Mr. Richard Gonzalez reports

PETRO-VICTORY ANNOUNCES THE ACQUISITION OF 13 OIL FIELDS LOCATED IN THE POTIGUAR BASIN, RIO GRANDE DO NORTE, BRAZIL

Petro-Victory Energy Corp., pursuant to the press release dated Dec. 17, 2024, has signed a sale purchase agreement (SPA), in a 50/50 partnership with Azevedo & Travassos Petroleo (ATP), for the acquisition of 13 oil fields denominated as Polo Porto Carao and Polo Barrinha from 3R RNCE S.A. and 3R Potiguar S.A., subsidiaries of Brava Energia S.A.

Key highlights of the acquisition

• Oil fields: 13 oil fields with fully operational production facilities comprising 38,301 acres;
• Location: onshore Brazil, Potiguar basin, strategically located adjacent to Petro-Victory's existing assets;
• Production: current production of 250 barrels of oil per day with a high-impact work program to significantly increase oil production;
• Reported statistics: National Agency of Petroleum has reported volume of oil in place 125 million barrels, recovery factor 13.3 per cent;
• Total acquisition value: $15-million (U.S.) (net $7.5-million (U.S.) for Petro-Victory);
• Payment structure: The payment will be made in four tranches plus a gross overriding royalty, of which Petro-Victory's contribution will be pro rated at its 50-per-cent working interest.
  • $600,000 (U.S.) paid at signing;
  • $2.9-million (U.S.) to be paid at closing;
  • $3.5-million (U.S.) to be paid one year after closing;
  • $4.5-million (U.S.) to be paid two years after closing;
  • $3.5-million (U.S.) to be paid with a 7-per-cent gross overriding royalty.
• Participation: Petro-Victory 50-per-cent working interest and ATP 50-per-cent working interest;
• Seller: Brava Energia S.A.

Richard F. Gonzalez, chief executive officer, commented:

"This acquisition marks a transformative milestone for Petro-Victory, significantly enhancing our oil production capacity and increasing our proven reserves. We expect the updated reserve report will increase our proven reserves by 50 per cent. It also maximizes the substantial investments made by our subsurface, engineering and operations teams over the past five years in the Potiguar basin. Through disciplined strategy and technical expertise, we have built a strong position and deep understanding of this oil prolific basin. We are pleased to further strengthen our partnership with ATP through this acquisition, reinforcing our commitment to unlocking the full potential of the Potiguar basin."

Strategic rationale

The acquisition aligns with Petro-Victory's strategy to generate accretive shareholder value through disciplined investments in high-impact, low-risk assets in Latin America.

The 13 oil fields acquired in the Potiguar basin are adjacent to Petro-Victory's existing assets. The Potiguar basin is the most oil prolific basin onshore Brazil, and the newly acquired fields increase Petro-Victory's production and reserves.

Petro-Victory currently has three oil-producing fields and 34 exploration blocks in the Potiguar basin. Over the past five years, Petro-Victory has reprocessed and merged 12 volumes of 3-D seismic data covering more than 1,500 square kilometres in the Potiguar basin including volumes which cover the acquired fields. Petro-Victory has also performed an extensive hydrocarbon basin analysis, as well as an in-depth geological, geophysical and petrophysical interpretation.

Brava originally purchased the 13 oil fields from Petrobras between the years 2020 and 2022. The fields were discovered in 1976 by Petrobras and have produced 16.5 million barrels of oil to date with a 13.3-per-cent recovery factor.

Brava has a certified reserve report from DeGolyer and MacNaughton which we are commissioning to complete a National Instrument 51-101-compliant reserve report. This information will be published when available.

Financial and operational impact for Petro-Victory

• Increased production: The acquisition immediately adds 125 barrels of oil per day, net to Petro-Victory's production, with a high-impact workover program in place to significantly enhance production. The transaction includes the transfer of cash generation related to the production and sale of oil as of the signing date which will be credited to the company at the time of closing.
• Acquired infrastructure and equipment:
  • 13 production stations;
  • Tanks: a total of 40 tanks (30, 40 and 60 cubic m);
  • Pumps: 11 transfer pumps and six injection pumps;
  • Infrastructure: flow lines, power lines, SPDA (lightning protection system) and fire-protection system;
  • Automation: Pintassilgo, Serraria, Porto Carao, and Lagoa Aroeira are fully automated and have installed infrastructure for injection capability;
  • Artificial lift wells: equipped with pump jacks, progressive cavity pumps and electric submersible pumps.
• Cost synergies: The proximity of the new oil fields to the company's existing assets enables it to streamline logistics and share services such as maintenance, transportation, administrative support, and resource allocation for personnel, equipment and technologies. This shared infrastructure significantly reduces overall operational costs. Additionally, the economies of scale lead to a lower per-barrel cost and improved profitability. Furthermore, the company's larger combined production capacity enhances its bargaining power with suppliers and service providers, resulting in more favourable terms and reduced costs.

Work program

The work program focuses on maximizing production, improving recovery rates and optimizing operating costs through the following key initiatives:

• Well reopening and production enhancement: reactivate currently shut-in wells to increase gross production and maximize oil recovery;
• Advanced cased-hole technologies: utilize state-of-the-art well bore diagnostics to identify and target bypassed pay zones, enhancing production efficiency;
• Secondary recovery implementation: increase reservoir pressure and improve recovery factors through secondary recovery methods, such as water injection;
• Hydraulic stimulation: apply proven hydraulic stimulation techniques to improve production.

Closing timeline

The transaction is expected to close in the second half of 2025 subject to customary closing conditions and regulatory approvals with the National Agency of Petroleum in Brazil.

About Petro Victory Energy Corp.

Petro Victory Energy is engaged in the acquisition, development, and production of crude oil and natural gas resources in Brazil. The company holds 100-per-cent operating and working interests in 38 licences totalling 257,604 acres in two different producing basins in Brazil. Petro-Victory generates accretive shareholder value through disciplined investments in high-impact, low-risk assets. The company's common shares trade on the TSX Venture Exchange under the ticker symbol VRY.

We seek Safe Harbor.