Petro-Victory: Fueling Brazil's Onshore Oil And Gas Potential

Jim Gordon

Hi, I’m Jim Gordon and you're watching Market One Minute. Joining us is Richard F. Gonzalez. He is the Chairman and CEO of Petro-Victory Energy. Richard, welcome.

Richard F. Gonzalez

Thank you, Jim, pleasure being here.

Jim Gordon

Okay, let's start with a little overview on the company.

Richard F. Gonzalez

I founded Petro-Victory in 2006 with Mr. John Harvison, legendary Texas oilman based out of Fort Worth, Texas. Mr. Harvison started his oil and gas company in 1958 so very long in the tooth in the oil and gas business. Petro-Victory was founded to focus on Latin America and specifically onshore upstream, which is exploration and production.

Jim Gordon

You have quite an experienced team that you've gathered together. Tell us a little bit about them.

Richard F. Gonzalez

Jim, we have over 300 years of experience on our board and our management team. We have a board of directors comprised of former international CEOs of publicly traded companies, 60+ billion dollars. We have oilmen who have made their fortunes by producing oil and putting it into the tanks and they've done that for four decades. So we have the experience that I value so much from men that have already built the companies that can help us to complete our vision and our goal.

Jim Gordon

Got to ask, what motivates you and a team of Texas oilmen to work in Brazil?

Richard F. Gonzalez

Well, again, Petro-Victory was created to focus on Latin America, and when you're from Texas and you're focusing on Latin America, you always look for above-market returns and where those opportunities lie. Jim, I'm a first-generation American. My mom is from the country of Brazil, so my first language is Portuguese. So I understand the culture, I understand how to conduct commerce, I'm fluent in the language, so I feel very comfortable in Brazil. 

And so when we were looking at the scope of Latin America, what attracted us to Brazil was in 2016, Petrobras, the national oil company of Brazil, who has had a monopoly on upstream, midstream, and downstream, the entire oil industry since 1954, announced a divestiture program where they were going to sell everything that wasn't deep offshore pre-salt, which is a world-class multi-billion dollar play for them. And we were going to sell all their non-core assets, again from an independent and a junior oil and gas company to be able to come in and follow a national oil company. It's very rare when one has the opportunity to do that. We saw it and we ceased it in 2016.

Jim Gordon

Richard, I saw you have a valuation on your reserves of more than 250 million. Tell us about the valuation of your reserves.

Richard F. Gonzalez

Jim, we have 38 blocks comprising of over a quarter of a million acres onshore in Brazil. And of those 38 blocks, 6 have been quantified and audited reserves. And the value of those reserves on those 6 blocks is $256 million.

Jim Gordon

On the 6?

Richard F. Gonzalez

On the 6 out of 38. The other 32 blocks are being quantified and qualified this year, and we'll have those numbers for the value of the NPV10 2P reserves by the end of the year.

Jim Gordon

Richard, everything we've talked about so far is in regard to conventional drilling. You being from Texas, are there any unconventional opportunities in Brazil?

Richard F. Gonzalez

Jim, that's a great question. There's a tremendous unconventional play in our acreage. Two and a half years ago, we commissioned a world-leading engineering firm to go off and do a complete petrophysical report on the potential of the unconventional play that we have underneath our quarter of a million acreage. We recently received that report, 182 pages, and they give us oil in place numbers of what the source rock has potential of oil in place and they give us a low case, a mean case and a high-end case. And the mean oil in place is 36 billion barrels of oil. So it is a tremendous opportunity for us to tap into the unconventional. 

We have a team of experienced geoscientists and drillers being from Texas, the home and the pioneers of unconventional drilling that has changed the spectrum of the oil and gas industry and made the United States the largest oil producer in the world. We now are looking to deploy that know-how, that expertise, our investments in the Potiguar Basin where we have our acreage over this unconventional play.

Jim Gordon

Richard, what is the company's approach to ESG?

Richard F. Gonzalez

Jim, we take our corporate responsibility on ESG very seriously, but two and a half years ago, we partnered with the leading solar development company in Brazil and developed a solar array to come on and build a solar plant in one of our fields. That solar plant came online about a year ago and it produces 40,000 kilowatts of electricity. So, that responsibility to have a carbon neutral footprint along with the fiscal responsibilities to our shareholders, electricity is our largest OPEX line item. This particular solar project that we built has a two-and-a-half-year payback. We're already over a year into it, and we consume 30% of the energy that our solar plant today produces. The other 70% goes back into the grid, we get the credit for it. So as we bring more fields online, those credits will be applied accordingly. 

Also, on the social programs. This one hits my heart in a special spot having my mom's family from Brazil to be able to go back and conduct commerce and give people jobs and invest in the communities where we work, where our workers work, where we provide energy security and all of the above. We have a fantastic team in Brazil and when I say we don't even call it a team we call it the Petro-Victory family and the Petro-Victory family embraces all of these virtues and they come full force when we have one of our social program events. 

Last year, we aided and helped over 300 students. We have over 900 family members in our Christmas program. Making a direct impact in our backyard is extraordinarily important to us. Our social programs just expand as we expand. And again for us, it's making a difference in the lives of those that live in the communities where we work.

Jim Gordon

Final question, Richard, what is next for Petro-Victory?

Richard F. Gonzalez

Jim, what's next for Petro Victory? We have $256 million in value of our reserves. Over half, approximately $130 million is in proven reserves. Getting those reserves out of the ground in the safest most responsible manner and economical, putting him into the tanks and turning that into cash flow and generating the shareholder accretion and the value for our shareholders. So again, in summary, what's next? Converting the low hanging fruit to 1P into oil, into cash flow and reinvesting.

Jim Gordon

Richard, it has been a pleasure. Thanks for joining us.

Richard F. Gonzalez

Thank you very much, Jim.

ABOUT PETRO-VICTORY ENERGY CORP.:  

Petro-Victory Energy Corp. VRY is a dynamic energy company focused on the acquisition, development, and production of crude oil and natural gas resources in Brazil.

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