Petro Vista Seals Deal on Brazilian Offshore Tartaruga Block
Petro Vista Energy Corp. has closed the acquisition of a 41.3% working interest in the shallow offshore producing oil concession Block SES-107D ("Tartaruga Block") subject to the receipt of all necessary regulatory and corporate approvals.
The Tartaruga Block is located in the prolific Sergipe-Alagoas Basin, in north-eastern Brazil, and has current average production of approximately 250 boe/d from one zone in one well with known additional multiple pay zones. The Company's share of production commences on September 25, 2008. Production is expected to be increased with a planned work-over of the current producing well prior to the drilling of a sidetrack well into additional producing horizons on the Tartaruga Block. The acquisition is subject to receipt of documentation from the consortium members and approval from the Agencia Nacional do Petroleo ("ANP"). A development plan has been approved by the ANP and includes two to three additional development wells.
The Tartaruga Block is situated in shallow waters along the north-eastern Brazilian coastline in the Sergipe-Alagoas Basin, Brazil. The original Tartaruga Block discovery well was directionally drilled by Petrobras in 1994 from an onshore location in a four-way structurally closed, offshore target in the Cretaceous Penedo formation sands found at drilled depths of 2,800 to 3,700 meters. Since 1995, this well has cumulatively produced over 637,000 barrels of 42 API gravity oil with average oil production in excess of 250 boe/d and 660 Mcf of gas (gross) from one pay zone, the shallow Penedo-1 sand.
Multiple potential pay zones are known to occur within the Cretaceous Penedo (shallow) and Serraria (deeper) formations. According to published IHS Energy Inc. (Independent Source: HIS Energy Inc.) data the Serraria formation is a proven reservoir in the nearby Caioba field having 27 MMBO and 145 BCF, as well as in the large Carmopolis field, which produces 15 MMBO of the total 330 MMBO in the Serraria.
Estimated Reserves and Prospective Resources
Petrotech Engineering Ltd. prepared an engineering and economic evaluation of the Tartaruga Block in accordance with NI 51-101 with an effective date of March 31, 2008 (summary report available on www.sedar.com). The evaluation conservatively indicates the Penedo formation original petroleum initially in place to be approximately 15 Million stock tank barrels (MMstb) of oil with a potential ultimate recovery of 1.5 MMstb of oil, with remaining Penedo formation reserves in Tartaruga at 2.3 Million Barrels Oil Equivalent.
The Company will immediately undertake the work-over of the existing well and has identified a suitable drilling rig to commence drilling of the sidetrack well in November 2008. Cost estimates on the Tartargua Block are approximately US$6.5 million, primarily for the sidetrack well (drill and complete). Additional development drilling, re-completions and exploratory drilling of identified targets are anticipated for Q4 2009.
Read Taylor, President and CEO, commented, "The Tartaruga acquisition provides us with immediate production and cash flow which has the potential to increase significantly with the upcoming sidetrack and work-over. Combining this with imminent production in Colombia, we will have the ability to pursue our large upside projects in both Brazil and Colombia."
Pursuant to the terms of a Head Farm-Out Agreement dated September 25, 2008, Petro Vista acquired a 41.3% working interest (30% net revenue interest) in the Tartaruga Block from UP Petroleo do Brasil Ltda. The acquisition is subject to receipt of approval of the consortium members and approval from the ANP and conclusion of the acquisition of the issue capital of UP Petroleo Brasil Ltda. by TDC Engineering Inc.
In consideration for the working interest, Petro Vista has agreed to pay up to US$4 million to fund drilling costs for the sidetrack well on the Tartaruga Block. In addition, Petro Vista will pay all completion costs subject to reimbursement of up to 120% of such costs from 90% of production from the Tartaruga Block that includes the currently producing well, net of a commitment by UP Petroleo do Brasil Ltda to contribute drilling equipment and a minimum of $675,000 to the well completion costs.
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