Porto Energy Corp. to Wind-Down Its Operations Due to Capital Constraints
THE WOODLANDS, TX, May 26, 2014 /CNW/ - Porto Energy Corp., ("Porto" or the "Company") (TSXV:PEC), a company focused on oil and gas exploration, appraisal and development in Portugal, today announced it will wind-down the operations of its subsidiary, Mohave Oil and Gas Corporation, ("Mohave"). As a result, Mohave will be surrendering its concession acreage in Portugal.
In addition, the board of directors of Porto intends to resign as of the close of business on Friday, May 30, 2014, at which time it is anticipated that trading in the common shares of Porto will be suspended by the TSXV, with the eventual delisting of the Company from the TSXV in due course.
The Company has been unable to attract investment interest in its concession assets in Portugal. The Company believes this is largely due to the lack of oil or gas production in Portugal. As a result of its inability to procure the associated funding, there has been extreme working capital pressure over the past eighteen months. During the past six months, the Company has been in negotiations with two investment candidates: one interested in farming-in and the other interested in purchasing a significant interest in the subsidiary of the Company, Mohave. The Company and the potential farm-in candidate were unable to reach agreeable terms and discussions were terminated at the beginning of May. Discussions with the other party interested in purchasing a significant interest in Mohave were not successful as that party was not able to secure the necessary funding. Those discussions could not be continued given the Company's current working capital position.
As a result, the board of directors and management of the Company have agreed that efforts cannot be reasonably continued given Porto's working capital position and as a result, the board of directors of the Company has determined to wind-down the Mohave's operations effective May 30, 2014, at which time each of the directors of the Company intend to resign as a director of the Company and Mohave, as applicable.
Over the past several months, the management and board of directors of Porto have diligently pursued numerous and varied financing and transactional opportunities for the Company. However, the difficult financial markets and other factors have not led to a successful completion of these initiatives.
The Company engaged financial advisors to provide financial advisory services with respect to projects and potential business combinations as well as equity and debt financings. The Company, along with its advisors contacted over 250 prospective joint venture candidates. Through its efforts, management was able to present its asset database to approximately 30 candidates. Unfortunately, none of these candidates were willing to commit an investment in the Company or its assets.
In addition, the Company has made efforts over the last several months, through TGS, to license and market four sets of seismic survey data, including one 3D offshore survey spanning 1,099 square kilometers, two 3D onshore surveys totaling 358 square kilometers (excluding 160 square kilometers of Aljubarrota 3D seismic data as it is jointly owned by the Company and its joint venture partner, Galp, and one 24,000 square kilometer aeromagnetic survey. Approval of the agreement was not guaranteed to bring in immediate funding. However, in obtaining government approval, TGS was then able to begin to market the Company's seismic data to interested parties. Any sale would have brought funding into the company within 30 days of the sales agreement. Unfortunately, no sales were consummated.
About Porto Energy Corp.
Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery. Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal's Lusitanian Basin totaling 1.6 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions and generated more than 45 prospects and leads. Porto Energy's shares trade on the TSX Venture Exchange under the ticker symbol "PEC". For more information on Porto Energy visit www.portoenergy.com.
No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.
Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.
Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
This press release contains certain forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "predict" and "potential" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.
Neither 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.
SOURCE Porto Energy Corp.