Fortress Energy along with Petrominerales Ltd. acquires tight oil properties in Reconcavo Basin, Brazil
Thursday, Dec 20, 2012Fortress Energy Inc. ("Fortress" or the "Company") is pleased to announce it has, along with Petrominerales Ltd., acquired 100 percent of the shares of a Brazilian private oil and gas company, Alvopetro S.A. Extracao de Petroleo e Gas Natural ("Alvopetro S.A."). The ownership interest in Alvopetro S.A. is 25 percent Fortress and 75 percent Petrominerales, with Petrominerales assuming operatorship. The oil and gas interests acquired include a 100 percent working interest in seven exploration Blocks located in the Reconcavo Basin, covering an area of approximately 160 sq km and a 100 percent working interest in three onshore producing oil fields: Bom Lugar, located in the Reconcavo Basin, Jiribatuba, located in the Camamu Basin and Aracaju, located in the Sergipe Basin. The producing oil assets have current production of approximately 60 barrels per day of light oil with significant development potential at Bom Lugar utilizing horizontal wells and multistage hydraulic fracture stimulation.
The Reconcavo Basin is located 85 km north of the city of Salvador where the Brazilian oil industry found its beginning with the first oil discovered in 1939. Since then the cumulative production from the Reconcavo Basin has totalled 1.5 billion barrels of light oil from 86 fields. There have been 6,000 wells drilled into the Reconcavo Basin spanning an area of approximately 10,000 sq km. Current production is over 60,000 barrels of oil equivalent per day, and the majority of the basin's production comes from the Sergi, Agua Grande, and Candeias reservoirs found at depths of 315 to 1,975 meters in this area. The Reconcavo Basin has a well-developed infrastructure and active service sector, with crude oil and natural gas pipelines and numerous roads in an area which is predominantly farm land.
As previously announced, Fortress has identified, from prior drilling, a pervasive oil saturated tight GOMO sand sequence with porosities estimated to be between 9 - 15 percent existing within a 1,000 meter thick, rich Candeias Shale source rock at a depth of between 2,500 and 3,400 meters and which exists on much of the Alvopetro S.A. lands. Future activities will involve multi-well development, multistage hydraulic fracturing and horizontal drilling over the approximate 200 sq km of lands and existing producing fields. There are mature oil fields in the Reconcavo Basin that are producing from the GOMO sand in a similar geological setting located both to the north and south of the acquired lands the fields of which have produced over 120 mmbbls to date, and there have been numerous prior tests and oil shows from the GOMO sands throughout the basin confirming a pervasive oil saturated hydrocarbon system.
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