Petro-Victory Energy Corp. (TSX-V:VRY) has strategically positioned itself as a significant player in Brazil's oil and gas sector.
With a meticulous approach, the company has secured 100% operating and working interests across 41 licenses, spanning an extensive area totaling 272,912 acres in two prolific basins.
Central to Petro-Victory's modus operandi is its commitment to generating accretive shareholder value through disciplined investments in assets characterized by high impact and low risk.
The recent announcement of the SPT-129 workover rig's arrival from Braserv Petróleo at the São João field underscores Petro-Victory's strategic initiatives. The expedited commencement of a comprehensive workover program targeting new oil production from 14 additional zones across three producing wells signifies a calculated move aimed at optimizing operational efficiency and capitalizing on untapped reserves.
São João field's substantial proved plus probable (2P) oil reserves, estimated at 1.9 million barrels, boast a NPV10 valuation of US$73.5 million, serving as a testament to the field's immense potential.
The delineation of the workover program, delineating zones within the SJ-11, SJ-01, and SJ-06 wells, reflects Petro-Victory's strategic focus on maximizing production yields while minimizing operational risks.
Against the backdrop of Brazil's ascension as a key player in global energy markets, Petro-Victory Energy is poised to capitalize on burgeoning opportunities, fueling sustainable growth and value creation for its diverse array of stakeholders. As the company embarks on an ambitious work plan for 2024, Petro-Victory's strategic maneuvers are primed to solidify its status as a preeminent force in Brazil's energy sector.
In an exclusive interview with Proactive, Richard Gonzalez, CEO of Petro-Victory Energy, delves into the nuanced intricacies of the company's strategic foray into Brazil's energy landscape. With a discerning analysis of regional dynamics and regulatory frameworks, Gonzalez sheds light on Petro-Victory's positioning as a trailblazer in Brazil's evolving energy sector.
Proactive: Brazil is the largest oil producer in South America, making it an intriguing topic. So, let's start with the basics: What factors initially attracted you to working in Brazil?
RG: I've been conducting business in Latin America for the past 30 years. My mother hails from Brazil, and my father from Paraguay, granting me fluency in Portuguese and Spanish. With Brazil's predominant language being Portuguese, we possess a deep understanding of its culture and business practices.
The impetus for our venture into Brazil in 2016 stemmed from the announcement of Petrobras (NYSE:PBR)' monopoly breakup. This marked the initiation of their divestiture program where mature fields were put up for sale. Petrobras (NYSE:PBR), facing challenges on their balance sheet, opted to concentrate their resources on offshore operations, divesting from onshore and shallow water assets. Seizing the opportunity to emerge as a significant player behind a major entity, we embarked on our Brazilian venture, recognizing the immense potential in being positioned as a key contender in the market.
You were able to acquire assets quickly. Was that part of your strategy?
There was a significant correction in oil prices in 2015 and many investors were pulling back. However, we viewed this as an opportunity to act counter-cyclically, against the prevailing trend. As we often say in Texas, we like to buy our straw hats in the wintertime. So, we turned our attention to Brazil, recognizing it as the ninth largest economy globally, yet largely dominated by one company, Petrobras. With its extensive infrastructure, reserves, production capabilities, pipelines, and refineries, Brazil presented an ideal environment for strategic acquisitions.
After meticulous research spanning several years, analyzing various basins, geology, and geophysical data, we identified prime locations for investment. Focusing on the most oil-rich basin in Brazil, we strategically acquired 41 blocks totaling over 270,000 acres, setting the stage for further asset acquisitions and development.
Could you discuss the regulatory landscape in Brazil? Was it relatively easy in the past, or has it become more streamlined and established over time?
The regulatory framework in Brazil is relatively straightforward. The country boasts world-class economics in the oil and gas sector. For onshore operations, we pay a remarkable 5.5% royalty and hold a 94% NRI (net revenue interest). Selling our oil at Brent prices is advantageous, and the existing infrastructure is robust. However, becoming an operator requires patience—it's not something achieved overnight. The process involves obtaining environmental licenses, ensuring all paperwork is in order, and making strategic investments. Safety and community economics are top priorities throughout this process. Overall, Brazil provides an excellent operating environment.
You genuinely aim to integrate as a citizen while working there, which greatly enhances the support received from both local and federal governments, correct?
That's absolutely accurate. We take the ESG component very seriously. A couple of years ago, we constructed a 40,000-kilowatt solar project on one of our fields to achieve carbon neutrality and uphold responsibility from that standpoint. Currently, we consume 30% of all generated electricity, with the remaining 70% supplied to the grid. As we expand, we accrue credits for all our facilities, spanning from the fields to our offices. We have a robust social program, exemplified by our participation in events like the day of the children last September. We hosted 900 participants from the community, contributing to schools and aiding over 300 students. Our social initiatives grow alongside our company, forming an integral cornerstone, wherein all our team members, whom we consider part of the Petro Victory family, actively participate. It's a highly rewarding aspect of our operations.
Let's end by bringing it back to the company. I know 2024 is a big year for the company. Is this the most significant year that you've seen since you started it?
Every year holds significance as it contributes to building our platform. In the initial years, we focused on establishing the foundation, which included land acquisition and infrastructure development. Additionally, we invested time in geological and geophysical work, including the reprocessing of seismic data, a meticulous process that spanned three years but adds substantial value and unveiled promising prospects. Furthermore, assembling our team in Brazil has been a rewarding experience.
This year marks a pivotal moment as our efforts from the past seven years culminate in oil production, leading to cash flow generation and reinvestment in our assets. This creates immediate and long-term shareholder value, benefiting not only our investors but also the communities and our PetroVictory family.
