opens up numerous opportunities for future growth. By leveraging our collective strengths, we can operate more effectively and drive greater value for both organizations.
"Furthermore, the Company is also evaluating opportunities to increase production through the acquisition of mature fields in Brazil and LATAM which would be complementary to our existing high-growth portfolio."
Summary Reserves and Resources
As announced in the press release dated May 9, 2024, the Company's Independent Reserve and Resource Report as of December 31, 2023 and issued by GLJ, Ltd. dated April 25, 2024 ("GLJ Report") added development pending risked contingent resources of 8.4 MMboe. The GLJ Report is summarized below.
The Company holds 100% working interest in thirty-eight (38) concessions. Six (6) of the thirty-eight (38) concessions have reserves included in the GLJ Report. The Company continues to invest geological and geophysical resources in further evaluation of the remaining thirty-two (32) blocks. The additional thirty-two (32) concession blocks are not included in the reserve figures below.
Proved ("1P") reserves:
3,434 thousand barrels of oil equivalent ("Mboe"); and
Net present value before tax, discounted at 10% ("NPV10") is USD $130.5 million ($40.68/boe) for 1P reserves.
Proved plus Probable ("2P") reserves:
6,873 Mboe; and
Before tax NPV10 is USD $257.7 million ($40.05/boe) for 2P reserves.
Proved plus Probable plus Possible ("3P") reserves:
10,116 Mboe; and
Before tax NPV10 is USD $368.5 million ($38.91/boe) for 3P reserves.
Development Pending Risked Contingent Resources – Best Estimate
8,359 Mboe; and
Before tax NPV10 is USD $97.3 million
Furthermore, the Company has identified 16 opportunities across 12 of the other blocks. Of these, 7 opportunities represent economically viable prospects. The Company will have a prospective resources report completed in the coming weeks for the first four (4) initial prospects.
