MATERIAL FACT
PETRORIO TO ACQUIRE THE PETROBRAS STAKE AND
CONSOLIDATES 100% OF BIJUPIRÁ AND SALEMA OIL FIELDS
Rio de Janeiro, July 1st, 2015 - Petro Rio S.A. ("PetroRio" or the "Company") (BM&FBOVESPA: PRIO3, TSX-V: HRP) hereby announces the signing of a purchase and sale agreement to acquire 20% of the rights and obligations of the concession contracts for the Bijupirá and Salema ("BJSA") Fields with Petróleo Brasileiro S.A. ("Petrobras"). In January 2015, PetroRio announced the execution of a purchase and sale agreement to acquire 80% of the rights and obligations of the concession contracts for these fields with Shell Brasil Petróleo Ltda ("Shell"). Therefore, after the approval of the transaction by regulatory agencies and satisfaction or waiver of all closing conditions, PetroRio will hold 100% stake in BJSA Fields and will be their operator.
The total transaction price is US$ 25 million, subject to adjustments, payable in cash. Of this amount, 20% will be paid with the Company´s own funds and 80% will be funded through structured finance facilities. This transaction includes the 20% stake held by Petrobras in the BJSA Fields and equipment related to their operation.
The BJSA fields are located in the Campos Basin, in water depths of 480 and 850 meters. The concessions cover an area of 40,000,000 m2, with a daily production of 22,000 barrels of oil and 325,000 m3 of associated gas, which are equivalent to 24,000 boe/day. The oil extracted from the fields is light oil (from 28° to 31° API). The BJSA Fields are located just 80km northeast of the Polvo Field, PetroRio's production asset, which will allow important synergy gains between the Company's operations.
The BJSA Fields acquisition is an important milestone for PetroRio, since it corroborates the Company´s growth strategy through the acquisition of fields already in production. It is estimated that the production from the BJSA Fields shall increase substantially PetroRio´s current levels of production. The conclusion of this agreement confirms PetroRio among the most important emerging companies of the local oil industry, consolidating its position as one of the largest independent producers in Brazil.
PetroRio is focusing in the development of a solid growth platform aiming at generating value for its shareholders. It has been achieving excellent results in the operation of Polvo Field, which can be proved by the efficient understanding of the reservoir, improved production curve (more stable and with fewer interruptions) and excellent levels of operational efficiency. The quest for increased operational efficiency coupled with the reduction in production costs will be PetroRio's priority in the BJSA Fields operation.
The conclusion of the purchase and sale transaction between PetroRio and Petrobras is subject to certain conditions precedent, including approval of the assignment of rights by Brazil's Council for Economic Defense (CADE) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP).
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For more information, please contact Petro Rio's Investor Relations Department.
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.
In January 2015, PetroRio announced the proposed acquisition of the Bijupira and Salema Fields located at the same basin, Campos Basin, at a distance of approximately 80 km from the Polvo Field, tripling its current daily production to more than 33,000 barrels of oil. Such acquisition is subject to the approval of Brazil's National Agency of Petroleum, Natural Gas and Biofuels (ANP). Furthermore, 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. 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. For more information, please visit the Company's website: www.petroriosa.com.br.