Update on acquisition of the Bijupirá and Salema Oil Fields and FPSO Fluminense

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

Summary of Net Present Value of Cash Flow

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:

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.

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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.