RIO DE JANEIRO, May 27, 2015 /CNW/ - PetroRio1
(or the "Company") (BM&FBOVESPA: HRTP3, TSX-V: HRP), announces
the results of the geological report received from an external
consultant hired by PetroRio respecting the Bijupirá and
Salema Fields. As previously
disclosed (by Material Fact dated February
13, 2015), the Company has proposed to acquire 80% of the
rights and obligations of the concession contracts for the Bijupirá
and Salema Fields – 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.
Proved developed producing and proved plus probable reserves
attributable to the interests in the Bijupirá and Salema Fields to be acquired by the Company were
evaluated effective January 1, 2015
by Rose & Associates, LLP, an independent qualified reserves
evaluator hired by PetroRio, in accordance with the requirements
under National Instrument 51-101 (the "Rose Report") and are 24.5
million BOE, of which 71% (17.4 million BOE) are proved developed
producing reserves. As further summarized below, the before tax net
present value (discounted at 10%) of the future cash flow
attributable to total proved and probable reserves is approximately
US$570.6 million.
Summary of Oil and Gas Reserves
|
|
Light & Medium
Oil
|
|
Solution
Gas
|
|
Total
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Reserve
Category
|
|
MMbbl
|
|
MMbbl
|
|
Bcf
|
|
Bcf
|
|
MMboe
|
|
MMboe
|
|
Proved Developed
Producing
|
|
16.0
|
|
14.4
|
|
8.7
|
|
5.5
|
|
17.4
|
|
15.3
|
|
Total
Proved
|
|
16.0
|
|
14.4
|
|
8.7
|
|
5.5
|
|
17.4
|
|
15.3
|
|
Probable
|
|
6.5
|
|
5.8
|
|
3.4
|
|
2.1
|
|
7.0
|
|
6.2
|
|
Total Proved Plus
Probable
|
|
22.5
|
|
20.2
|
|
12.0
|
|
7.6
|
|
24.5
|
|
21.5
|
|
Notes:
|
|
(1)
|
Columns may not add
due to rounding.
|
(2)
|
"Gross" reserves
means the Company's share after applying working
interest.
|
(3)
|
"Net" reserves means
the Company's share after applying working interest and ANP
royalties.
|
(4)
|
Barrels of oil
equivalent (BOE) based on 6 Mcf/bbl.
|
(5)
|
"Proved Developed
Producing" reserves are those reserves that are expected to be
recovered from completion intervals open at
the time of the
estimate. These reserves may be currently producing or, if shut in,
they must have previously been on production,
and the date of
resumption of production must be known with reasonable
certainty.
|
(6)
|
"Probable" reserves
are those additional reserves that are less certain to be recovered
than proved reserves. It is equally likely that
the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves.
|
Summary of Net Present Value of Cash Flow
|
Before Income Tax
Discounted at (%/yr)
|
|
|
0%
|
|
5%
|
|
10%
|
|
15%
|
|
20%
|
Reserve
Category
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
Proved Developed
Producing
|
|
386.9
|
|
379.0
|
|
369.9
|
|
360.2
|
|
350.3
|
Total
Proved
|
|
386.9
|
|
379.0
|
|
369.9
|
|
360.2
|
|
350.3
|
Probable
|
|
244.8
|
|
221.8
|
|
200.8
|
|
181.8
|
|
164.9
|
Total Proved Plus
Probable
|
|
631.7
|
|
600.8
|
|
570.6
|
|
542.0
|
|
515.2
|
|
After Income Tax
Discounted at (%/yr)
|
|
|
0%
|
|
5%
|
|
10%
|
|
15%
|
|
20%
|
Reserve
Category
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
|
US $ MM
|
Proved Developed
Producing
|
|
209.1
|
|
212.5
|
|
213.2
|
|
212.2
|
|
209.9
|
Total
Proved
|
|
209.1
|
|
212.5
|
|
213.2
|
|
212.2
|
|
209.9
|
Probable
|
|
158.0
|
|
146.7
|
|
135.0
|
|
123.8
|
|
113.2
|
Total Proved Plus
Probable
|
|
367.1
|
|
359.2
|
|
348.3
|
|
335.9
|
|
323.1
|
Notes:
|
|
(1)
|
Columns may not add
due to rounding.
|
(2)
|
It should not be
assumed that the undiscounted and discounted future net revenues
estimated by Rose & Associates, LLP
represent the fair
market value of the reserves.
|
(3)
|
The price assumptions
underlying the estimates were prepared by Rose & Associates,
LLP. There is no assurance that forecast
price and cost
assumptions will be attained and the variance could be
material.
|
Rose & Associates, LLP used the following pricing, inflation
and exchange rate assumptions as of January
1, 2015 in the Rose Report in estimating the net present
value of the future net revenue attributable to the reserves:
Year
|
|
UK
Brent
|
|
Henry
Hub
|
|
Realized
Oil
|
|
Realized
Gas
|
|
Cost
Inflation
|
|
Exchange
Rate
|
Forecast
|
|
US $/bbl
|
|
US$/MMBtu
|
|
US $/bbl
|
|
US $/Mcf
|
|
%/Year
|
|
BRL/US $
|
2015
|
|
67.75
|
|
3.28
|
|
64.62
|
|
1.87
|
|
4.5
|
|
2.64
|
2016
|
|
82.75
|
|
3.75
|
|
78.93
|
|
1.87
|
|
4.5
|
|
2.64
|
2017
|
|
90.25
|
|
4.00
|
|
86.08
|
|
1.87
|
|
4.5
|
|
2.64
|
2018
|
|
92.20
|
|
4.38
|
|
87.94
|
|
1.87
|
|
4.5
|
|
2.64
|
2019
|
|
95.41
|
|
4.75
|
|
91.00
|
|
1.87
|
|
4.5
|
|
2.64
|
2020
|
|
98.62
|
|
4.91
|
|
94.07
|
|
1.87
|
|
4.5
|
|
2.64
|
2021
|
|
100.03
|
|
5.08
|
|
95.41
|
|
1.87
|
|
4.5
|
|
2.64
|
2022
|
|
101.78
|
|
5.24
|
|
97.09
|
|
1.87
|
|
4.5
|
|
2.64
|
2023
|
|
103.57
|
|
5.40
|
|
98.79
|
|
1.87
|
|
4.5
|
|
2.64
|
2024
|
|
105.39
|
|
5.53
|
|
100.52
|
|
1.87
|
|
4.5
|
|
2.64
|
2025
|
|
107.24
|
|
5.63
|
|
102.29
|
|
1.87
|
|
4.5
|
|
2.64
|
Thereafter
|
|
2%/year
|
|
2%/year
|
|
2%/year
|
|
Constant
|
|
Constant
|
|
Constant
|
Note:
|
|
(1)
|
"BRL" means Brazilian
Reals.
|
The completion of the proposed acquisition is subject to certain
conditions precedent, including approval of the National Agency of
Petroleum, Natural Gas and Biofuels (ANP).
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 mitigating the 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 PetroRio is the new brand of HRT Participações em
Petróleo S.A. The Company's new corporate name, Petro Rio S.A. was approved in the Special
Shareholders' Meeting held on May 15,
2015, but it is subject to registration and approval in the
competent bodies. 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.
About PetroRio
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
Reader Advisories
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 concerning
the reserves attributable to the assets to be acquired and the
estimate of the net present value of the future net revenues
attributable thereto, statements regarding the expected time for
completing closing of the proposed acquisition, 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: 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 the
Company 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 reserves and future net revenue in this press release
represent estimates only. The reserves and estimated future net
revenue from the properties have been independently evaluated by
Rose & Associates, LLP with an effective date of January 1, 2015. The evaluation includes a number
of assumptions relating to factors such as initial production
rates, production decline rates, ultimate recovery of reserves,
timing and amount of capital expenditures, marketability of
production, future prices of crude oil and natural gas, operating
costs, abandonment and salvage values, royalties and other
government levies that may be imposed over the producing life of
the reserves. These assumptions were based on price forecasts in
use at January 1, 2015 and many of
the assumptions are subject to change and are beyond the control of
the Company. Actual production and cash flows derived from the
properties can vary from the evaluation.
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.
Barrels of Oil Equivalent: Disclosure provided herein in
respect of barrels of oil equivalent (BOE) may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf:
1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Sedar Profile # 00031536
Neither TSX Venture Exchange
nor its Regulation Services Provider (as that term is defined in
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE HRT Participações em Petróleo S.A.