Mr. Jose Arata reports

NEW STRATUS ENERGY ANNOUNCES MOU WITH PDVSA QUALIFIED PRIVATE COMPANY

New Stratus Energy Inc. has signed an MOU (memorandum of understanding) with GoldPillar International Fund SPC Ltd., a private entity organized and existing under the laws of the British Virgin Islands and which is in negotiations with Petroleos de Venezuela S.A. (PDVSA), the Venezuelan national oil company, to partner in mixed companies to develop oil and gas assets in Venezuela.

New Stratus will beneficially hold a 50-per-cent equity interest in GoldPillar which will in turn hold operatorship and equity positions in mixed companies (joint venture companies) with PDVSA ranging from 40 per cent to 49.99 per cent, although the intent will be to pursue majority equity positions through continuing negotiations with PDVSA and as applicable regulations may allow.

Under the arrangement with PDVSA, GoldPillar will advance the cash required to finance capital expenditures and operating expenses of the relevant mixed companies under the terms of business plans approved jointly with the Venezuelan authorities for each mixed company. Those advances will be reimbursed to GoldPillar through the mechanisms of assignment of volumes of crude oil and products specifically detailed in each mixed company joint venture agreement. Any funds to be advanced by GoldPillar to the relevant mixed company will be provided by New Stratus as shareholder financing to GoldPillar and such financing will be repaid to New Stratus prior to the distribution of any dividends to the shareholders of GoldPillar.

Finally, all proceeds of sales of crude and products on volumes approved by PDVSA, managed and attributable to GoldPillar will be used to reimburse capital expenditures and operational costs, as well as to pay dividends to shareholders of GoldPillar.

Initial joint venture company

The first joint venture between PDVSA and GoldPillar, through an existing mixed company, consists of four on-shore fields located in the prolific Eastern basin of Venezuela. The fields have produced almost 600 million boe (barrels of oil equivalent) since production began in 1959 and produced at a maximum rate of 60,000 boepd (barrels of oil equivalent per day) in 1960. Due to infrastructure erosion and lack of capital investment, production since 2017 has been minimal.

The current business case of these fields calls for infrastructure improvements and to begin producing the most prolific existing wells. Over the course of the new 27-year contract, operating expenses are expected to be approximately $709-million (U.S.) and capital expenditures are expected to be approximately $693-million (U.S.), both of which are expected to be financed primarily through cash flow over the course of the 27-year contract. The corporation expects to release more detailed information, including cash flow estimates in connection with entering into definitive agreements with GoldPillar.

GoldPillar is expecting to obtain final approval from local authorities and to complete this transaction with PDVSA by the end of August, 2023, with the objective to commence the activities in the fields by October, 2023.

We seek Safe Harbor.