Petro-Victory Energy Corp. (TSX-V:VRY) announced that it has struck a deal with Brazil’s Azevedo & Travassos Energia for a business combination that would see ATE acquire all outstanding shares of the Canadian oil and gas firm in a deal valued at about $39.5 million.
Under the terms of the proposed transaction, Petro-Victory would become a wholly owned subsidiary of ATE, with current Petro-Victory shareholders receiving 266 million ATE shares valued at $0.73 Brazilian Reais (C$0.18) apiece—representing a premium of roughly C$2.15 based on the company’s July 2 closing price.
The combination is expected to advance ATE’s growth strategy by integrating Petro-Victory’s diverse portfolio of production and exploration assets in Brazil. Petro-Victory holds 49 concession contracts covering over 276,000 acres in Brazil, as well as additional assets in partnership with Capixaba Energia. ATE, founded in 2023, operates in Brazil’s Potiguar Basin and manages assets through subsidiaries Azevedo & Travassos Petróleo and Phoenix Óleo e Gás.
ATE will fund the acquisition through a R$150 million (US$27.7 million) private placement, issuing over 205 million units at the same price per share. The Brazilian firm will also assume all outstanding Petro-Victory debt.
As part of the deal, Petro-Victory shareholders of record at closing will receive a 10% gross overriding royalty on future production from existing and newly created fields in the company’s current concessions—excluding reservoirs under a separate partnership with Eneva. The royalty will last for 15 years from commercial production or the closing date, depending on the field.
Shareholders may also receive contingent payments related to existing partnerships between Petro-Victory and third parties.
The deal remains subject to a number of conditions, including completion of the private placement by July 12 (subject to a 30-day extension at ATE’s discretion), execution of a definitive agreement, shareholder and regulatory approvals, and completion of audits by both parties.
No finder’s fees will be paid in connection with the transaction, and the companies cautioned there is no certainty the deal will close as proposed.