RIO DE JANEIRO, Feb. 13, 2015 /CNW/ - PetroRio1 ("PetroRio" or the "Company"), the new brand of HRT Participações em Petróleo S.A., hereby announces the signing of arm's length purchase and sale agreements dated January 20, 2015 (the "Agreements") to acquire 80% of the rights and obligations of the concession contracts for the Bijupirá and Salema Fields with Shell Brasil Petróleo Ltda. ("Shell"), Petróleo Brasileiro S.A. – Petrobras, holds the remaining 20%. The transaction also involves the acquisition of, among other assets, the FPSO Fluminense, used in the production process of both fields, with storage capacity for 1.3 million barrels of oil. Only upon approval from Brazilian regulatory agencies will the Company become the owner and operator of the concession contract interests covering these producing fields.
The Bijupirá and Salema Fields, located in water depths of 480 and 850 meters, are located in the Pre-Salt polygon, just 80 km northeast of the Polvo Field, PetroRio's first production asset, generating important synergy opportunities between the operations. The two upstream concession contracts which contain the Fields cover an area of 40,000,000 m2, and daily production therefrom currently totals 22,000 barrels of light oil and 325,000 m3 of associated gas. The oil extracted from the fields is light from 28° to 31° API.
The total acquisition price under the Agreements is US$150 million, subject to adjustment, payable in cash. 20% of the acquisition price for the fields was funded in part with cash on hand resulting from the first issuance of the Company's convertible debentures which was completed in December 2014. The key attributes and other information about the convertible debentures are set forth in news releases dated October 24, December 1, and December 9, 2014.
The balance of 80% of the acquisition price is payable at closing, upon satisfaction or waiver of all closing conditions, and may be funded through its existing standby credit facility provided by a syndicate of lenders led by Glencore Ltd., a subsidiary of Glencore PLC.
The completion of the purchase and sale transaction between PetroRio and Shell is subject to certain conditions precedent, including approval of the assignment of rights by Brazil's Council for Economic Defense (CADE) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP). Receipt of required regulatory approvals and the subsequent Closing may take several months, or may not occur at all.
The Company has retained an independent qualified reserves evaluator to prepare a geological report in compliance with the Canadian Securities Administrators' National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (the "Report"), and the Report is expected to be received on or about March 6, 2015. The Report will be used by the TSX-V as supporting documentation in determining whether or not to accept the proposed transaction, and it is expected that the Report will assist investors in assessing the proposed transaction. A further news release will be issued by the Company when the Report is available, providing further details on the assets proposed to be acquired under the Agreements. Investors are cautioned that, until the Report is prepared and disclosed,there may not be sufficient informationabout the assets so as to enable investors to make a reasonable investment decisionabout the transaction.
PetroRio is born of a new corporate culture focused on increasing production through the acquisition of production assets, the re-exploration and optimization of the Polvo, Bijupirá and Salema Fields, increasing operational efficiency and reducing production costs and corporate expenses, as well as eliminating exploration risk. The Company's main objective is to create value for its shareholders, protecting its liquidity and increasing revenue and profits, with full respect for safety and the environment.
1 The Company's corporate name will remain HRT Participações em Petróleo S.A., until the modification is approved at the Shareholders' Meeting, in accordance with proposal to be submitted by Management. The Company's shares and GDSs will continue to be traded under the tickers HRTP3 on the BM&FBOVESPA and HRP on TSX-V until the new corporate name is approved and the request to change the tickers is authorized by the BM&FBOVESPA and the Brazilian Securities and Exchange Commission (CVM). The Company will keep its shareholders and the market in general informed of the progress of this process.
PetroRio, through its subsidiaries, holds a 60% participating interest and it is also the operator of the Polvo Field, which is located in the southern portion of the Campos Basin, at 100km east of the city of Cabo Frio, Rio de Janeiro. PetroRio has Brazil's seventh largest daily production of barrels of oil equivalent (boe), with 20.3º API, deriving from three producing reservoirs. PetroRio is the owner, through its subsidiaries, of "Polvo A" fixed platform and a 3.000HP drilling rig, currently in operation in the field, being the platform connected to the "Polvo FPSO" vessel, with capacity to segregate hydrocarbons and water treatment, oil storage and offloading. Polvo Field license covers an area of approximately 134km2, with several prospects with potential for further explorations. Additionally, PetroRio holds a 55% interest and is the operator of 17 exploration blocks in the Solimões Basin, and also operates ten exploration blocks off the Namibian coast, in the Orange and Walvis sub-basins. PetroRio is committed to minimizing any possible environmental impacts on the sites where it acts. Our commitment to the local communities is towards health conditions, safety and quality of life. For more 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 the expected benefits of the proposed acquisition under the Agreements, the expected source of funding for the balance of the total acquisition price under the Agreements, the expected time for completing closing of the proposed acquisition under the Agreements, the proposed change of the Company name to PetroRio 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 because 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.
The following risk factors could affect our operations, as well as our ability to complete the proposed acquisition under the Agreements and to realize the expected benefits of the proposed acquisition: the contingent resource and prospective resource evaluation reports involving a significant degree of uncertainty and being based on projections that may not prove to be accurate; inherent risks to the exploration and production of oil and natural gas; limited operating history as an oil and natural gas exploration and production company; drilling and other operational hazards; breakdown or failure of equipment or processes; contractor or operator errors; non-performance by third party contractors; labor disputes, disruptions or declines in productivity; increases in materials or labor costs; inability to obtain required regulatory approvals; inability to attract sufficient labor; requirements for significant capital investment and maintenance expenses which HRT may not be able to finance; cost overruns and delays; exposure to fluctuations in currency and commodity prices; political and economic conditions in Namibia and Brazil; complex laws that can affect the cost, manner or feasibility of doing business; environmental, safety and health regulation which may become stricter in the future and lead to an increase in liabilities and capital expenditures, including indemnity and penalties for environmental damage; early termination, non-renewal and other similar provisions in concession contracts; and competition. We caution that this list of factors is not exhaustive and that, when relying on forward-looking statements to make decisions, investors and others should also carefully consider other uncertainties and potential events. The forward-looking statements herein are made based on the assumption that our plans and operations will not be affected by such risks, but that, if our plans and operations are affected by such risks, the forward-looking statements may become inaccurate.
The forward-looking statements contained herein are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, we do not undertake to update such forward-looking statements.
The term "boe" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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SOURCE HRT Participações em Petróleo S.A.
For further information: For additional information, please contact PetroRio's Investor Relations Department. IR CONTACTS: Guilherme Marques - CFO and Investor Relations Officer; Tainah Costa - Investor Relations Specialist; Luana Ayala - Investor Relations Intern; Phone: +55 21 3721-3810, [email protected]