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THE WOODLANDS, TX, March 1, 2012 /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 that it has entered into a definitive joint venture agreement with Sorgenia International B.V., Netherlands ("Sorgenia"), and Rohöl-Aufsuchungs Aktiengesellschaft, Austria ("RAG"), (together the ("Farm-in Partners"), to jointly evaluate the unconventional resource potential of the Lower Jurassic (Lias) stratigraphic interval within Porto's concessions in Portugal. Porto will retain operatorship of the Company's concessions and the joint venture. The area to be jointly evaluated is approximately 450,000 acres. The Lias stratigraphic interval is being pursued as an unconventional resource throughout Europe.
Under the terms of the agreement, Sorgenia and RAG will each initially secure a 32.33% working interest specifically in the Lias interval in exchange for their participation in the first phase of a three phased work program. Porto will not be required to fund the joint venture until the third phase unless phase one and two encounter cost overruns as discussed below. The first phase, which must be completed by December 31, 2012, is focused on developing a comprehensive geophysical and geochemical analysis of the Lias interval. The Farm-in Partners will each fund 50% of the overall costs of the first phase work program with total program costs not to exceed US$1.0 million. The second phase will begin immediately following the first and must be completed by August 1, 2014, but is subject to extension. Upon entry into the second phase, the Farm-in Partners will each be deemed to have earned a 32.33% interest in the Lias interval. Second phase activities include the drilling of two deep wells and additional geochemical and geophysical analysis. The costs associated with the two wells will be shared equally between the Farm-in Partners capped at a gross cost of US$10.0 million, net of mobilization and demobilization costs. Other costs associated with the phase two work program will be shared according to the working interest held by each of the parties. Activities under the phase three work program, which is expected to begin immediately following completion of the phase two work program, include the submission of a five-year general development and production plan with further development and production initiatives to follow as necessary. The costs for the third phase work program will be borne by all parties according to their working interest in the Lias interval.
"With the signing of a definitive agreement, and in conjunction with our valued partners, we are now able to advance our efforts in evaluating the tight oil potential of the Lower Jurassic in our concessions," said Joseph Ash, President and CEO of Porto. "Acting on JV opportunities allows us to more fully evaluate the potential of our substantial Portuguese holdings while reducing our costs and better managing exploration risk and we expect it to remain part of our overall strategy going forward."
About Sorgenia International B.V., Netherlands
Sorgenia is based in Milan, Italy and operates in the energy and natural gas sectors. The company is the leading private operator in the power and natural gas markets in Italy with more than five-hundred thousand customers. Sorgenia has a controlling interest in Tirreno Power, one of the largest Italian electricity producers and, through its subsidiary, Sorgenia E&P, holds exploration and production interests in the English North Sea, Bulgaria, Poland, and Colombia. Sorgenia brings experience in unconventional oil and gas resources through its shale gas activities in Poland.
About Rohöl-Aufsuchungs Aktiengesellschaft, Austria
RAG is the longest-standing exploration and production company in Austria. Since the discovery of oil and gas by RAG in the Vienna Basin in 1937, the company has produced more than 14 million tons of crude oil and more than 23 billion cubic meters of natural gas. Today, RAG's annual production stands at around 750 million cubic meters of natural gas and 120,000 tons of crude oil. RAG has a nearly 30-year history in natural gas storage, as well. It operates the second-largest gas storage facility in Central Europe.
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 five concessions in Portugal's Lusitanian Basin totaling 1,444,152 net acres or 5,844 km2. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions including unconventional oil and gas resource plays as well as conventional oil and gas targets. Porto's shares trade on the TSX Venture Exchange under the ticker symbol "PEC". For more information on Porto visit www.portoenergy.com.
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.
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