Porto Energy Corp. (TSX: V.PEC, Stock Forum) announced that its joint venture partner in the Aljubarrota-3 concession, Petróleos de Portugal - Petrogal, S.A. (Galp), a state-owned company, has exercised its option to become the operator of the concession, pursuant to the terms of the definitive farm-out agreement signed by the two companies in June 2012.
Assignment of operatorship is subject to approval by the Portugese government department, Direcção Geral de Energia e Geologia.
According to the Porto Energy press release, under the terms of the definitive farm-out agreement, Galp paid the company $4.3 million in back costs as well as their portion of the drilling of the ALC-1 well, approximately $6.15 million, to earn 50% of the company's rights in the Aljubarrota-3 concession which comprises approximately 300,000 acres onshore Portugal.
The 50% participation extends to all stratigraphic intervals within the concession and was approved by the Portuguese government in September 2012. The two companies concluded a joint operating agreement in the first quarter of 2013.
"Galp's exercise of their option to operate the Aljubarrota-3 concession clearly demonstrates their interest and belief in the potential of this asset," said Joseph P. Ash, President and CEO of Porto. "While we retain an equal working interest in the concession and expect to participate fully in determining the strategic direction of future exploration activities; transitioning to a non-operated role will provide us with improved financial and operational flexibility going forward."
Porto 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.
On Friday, Porto soared 66.7% and was trading at $0.05 a share. The company had a market cap of $10 million, based on 199 million shares outstanding.