Petro-Victory Energy Corp., Calgary, will develop Andorinha field and Block POT-T- 281 in Brazil's Potiguar basin in the state of Rio Grande do Norte after entering into an agreement with Azevedo Travassos Petroleo S/A (ATP).
The agreement includes a work program to be carried out in Andorinha field and POT-T-281 block, both 100% owned and operated by Petro-Victory.
ATP will pay 100% of the work program which initially consists of drilling and completing AND-4 and AND-5 wells in Andorinha field and a workover in the CR-2 well in POT-T-281 block. ATP may, at its sole discretion, offer engineering services, construction, and assembly of oil production facilities and well drilling, completion, and maintenance services.
ATP will receive 75% of the net income generated by production of the wells until the CAPEX for the work program provided by ATP is fully recovered. Petro-Victory will receive 25%. Thereafter, the net income generated by the production will be split 50-50.
The agreement also establishes the commitment to hire a third-party independent engineering firm to certify reserves of Andorinha field and POT-T-281 block after completion of the work program.
ATP will have a time-limited option to buy 50% of both assets at $10/bbl of proven reserves (1P) and $4/bbl of probable reserves.
