CALGARY, Sept. 21, 2016 /CNW/ - Alvopetro Energy Ltd. ("Alvopetro") (TSX-V:ALV) is pleased to announce that we have entered into a Farm-out Agreement (the "Farm-out") with an independent third party ("Farmee") whereby the Farmee will acquire a 95% participating interest in Block 107 from Alvopetro. Block 107 is 7,561 acres, was acquired by Alvopetro in the 11th Brazil Bid Round and has an initial exploratory phase expiry of March 1, 2017.
Under the terms of the Farm-out, the Farmee is responsible for 100% of the costs associated with drilling two wells in satisfaction of work commitments on Block 107. Alvopetro received an upfront cash payment of $0.3 million and, upon completion of the work commitments and approval by the National Agency of Petroleum, Natural Gas and Biofuels of Brazil ("ANP"), Alvopetro will be entitled to exchange its 5% participating interest for a 5% gross-overriding royalty ("GORR") on Block 107. Subject to a drilling success on Block 107, Alvopetro will also be entitled to a 5% GORR on an adjacent exploration block held by the Farmee. The closing of the Farm-out is conditional on, among other things, approval from the ANP and the timely receipt of necessary environmental permits for the commitment wells to be drilled by the Farmee.
This farm-out allows us to reduce our capital commitments on Block 107 while retaining upside associated with the exploration prospects on both Block 107 and the separate exploration block held by the Farmee. Following the successful completion of the Farm-out, including the receipt of the GORR, Alvopetro will hold and operate 13 exploration blocks and 2 mature fields in Brazil, totaling 132,948 gross acres (122,935 net acres).
Alvopetro Energy Ltd.'s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by applying innovation to underexploited opportunities. Our strategy is to focus on three core opportunities including lower risk development drilling on our mature fields, shallow conventional exploration, and the development of the significant hydrocarbon potential present in our deep Gomo tight-gas resource play. Our efforts in the near-term are concentrated on building a natural gas business by finalizing a unitization agreement and securing a gas sales contract for our 197(2) discovery.
Neither the 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 news release.
All amounts contained in this news release are in United States dollars, unless otherwise noted.
Forward-Looking Statements and Cautionary Language. This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "plan", "intend" and other similar words or expressions are intended to identify forward-looking information. More particularly and without limitation, this news release contains forward-looking information concerning a potential farm-out transaction subject to certain conditions and approval by the ANP, exploration prospects, operational matters, and regulatory matters associated with the potential farm-out. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including expectations and assumptions concerning regulatory licenses and approvals relating to the transaction, and the success of future drilling activities, and the fulfilment of certain conditions precedent to the transaction. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed through the SEDAR website at www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
SOURCE Alvopetro Energy Inc.
For further information: Corey C. Ruttan, President, Chief Executive Officer and Director, Alison Howard, Chief Financial Officer, Phone: 587.794.4224, Email: firstname.lastname@example.org, www.alvopetro.com, TSX-V: ALV