Petro-Victory Announces Commercial Oil Production at the Sao Joao Oil Field

Source: 11/19/2020, Location: South America

Petro-Victory Energy Corp. is delighted to announce that it has commenced commercial production at the Sao Joao oil field in the State of Maranhao, Brazil.

São Joao oil field (Petro-Victory 50% Working Interest)
As previously announced, Petro-Victory acquired a 50% working interest in the Sao Joao oil field in Q4 2019 for a total cost of R$500,000 (approximately US$93,000 at current exchange rate). The Sao Joao field produced 87,500 BO cumulative intermittently between 1984-1988 from 4 wells and has been abandoned in excess of 30 years.

In Q4 2019 and Q1 2020 the Company, with its operating partner Oeste de Canoas Petróleo e Gás Ltda, installed production facilities at the field area, including storage tanks, flow lines, road access, and general civil and mechanical work. A workover rig was mobilized in Q2 2020 to commence production testing. In November, the field is currently averaging production of 70 BOPD (35 BOPD net to Petro-Victory) from 3 wells (SJ-01, SJ-06, and SJ-11), and production is expected to increase in the short-term following the installation of artificial lift systems at the SJ-01 and SJ-11 wells.

Successful Workovers
The Company has re-entered 3 suspended oil wells (SJ-01, SJ-06, and SJ-11) and completed oil production testing in line with its work program commitments with the Agencia Nacional do Petroleo Gas Natural e Biocombustiveis of Brazil ("ANP").

The SJ-01 well was re-entered and brought online without artificial lift and has produced over 3,000 barrels of 36o API light oil over a 6-month period until October 2020. The well was tested over 3 periods, 11 days in April, 12 days in May, and 11 days in June, and was put online on the 9th July with continuous natural flow and has since averaged 8 BOPD during this period.

The SJ-06 well was re-entered and tested and has produced over 2,800 barrels of 36o API light oil over a 5-month period until October 2020. The well was tested for 9 days in May and 26 days in June, and 34 days across July and August. The SJ-06 well was suspended on the 11th August to install a progressive cavity pump (PCP) system to provide artificial lift. SJ-06 is currently averaging 35 BOPD since resuming production and the workover rig has now been mobilized to SJ-11 for production testing.

The SJ-11 well was re-entered for testing and was brought online on 26th October without artificial lift. In the period between 26th October and 15th November the well has averaged 46 BOPD. Due to the strong production performance from SJ-11 the well will be allowed to produce without artificial lift until the end of November, when SJ-11 will be temporarily suspended to install a progressive cavity pump (PCP) system to provide artificial lift. The SJ-11 well is geologically similar to the SJ-06 well and is expected to perform in a comparable fashion when installed with the PCP system

Short-Term Work Program
Following installation of the PCP system at SJ-11 in November/December, the workover rig will be mobilized to the producing SJ-01 well for installation of the third PCP system at the field.

An updated development plan for the Sao Joao field has been submitted to the ANP at their request following the declaration of commerciality and the commencement of commercial production resulting from the successful workovers at SJ-01, SJ-06, and SJ-11. On approval, the Company will announce any future additional work program items and will keep the market updated on the progress at the upcoming workovers on SJ-11 and SJ-01.

Oil Sales / Commercial
Petro-Victory has achieved payback of initial acquisition cost and capital expenditures at the Sao Joao field and is netting back US$30 per barrel with oil sales attracting a US$5 premium to Brent pricing (average November oil sales priced at US$45 per barrel when Brent was US$40 per barrel). With production set to increase in the short-term with the completion of the pumping units at SJ-01 and SJ-11, the Sao Joao field has been a highly successful first production operation for the Petro-Victory team.

Daily Production Update
The Company is currently in the process of applying for workover and drilling permits for its 100% working interest field, Andorinha, and will update shareholders on the progress at this field in the near future. Net production in the month of November across the Petro-Victory portfolio is currently averaging 52 BOPD (35 BOPD at Sao Joao, 4.5 BOPD at Carapitanga, and 12.5 BOPD at Andorinha).

Work will be focused initially on the Sao Joao and Andorinha fields to increase production, as well as plans to bring online the 100% owned Alto Alegre and Trapia fields in the short-term, in addition to performing workovers at the producing Carapitanga field.

Richard F. Gonzalez, Chief Executive Officer of Petro-Victory commented, "The commercial oil production of our first 3 workovers at the Sao Joao oil field demonstrates the successful execution of Petro-Victory's business model of profitably producing oil in onshore Brazil. The cash proceeds, generated from the previously announced sale of non-operated assets, will fund the robust 2021 work program across our portfolio of oil fields."

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