The acquisition, valued at approximately US$39.5 million, aims to create increased shareholder value through an expanded portfolio and enhanced growth strategy in the Brazilian energy sector.
Petro-Victory Energy Corp, an oil and gas company with a diversified portfolio of production and exploration assets in Brazil, and Azevedo & Travassos Energia S.A. ("ATE"), a publicly traded Brazilian energy company, today announced the signing of a binding Memorandum of Understanding (MOU). This agreement, formalized on July 2, 2025, sets the stage for ATE to acquire all issued and outstanding common shares of Petro-Victory, with Petro-Victory becoming a wholly owned subsidiary of ATE.
The Transaction is designed to combine the businesses and assets of both entities, leveraging Petro-Victory's extensive production and exploration portfolio to supplement ATE's growth strategy. This strategic combination is expected to deliver enhanced shareholder value by creating a more robust and diversified energy entity in Brazil.
Under the terms of the Transaction, ATE will undertake a capital increase through a private placement of 205,479,453 Units of ATE at an issue price of R0.73(approximatelyCAD0.18) per Unit. This private placement is anticipated to generate aggregate gross proceeds of SA R150 million, translating to approximately $27.68 million and CAD$ 37.53 million based on current conversion rates. This capital infusion is a crucial step in financing the acquisition and supporting the combined entity's future growth initiatives.
Following the completion of the Capital Increase and other prerequisite conditions, certain Petro-Victory shareholders will convert existing claims against the Company and its affiliates into new common shares of Petro-Victory. Subsequently, ATE will acquire 100% of these outstanding Petro-Victory shares, issuing 266,000,000 ATE Shares to Petro-Victory's shareholders. These ATE Shares, which are registered and without par value, will be issued at a price of R0.73(CAD0.18) per share, distributed proportionally to the holders of Petro-Victory shares.
A significant aspect of the Transaction for Petro-Victory's shareholders of record at closing is the entitlement to a Gross Overriding Royalty (GORR). This GORR will be set at 10% on the gross revenue from all new oil production arising from existing fields within Petro-Victory's concessions prior to the MOU, or from new fields created after the MOU date in those same concessions. Notably, the GORR will exclude production from the São João Field reservoirs that are part of a partnership between Petro-Victory and Eneva S.A. The GORR will apply for a period of 15 years from the commencement of commercial production for new fields, or from the Closing Date for existing producing fields. Additionally, Petro-Victory shareholders will receive contingent payments tied to certain existing partnerships with third parties.
