BrazAlta & Schlumberger Enter Strategic Alliance

BrazAlta Resources has executed a Memorandum of Understanding (MOU) with Schlumberger Servicos de Petroleo Ltda. (SLB) through the concessionaire WWashington, a BrazAlta strategic partner for the exploration of oilfields in Brazil. SLB is the Brazilian subsidiary of the Schlumberger Group a worldwide services provider leader in the oil industry.

The purpose of the MOU is to establish the grounds for the joint development of wells drilling and completion under mutually agreed field production recovery enhancement opportunities in the Reconcavo and Sergipe basins located in the northeast of Brazil. Each project will be carried on a case-by-case basis where Washington, BrazAlta and SLB mutually agree on the risks to be assumed by each party in accordance to the MOU.

The MOU is firstly set for a two-years term and may be automatically renewed as the alliance moves forward and reaches the expected level of synergy.

SLB will not be an equity holder of wells or reservoirs in any project associated with the MOU, still SLB's compensation and the return on its investments will be based on the results (oil extraction) obtained with the joint development of such projects. The amount and term for the compensation of SLB will be later agreed under a Letter of Intent; a final draft is expected by January 2006.