LONDON: Corcel Plc, a London AIM-listed energy company with a focus on Angola and Brazil, has announced that its wholly-owned subsidiary, CRCL Brazil Ltd, has entered into a binding option agreement with Petroborn Óleo e Gás S.A.

This agreement includes acquiring a 20% interest in the IRAI gas field, a Right-of-First Refusal (ROFR) over the remaining 80%, and a ROFR for 100% of the adjacent TUC-T-172 exploration block in Bahia, Brazil.

This move marks the first step in Corcel’s strategy to expand its Brazilian onshore acquisitions, aiming to diversify investor risk, generate initial production, and increase cash flow with minimal dilution to shareholders.

The IRAI gas field, operational since 2018, has produced 390,000 BOE of gas from three wells. Currently, one well is active, producing 117 BOEPD, while two others are shut-in pending workover operations. The field is highly profitable, with expected quick returns on well investments.

Corcel plans to fund two workover operations on the shut-in wells in early 2025, targeting to boost production to an average of 188 BOEPD throughout the year. After the workover results, Corcel may either exercise the option to acquire the 20% interest or be repaid for the funding.

Additionally, Corcel has a ROFR to acquire the remaining 80% interest in the IRAI gas field and 100% of the TUC-T-172 exploration block. Geraldine Geraldo, Corcel’s Chief Commercial & Strategy Officer, stated, “The IRAI Field and TUC-T-172 Option marks an exciting entry into Brazil, demonstrating our ability to secure value-enhancing deals in the Brazilian onshore sector to complement our Angola exploration strategy.”

The agreement requires Corcel to provide a loan of approximately $550,000 to Petroborn for the workovers in Q1 2025. If the option is exercised, Corcel will invest up to $2.95 million for further development over two years in two tranches. The company expects to receive cash flow distributions upon funding the first tranche, with a temporary additional 10% interest in cash flows to accelerate repayment.

The IRAI gas field, located in the Tucano Sul Basin, about 110 km northwest of Salvador, is attractive due to its shallow gas reservoirs and high production rates. The field offers a unique opportunity to increase production and revenue with low expenditure. The gas reservoirs have good quality, with an average of 13m of net pay and 23% porosity.

This acquisition aligns with Corcel’s strategy to expand its footprint as a leading western producer and supplier of tungsten and tungsten-related products, enhancing its market presence on three continents.

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