Petro-Victory Energy has signed an option agreement with Azevedo Travassos Petroleo (ATP) for the development of oil concessions in Brazil's Potiguar Basin.

The agreement centres around the Andorinha Field and POT-T-281 block, which are 100% owned and operated by Petro-Victory.

Under the deal, ATP will fund the initial work programme, which includes drilling and completing wells AND-4 and AND-5 in the Andorinha field.

Additionally, the agreement involves conducting a workover in the CR-2 well of the POT-T-281 block.

In return, ATP will receive 75% of the net income from these wells until its capital expenditure is recouped.

After ATP's investment has been recovered, the net income from production will be equally divided between the two companies.

Petro-Victory will retain operational control of both the Andorinha field and the POT-T-281 block. ATP may offer its engineering, construction and oil production services.

The agreement also stipulates the hiring of an independent engineering company to certify the reserves of both assets, post-work programme.

ATP holds an option to acquire a 50% interest in the assets at a pre-agreed price based on the certified reserves.

The option must be exercised within nine months the date of signing of option agreement, subject to the completion of the work programme.

In a press statement, Petro-Victory said: “The partnership between Petro-Victory and ATP creates potential for growth and further developments with the aim of extending market reach and capturing new synergies between the two companies and their operating assets.”

The Potiguar Basin, located in north-eastern Brazil across the states of Rio Grande do Norte and Ceará, has seen extensive oil exploration.

A total of 1,282 wells have been drilled at the basin’s onshore and offshore areas, leading to the production of more than one billion barrels of oil from more than 70 onshore oil fields.