Petro-Victory Energy and Azevedo & Travassos Ink MOU for Strategic Acquisition

On July 2, 2025, Petro-Victory Energy Corp. (TSXV: VRY), a key player in the Brazilian oil and gas sector, announced a significant development in its business strategy. The company has signed a binding memorandum of understanding (MOU) with Azevedo & Travassos Energia S.A. (ATE), which aims to establish a business combination that will see ATE acquiring all outstanding shares of Petro-Victory. This transaction represents a strategic move to enhance both companies’ operational synergies and increase shareholder value.

The proposed acquisition involves a capital increase by ATE, amounting to approximately R$150 million (about USD$27.68 million), to facilitate the transaction through a private placement of 205,479,453 units priced at R$0.73 (CAD$0.18) each. The transaction is designed to leverage the strengths of ATE and Petro-Victory, ultimately resulting in Petro-Victory transitioning into a wholly-owned subsidiary of ATE. In this new structure, existing shareholders of Petro-Victory will become shareholders of ATE, thus allowing them to benefit from the collective assets and future growth potential of the two companies.

This strategic decision is expected to lead to an enhancement in shareholder value by combining the diverse portfolio of production and exploration assets of Petro-Victory with ATE's growth strategy. As part of the transaction details, Petro-Victory shareholders will not only receive ATE shares but will also be entitled to a ten percent gross overriding royalty (GORR) on new production from existing oil fields. This GORR is set to apply for fifteen years from the commencement of commercial production from the designated fields.

In addition, the shareholders will also have the opportunity to receive contingent payments in relation to existing partnerships, further adding potential revenue streams for them. The estimated enterprise value of the transaction has been assessed at approximately USD$39.5 million (CAD$53.6 million), taking into account Petro-Victory's outstanding debt and contingent payments.

The transaction is contingent upon several conditions, including the completion of the capital increase by July 12, 2025. ATE will have the discretion to extend this deadline for up to thirty days. The parties will also need to finalize a definitive agreement, which will outline expectations and commitments typical for such transactions. Furthermore, the transaction requires approvals from shareholders and compliance with regulatory requirements, including those set by the TSX Venture Exchange (TSXV).

Petro-Victory Energy is known for its portfolio that includes 49 concession contracts covering over 276,755 acres, alongside joint operations in Capixaba Energia with BlueOak. The company emphasizes disciplined investments in low-risk assets to foster sustainable growth, aiming to create lasting shareholder value. On the other hand, ATE, founded in 2023, is dedicated to developing onshore oil and gas assets, specifically in Brazil's Potiguar Basin, focusing on sustainable growth as well.

Both companies view this transaction as mutually beneficial, paving the way for a more robust energy presence in the dynamic Brazilian market. With ongoing diligence and stages ahead before the deal can finalize, the next few months are crucial for both firms as they work towards establishing a bright future in the energy sector.

This planned acquisition represents a noteworthy investment opportunity in the face of the evolving energy landscape, with both petrochemical companies keen on maximizing their operational efficiencies and strategic market positioning. As negotiations continue, both parties remain optimistic about the potential of this deal to create significant returns for their shareholders and stakeholders, while continuing to address the pressing needs of energy production in Brazil and beyond.

Topics Energy)

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