Fortress Energy Inc.

Fortress Energy Inc.

December 20, 2012 01:40 ET

Fortress Energy Along With Petrominerales Ltd. Acquires Tight Oil Properties in Reconcavo Basin, Brazil

CALGARY, ALBERTA--(Marketwire - Dec. 20, 2012) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Further to its previous announcement, Fortress Energy Inc. ("Fortress" or the "Company") is pleased to announce it has, along with Petrominerales Ltd., acquired 100 percent of the shares of a Brazilian private oil and gas company, Alvopetro S.A. Extração de Petroleo e Gás Natural ("Alvopetro S.A."). The ownership interest in Alvopetro S.A. is 25 percent Fortress and 75 percent Petrominerales, with Petrominerales assuming operatorship. The oil and gas interests acquired include a 100 percent working interest in seven exploration Blocks located in the Reconcavo Basin, covering an area of approximately 160 sq km and a 100 percent working interest in three onshore producing oil fields: Bom Lugar, located in the Reconcavo Basin, Jiribatuba, located in the Camamu Basin and Aracaju, located in the Sergipe Basin. The producing oil assets have current production of approximately 60 barrels per day of light oil with significant development potential at Bom Lugar utilizing horizontal wells and multistage hydraulic fracture stimulation.

The Reconcavo Basin is located 85 km north of the city of Salvador where the Brazilian oil industry found its beginning with the first oil discovered in 1939. Since then the cumulative production from the Reconcavo Basin has totalled 1.5 billion barrels of light oil from 86 fields. There have been 6,000 wells drilled into the Reconcavo Basin spanning an area of approximately 10,000 sq km. Current production is over 60,000 barrels of oil equivalent per day, and the majority of the basin's production comes from the Sergi, Agua Grande, and Candeias reservoirs found at depths of 315 to 1,975 meters in this area. The Reconcavo Basin has a well-developed infrastructure and active service sector, with crude oil and natural gas pipelines and numerous roads in an area which is predominantly farm land.

As previously announced, Fortress has identified, from prior drilling, a pervasive oil saturated tight GOMO sand sequence with porosities estimated to be between 9 - 15 percent existing within a 1,000 meter thick, rich Candeias Shale source rock at a depth of between 2,500 and 3,400 meters and which exists on much of the Alvopetro S.A. lands. Future activities will involve multi-well development, multistage hydraulic fracturing and horizontal drilling over the approximate 200 sq km of lands and existing producing fields. There are mature oil fields in the Reconcavo Basin that are producing from the GOMO sand in a similar geological setting located both to the north and south of the acquired lands the fields of which have produced over 120 mmbbls to date, and there have been numerous prior tests and oil shows from the GOMO sands throughout the basin confirming a pervasive oil saturated hydrocarbon system.

Mr. Bailey, Fortress' President & CEO was quoted "Since selling most of its Canadian natural gas assets in September 2010, Fortress refocused its efforts to identify an oil rich basin where large land spreads could be acquired and where completion techniques that have transformed the North American industry could be applied to develop and exploit existing oil accumulations. This has led to that acquisition of these assets in the Reconcavo Basin, Brazil along with a joint venture partner Petrominerales Ltd. with significant experience and track record operating in Latin America." Fortress along with its partner anticipates having an active capital program in Brazil to develop a large-scale, repeatable, low-risk, multi-well development program starting as early as 2014 with five wells planned in 2013.

For further details on the acquisition please see our Brazil presentation on our website at:
http://www.fortressenergy.ca/files/Fortressenergy%20Shareholder%20Presentation.pdf

Caution to Reader

This news release contains forward-looking information, including without limitation statements concerning the Company's future exploration and development activities. The forward‐looking information is based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling and development activities, the testing and performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather, and access to drilling locations. Risks associated with the forward-looking statements include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the test results and performance of exploration and development drilling, recompletions and related activities; timing and rig availability; availability of transportation and offloading capacity, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; impact of weather on operations; and other factors, many of which are beyond the control of Fortress. There is no representation by Fortress that actual results achieved during the forecast period will be the same in whole or in part as those forecast; and there is no representation by Fortress that the test results of any new exploration well or development well is necessarily indicative of long-term performance or ultimate recovery. Except as may be required by applicable securities laws, Fortress assumes no obligation to publicly update or revise any forward‐looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

The common shares of Fortress have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Fortress have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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