Porto Announces Review of Strategic Alternatives to Maximize Shareholder Value

THE WOODLANDS, TX, Oct. 7, 2013 /CNW/ - Porto Energy Corp., ("Porto" or the "Company") (TSXV:PEC), today announced that that in light of its ongoing capital requirements necessary to advance its oil and gas exploration program in Portugal, it has formed a Special Committee of independent directors and initiated a strategic review process to identify, examine and consider a range of strategic alternatives available to Porto, with a view to preserving and maximizing shareholder value. This process could result in a sale of the Corporation, a private placement or public financing through the issuance of debt, equity or a combination of both, a sale of a material portion of the Corporation's assets, a merger, business combination or a corporate reorganization, among other alternatives. The Special Committee has retained Black Spruce Merchant Capital Corp. as its financial advisor to assist in the strategic review process.

Corporate Highlights

Porto currently has a working capital balance of approximately $1.3 million and a Portuguese income tax pool of approximately $130.0 million at May 31, 2013.  Included in these tax pools are non-capital losses available to carry forward to future years of approximately $37.3 million.

The Company's independent resource evaluation (the "Report") performed by Dallas, Texas-based Netherland, Sewell & Associates, Inc. ("NSAI") effective December 31, 2012 and dated January 10, 2013, assigned a P50 risked recoverable Contingent Resources associated with the Company's Jurassic reef and other exploration prospects of approximately 44 mmboe and a P50 risked recoverable Prospective Resource mainly attributable to the Company's Lias Resource and Presalt Conventional prospects of approximately 637 mmboe (535 mmboe on a net working interest basis).

As stated in the Company's January 31, 2013 press release, work to characterize the Jurassic Lias resource play included finalized aeromagnetic data over the blocks, the drilling and analysis of 23 shallow wells and the development of a Lias deposition model that greatly increased the Company's understanding of the Lias marls in the central and northern blocks.  This work underpinned the Report by NSAI and points to a very prospective unconventional resource play that merits additional technical evaluation.

Review Process

Porto does not intend to disclose developments with respect to the strategic review process unless and until the Board of Directors has approved a definitive transaction or strategic option, or unless otherwise required by law or disclosure of which is deemed appropriate. The Corporation cautions that there are no guarantees that the strategic review will result in a transaction or if a transaction is undertaken, as to its terms or timing.

Porto's common shares trade on the TSX Venture Exchange under the symbol PEC. Porto currently has 198,954,653 common shares outstanding.

About Porto Energy Corp.

Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery.  Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal's Lusitanian Basin totaling 1.6 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions and generated more than 45 prospects and leads. Porto Energy's shares trade on the TSX Venture Exchange under the ticker symbol "PEC". For more information on Porto Energy visit www.portoenergy.com.

About Black Spruce Merchant Capital Corp.

Black Spruce is a private merchant banking firm focused on providing specialized financing and advisory services to the global energy industry. Our award-winning principals have a history of achieving success for clients based on high-level industry focus, strong industry relationships and innovative transaction skills. Offering advice in project, corporate and credit syndication; equity-linked financings; mergers and acquisitions; and strategic business development. For more information on Black Spruce visit: www.bsmc.ca

Cautionary Statements

No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable because of one or more contingencies. The contingent resources shown are contingent upon demonstration of the economic viability of the projects. Commercial flow rate testing and documentation of development plans will provide further evidence of economic viability of these projects. If these contingencies are resolved, some portion of the contingent resources estimated may be reclassified as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources.

Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Using probabilistic methods, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. Using probabilistic methods, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

Barrels of oil equivalent (BOEs) include oil, solution gas, associated gas and condensate. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This press release contains certain forward-looking statements.  These statements relate to future events or the Company's future performance.  All statements other than statements of historical fact are forward-looking statements.  The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "predict" and "potential" and similar expressions are intended to identify forward-looking statements.  These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.  These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Porto Energy Corp.

Heath Cleaver - Chief Financial Officer
Phone: [phone]

Black Spruce Merchant Capital Corp.
Sonny Mottahed - Managing Partner
or 
Jeff Barber - Managing Partner
Phone:  [phone]
Email:  [email protected]