New Stratus Energy signs farm-in MOU with Vultur Oil

Executive Summary

• New Stratus Energy Inc. has signed a Memorandum of Understanding (MOU) with Vultur Oil to acquire a 32.5% working interest in two oil and gas concession contracts (REC-T-108 and REC-T-107) located in the Reconcavo basin, Bahia, Brazil.
• The transaction involves a two-stage investment totaling $10 million USD, with $5 million due at closing and $5 million due within 180 days of the first-stage completion.
• The assets include significant proved and probable reserves, with an initial 15% working interest carrying $15.2 million in NPV10 proved reserves, increasing to $32.8 million NPV10 upon full earning of the 32.5% interest.

Key Details

• Transaction Structure: Farm-in agreement to acquire a 32.5% working interest in Blocks REC-T-108 and REC-T-107 from Vultur Oil (which currently holds 100% working interest).
• Asset Location: Reconcavo basin, onshore, Bahia, Brazil. Blocks are adjacent to Petrobras’s Aracas field.
• Reserves Estimates (Effective Aug 1, 2025):
  • At Closing (15% Working Interest):
    • Gross Proved Reserves: 1.42 million boe (NPV10: $15.2 million USD).
    • Gross Proved + Probable Reserves: 2.30 million boe (NPV10: $24 million USD).
  • Upon Completion of Second-Stage Investment (32.5% Working Interest):
    • Gross Proved Reserves: 3.07 million boe (NPV10: $32.83 million USD).
    • Gross Proved + Probable Reserves: 4.98 million boe (NPV10: $52 million USD).
• Financial Consideration & Investment:
  • First-Stage Investment: $5 million USD at closing, to be used for developing a horizontal re-entry well in the existing Gop well and/or a stepout of the Gren discovery well. Completion estimated within 180 days of closing.
  • Second-Stage Investment: $5 million USD within 180 days of first-stage completion, to be used for drilling new lateral wells from Gren or Gop.
  • Total Capital: $10 million USD.
  • Funding: No debt contemplated; no finders' fees payable.
• Regulatory & Closing Conditions:
  • Subject to ANP (National Agency of Petroleum, Natural Gas and Biofuels of Brazil) approval.
  • Subject to TSX Venture Exchange approval.
  • Phased Transfer: Initial 15% interest transfers upon first ANP approval (expected within 90 days). Remaining 17.5% transfers upon completion of second-stage investment and subsequent ANP approval.
• Operational History & Potential:
  • Gren Well (Block 108): Re-entered and hydraulically stimulated in April 2025. Currently under long-term testing with ESP artificial lift. Initial results show 1P volumes up to 100,000 barrels of light 36-degree-API oil.
  • Gop Well (Block 107): Drilled in 2017, reached 3,300m TVD. Confirmed hydrocarbons in Agua Grande and Sergi formations. Produced light crude between Feb 2018 and Sept 2019.
  • Unitization Claim: Vultur is involved in a unitization process with Petrobras regarding production drainage from the adjacent Aracas field. Net proceeds from any successful claim (after legal costs) will be distributed to joint partners.
  • Historical Context: Petrobras drilled an exploratory well in 1956 encountering natural gas; offsetting Biriba concession has produced over 42 billion cubic feet from similar formations.

Notable Quotes

• "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." — Wade Felesky, President and Director of New Stratus