Calgary, Alberta--(Newsfile Corp. - August 5, 2025) - New Stratus Energy Inc. (TSXV: NSE) ("New Stratus", "NSE" or the "Corporation") is pleased to announce the signing of a significant farm-in Memorandum of Understanding ("MOU") with Vultur Oil ("Vultur", and together with NSE, the "Joint Partners") to develop the Concession Contracts (as defined below) located in the State of Bahia, Brazil. The arms-length MOU was signed on August 4th, 2025.
Concession Contracts
The Blocks comprise two (2) concession contracts for the exploration, development and production of oil and gas, being: (i) N° 48610.010812/2015-04 issued by the National Agency of Petroleum, Natural Gas and Biofuels of Brazil ("ANP") dated December 23, 2015, over a block known as REC-T-108 (the "108 Contract"); and (ii) N° 48610.005425/2013-86 issued by the ANP dated August 30, 2013, over a block known as REC-T-107 (the "107 Contract" and together with the 108 Contract, the "Concession Contracts" or "Blocks"). Vultur holds a 100% working interest in the Concession Contracts.
The Concession Contracts are located in the Reconcavo Basin, onshore, in the State of Bahia in eastern Brazil. The Blocks are adjacent to the Araças field which is owned and operated by Petrobras, the state-owned oil company of Brazil. The three main reservoirs in the basin are the Candeias, the Agua Grande and the Sergi. Since 2012, Petrobras has produced approximately 5.9 million barrels of oil equivalent (boe) (3.6 million barrels of oil and 375 million cubic meters of natural gas) from the Aracas field.
Historical Operations
In April of 2025, Vultur successfully re-entered and hydraulically stimulated the Candeias Formation in the GREN well (originally drilled in 2019), located in the northern portion of Block REC-T-108. Following the recompletion with electronic submersible pump (ESP) artificial lift, the well is currently under long term testing. Initial results are promising with 1P volumes reaching up to 100,000 barrels of light 36° API oil thus far. The well will remain on long term test through October to establish operating parameters and a stable production base.
Prior to the GREN, the previous owner drilled the GOP exploration well in REC-T-107 in 2017. The well reached a total vertical depth (TVD) of 3300 meters, confirming the presence of hydrocarbons in both the Agua Grande and Sergi primary target formations. The well was completed and tested in the Sergi, and between February 2018 and September 2019 the well produced light crude demonstrating producibility from these sands. The intricate reservoir architecture highlights significant potential for the area under horizontal drilling and multistage fracking- techniques which are expected to substantially increase rates and ultimate recovery.
In 2021, the previous owner commenced a unitization process with Petrobras SA seeking recognition of certain production from Petrobras' adjacent Aracas field that was being drained from the areas of the Concession Contracts, including a claim against associated past revenues. Vultur remains involved in the unitization claim and, upon earning the entire thirty percent two point five percent (32.5%) working interest, net proceeds (if any and after legal costs) from unitization or equalization shall be distributed among the Joint Partners according to their working interests.
In addition to the above, in 1956, Petrobas drilled an exploratory well in the lower portion of the concession at a location called Progresso encountering natural gas. While Petrobras had not prioritized natural gas development at the time, over 42 billion cubic feet of natural gas has been produced from the same Agua Grande and Sergi formations at the offsetting Biriba Concession.
Reserves
At Closing, the reserves estimates(1) attributable to New Stratus' 15% working interest in the Blocks are as follows(2):
Gross Proved Reserves are estimated at 1.42 million barrels of oil equivalent ("BOE") having a before-tax net present value of future net revenue at a 10% discount rate ("NPV10") of US$15.2 million.
Gross Proved plus Probable Reserves are estimated at 2.30 million BOE having a NPV10 of US$24.0 million.
Assuming the completion of the Second Stage Investment, the reserves estimates(1) attributable to New Stratus' 32.5% working interest in the Blocks are as follows(2):
Gross Proved Reserves are estimated at 3.07 million BOE having a NPV10 of US$32.83 million.
Gross Proved plus Probable Reserves are estimated at 4.98 million BOE having a NPV10 of US$52.0 million.
Notes:
(1) See "Oil and Gas Advisory", below.
(2) The working interest of New Stratus in the Blocks will be 15% at Closing and 32.5% upon completion of the Second Stage Investment.
The reserves information attributable to the Blocks is effective as of August 1, 2025 and based on the procedures and standards contained in the Petroleum Resources Management System ("PRMS") of the Society of Petroleum Engineers. The use of PRMS differs from the reserves estimation requirements under Canadian securities laws. See "Oil and Gas Advisory", below.
MOU Terms
In accordance with the terms of the MOU, the Joint Partners intend to negotiate, settle and execute: (i) a definitive farm-out agreement (the "Farm-Out Agreement" or the "Transaction") providing for, among other things, the assignment and transfer to NSE of a thirty-two point five percent (32.5%) working interest in, the Concession Contracts (the "NSE Working Interest"); and (ii) a joint operating agreement (the "JOA" and together with the "Farm-Out Agreement" the "Definitive Agreements") for the development of the Concession Contracts.
Upon execution of the Definitive Agreements, Vultur shall submit the assignment approval application to the Brazilian National Petroleum Agency ("ANP") to permit the acquisition by NSE. The assignment approval application will be phased and after the obtainment of ANP's first approval, which is expected within 90 days, the initial fifteen percent (15%) working interest will be transferred to NSE on the date of the closing of the transaction (the "Closing"). The remaining seventeen point five percent (17.5%) working interest will be subject to a second ANP approval, in accordance with the terms of the Definitive Agreements, and will occur upon the completion of the Second Stage Investment (as defined below). Upon earning its working interest in the Blocks, NSE will participate in proportion to its working interest in any net proceeds from any operations and other income related thereto. Direct capital investments and operational costs are to be borne by the Joint Partners in proportion to their respective working interest in the Concession Contracts.
The forms of the Definitive Agreements will contain customary terms and conditions of transactions of these types and nature and are expected to comply with the model farm-out and joint operating agreement 2023 of the Association of International Energy Negotiators. Closing remains subject to ANP approval and the approval requirements of the TSX Venture Exchange.
As exclusive and final consideration for the transactions contemplated by the Definitive Agreements NSE will be responsible for:
At Closing, funding of five million US Dollars (US$5,000,000), which will be used to develop a horizontal re-entry well in the existing GOP well and/or a step-out of the current discovery well at GREN (the "First Stage Investment"). The completion of such well or intervention is estimated within 180 days from Closing (the "First Stage Activities"); and
Within 180 days from completion of the First Stage Activities, funding an additional amount of five million US Dollars (US$5,000,000), which will be used for drilling of new lateral wells out of either the GREN or GOP wells (the "Second Stage Investment").
No debt is currently being contemplated to fund the Transaction and no finders fees are payable.
Wade Felesky, President and Director of New Stratus, commented: "This is a very exciting opportunity for NSE to partner with Vultur in this world class asset in the heart of Brazil. The Reconcavo Basin has a rich history of hydrocarbon development and production with untapped exploration upside. This deal provides for enhanced shareholders returns as we continue to work on closing Block 60 in Ecuador this fall, further develop Soledad in Mexico and advance other value added projects in Latin America."
Horizon Partners acted as financial advisor to New Stratus with respect to the Transaction.
Contact Information
Jose Francisco Arata
Chairman & Chief Executive Officer
jfarata@newstratus.energy
Wade Felesky
President & Director
wfelesky@newstratus.energy
Mario Miranda
Chief Financial Officer
mmiranda@newstratus.energy - (647) 498-9109
Forward-Looking Information
Certain information set forth in this news release constitutes "forward-looking statements", and "forward-looking information" under applicable securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements may be identified by the use of conditional or future tenses or by the use of words such as "will", "expects", "intends", "may", "should", "estimates", "anticipates", "believes", "projects", "plans", and similar expressions, including variations thereof and negative forms. Forward-looking statements in this news release include, among others, satisfaction or waiver of the conditions precedent to the Definitive Agreements; the anticipated date of Closing; the terms and timing of the First Stage Investment and Second Stage investment; receipt of required legal and regulatory approvals for the Definitive Agreements; and the portion of the working interest ultimately awarded pursuant to the Farm-Out Agreement. Forward-looking statements are based on the Corporation's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them.
In respect of the forward-looking statements contained herein, the Corporation has provided them in reliance on certain key expectations and assumptions made by management, including expectations and assumptions concerning the execution of the Definitive Agreements (including receipt of all approvals and satisfaction of all conditions to the completion thereof) on terms acceptable to the Corporation or at all, the availability of financing on terms acceptable to the Corporation, prevailing weather conditions, prevailing legislation affecting the oil and gas industry, commodity prices and exchange rates.
Although NSE believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because NSE can give no assurance that they will prove to be correct. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks); risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; the impact of general economic conditions in Canada and Brazil; prolonged volatility in commodity prices; the risk that the U.S. administration imposes tariffs affecting the oil and gas industry in Brazil or globally, and that such tariffs (and/or retaliatory tariffs in response thereto) adversely affect the demand for the Corporation's production, or otherwise adversely affect the Corporation's business or operations; the risk that oil prices are lower than anticipated; determinations by OPEC and other countries as to production levels; the risk of changes in government policy on resource development; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; the timing for conducting planned operations and the results of such operations, including flow rates and resulting production; the availability of the requisite personnel and equipment to conduct operations; the ability to successfully integrate operations and realize the anticipated benefits of acquisitions; the ability to increase production, and the anticipated cost associated therewith; failure of counterparties to perform under contracts; changes in currency exchange rates; interest rate fluctuations; the ability to secure adequate equity and debt financing; and management's ability to anticipate and manage the foregoing factors and risks.
There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. New Stratus undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. Actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits may be derived therefrom.
Oil and Gas Advisory
The reserves information attributable to the Blocks is effective as of August 1, 2025 and prepared by an internal qualified reserves evaluator of Vultur. The reserves estimate is based on the procedures and standards contained in the PRMS of the Society of Petroleum Engineers, which is the reserves estimation methodology used by Vultur. The use of PRMS differs from the reserves estimation requirements under Canadian securities laws. The reserves estimate provided herein is for informational purposes only and therefore should not be unduly relied upon. The information was not prepared in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Notably, the reserves estimates are based on constant pricing using US$63.00 Brent oil pricing while NI 51-101 requires forecast pricing. References in this news release to reserves information are not indicative of long term performance or of ultimate recovery.
Statements relating to reserves are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated. The reserve estimates described herein are estimates only. The actual reserves may be greater or less than those calculated.
It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future net revenues attributed to such reserves.
References in this news release to initial production rates, test production rates, other short-term production rates or initial performance measures relating to new wells are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter, and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating production for the Corporation. Accordingly, the Corporation cautions that the test results should be considered to be preliminary.
Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 thousand cubic feet (Mcf) per 1 barrel (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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.
Note on Currency and Exchange Rates
In this news release, references to "$" or to "US$" are to United States dollars. In this news release, the Corporation has used a currency exchange rate of US$1.00 = CAD$1.38
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.
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
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SOURCE: New Stratus Energy Inc.
