Petro-Victory enters definitive deal with Azevedo

Executive Summary

• Petro-Victory Energy Corp. entered into a definitive association agreement to contribute selected Brazilian assets (Andorinha field, six exploration concessions, and a 50% Brava option) to Azevedo & Travassos Energia SA (ATE) in exchange for a 10.25% ownership stake in ATE.
• The transaction has an implied total value of approximately $5.6 million (U.S.), comprising the equity stake (valued at ~$2.0 million based on March 26, 2026 market data) plus the assumption of certain liabilities and obligations by ATE.
• The deal is structured in phases, with initial share issuance expected in Q2 2026, subject to regulatory approvals from Brazil’s National Agency of Petroleum, Natural Gas and Biofuels and other customary conditions.

Key Details

• Transaction Structure: Petro-Victory will contribute identified assets to a newly formed subsidiary, which will be incorporated into ATE. Petro-Victory will receive newly issued common shares of ATE representing 10.25% of its basic issued and outstanding share capital at initial closing.
• Consideration Value:
  • Equity Value: Approximately $2.0 million (U.S.), based on the volume-weighted average price of ATE shares (AZTE3) on the B3 as of March 26, 2026.
  • Total Implied Value: Approximately $5.6 million (U.S.), including the equity stake and the settlement/assumption of certain liabilities and contractual obligations by ATE.
• Assets Contributed:
  • Andorinha field concession.
  • Six exploration concessions in the Potiguar basin: POT-T-566, POT-T-304, POT-T-327, POT-T-352, POT-T-436, and POT-T-474.
  • 50% option to acquire interest in certain oil and gas assets subject to a separate acquisition process with Brava Energia SA (previously disclosed Feb 10, 2025).
• Assets Retained by Petro-Victory:
  • 100% interest in the Sao Joao field (Eneva partnership).
  • Partnership in Capixaba Energia with BlueOak Investments.
  • 100% ownership of Alto Alegre field and Trapia field production concessions.
  • 100% ownership in 28 exploration blocks across the Potiguar basin.
• Accounting & Balance Sheet Impact:
  • ATE shares to be recorded at fair value at issuance.
  • Expected to extinguish approximately $2.2 million of accrued contingent liabilities associated with the Andorinha concession partnership.
  • Expected to reduce contractual obligations related to the six exploration blocks by approximately $1.4 million (U.S.).
  • Book value of contributed assets estimated at approximately $5.6 million (U.S.).
• Timing and Approvals:
  • Targeted for completion in the second quarter of 2026.
  • Subject to standard regulatory, corporate, and stock exchange approvals in Brazil and Canada, including approval from Brazil's National Agency of Petroleum, Natural Gas and Biofuels.
  • Asset transfers will occur on a phased basis as regulatory approvals are received.

Notable Quotes

• No direct quotes from management were included in the provided text.