Portugal: Porto Signs Definitive Agreement to Explore Unconventional Resource Potential
Following up on its inital announcement last November, Porto Energy Corp., has it has entered into a definitive joint venture agreement with Sorgenia International B.V., Netherlands ("Sorgenia"), and Rohöl-Aufsuchungs Aktiengesellschaft, Austria ("RAG"), to jointly evaluate the unconventional resource potential of the Lower Jurassic (Lias) stratigraphic interval within Porto's concessions in Portugal.
Porto will retain operatorship of the Company's concessions and the joint venture. The area to be jointly evaluated is approximately 450,000 acres. The Lias stratigraphic interval is being pursued as an unconventional resource throughout Europe.
Under the terms of the agreement, Sorgenia and RAG will each initially secure a 32.33% working interest specifically in the Lias interval in exchange for their participation in the first phase of a three phased work program.
The first phase to be completed by December 31, 2012, is focused on developing a comprehensive geophysical and geochemical analysis of the Lias interval.
Upon entry into the second phase, Sorgenia and RAG will each be deemed to have earned a 32.33% interest in the Lias interval. Second phase activities include the drilling of two deep wells and additional geochemical and geophysical analysis. The costs associated with the two wells will be shared equally between Sorgenia and RAG capped at a gross cost of US$10.0 million, net of mobilization and demobilization costs. The second phase will begin immediately following the first and must be completed by August 1, 2014, but is subject to extension.
Porto will not be required to fund the joint venture until the third phase unless phase one and two encounter cost overruns as discussed below. The costs for the third phase work program will be borne by all parties according to their working interest in the Lias interval.
"With the signing of a definitive agreement, and in conjunction with our valued partners, we are now able to advance our efforts in evaluating the tight oil potential of the Lower Jurassic in our concessions," said Joseph Ash, President and CEO of Porto. "Acting on JV opportunities allows us to more fully evaluate the potential of our substantial Portuguese holdings while reducing our costs and better managing exploration risk and we expect it to remain part of our overall strategy going forward."