OIL & GAS PROJECTS - Brazil

Brownstone has been actively involved in on-shore Brazil since 2006 when it was awarded the Tucano Blocks (see below).  Since then, Brownstone has had interests in several other on-shore Brazilian Blocks, all described below.

Brazil ranks 6th in the world of proven oil reserves as well as in oil production. Until 1997, oil & gas exploration was a federal monopoly. Petrobras was the sole player and virtually the only customer. Currently, there are 50 oil companies with oil exploration and appraisal areas in Brazil.

• In November 2006, Brazil’s national petroleum agency, Agencia National De Petroleum, awarded Brownstone two onshore blocks in Round 8 of the Brazilian land auctions. 
   
• The blocks acquired by Brownstone are known as 131 and 132. Canacol Energy Ltd. and W.Washington Empreendimentos E. Participacoes Ltda. were also awarded the blocks known as 161,172, and 177.
   
• The 5 exploration blocks are valid for a total of three years. Each block represents approximately 180 km².

• Subsequent to the awards Brownstone entered into an agreement with Canacol and W.Washington to co-operate on the ownership and development of the five combined land blocks in the Tucano Basin area of central eastern Brazil.
   
• The agreement between the joint venture partners involves Brownstone paying the initial commitments for all Round 8 concessions obtained by Brownstone, BrazAlta, and W.Washington to a maximum of US$2.5 million to earn a 25% interest in all 5 blocks. 

The Brazilian National hydrocarbons regulator ANP awarded 38 explorations blocks offered in the Round 8 Hydrocarbon licensing round. However, on November 28, 2006, a federal judge in Brasilia issued an injunction suspending the auction after a congresswoman of the governing Workers Party challenged an auction rule that limits the number of bids each company is allowed to place at the auction.  The ANP issued a statement on November 29, 2006 saying that it was not successful in overturning the suspension of the Round 8 auction and, as a result, has declared the auction ended. The ANP still expects to overturn the injunction. During previous Rounds, Brazil's oil block auctions have been challenged in the courts, with ANP successfully overturning any judicial actions against them. 

Brownstone earned a 15% interest in blocks 204, 219, 234 and test well 235 by paying 25% of the costs of the Test Well 235 drilling in 2008.  The well was shot in and the partners subsequently abandoned block 204.  Current working interests on blocks 219, 234 and Test Well 235 are: Canacol - 13%; W.Washington - 30%; Brownstone - 15%; and Petrovista Energy Corp. - 42%.

Brownstone earned a 12.5% interest in blocks 94, 105, 115, and 116 by paying 25% of the costs of 3D seismic shot in 2008.  The partners subsequently abandoned block 116 and current working interests in 94, 105 and 115 are: Brownstone - 12.5%; Canacol - 32.1%; W.Washington - 35.4% and Petrovista - 20%.

In addition, Brownstone participated in 2008 in a 7-well drill program over Reconcavo Blocks 24,31,52,39,91,102 and 113; all of which were abandoned by Brownstone and its partners as unsuccessful. 

In December 2007, Brownstone entered into a consortium agreement with Canacol, W. Washington and Petro Latina do Brasil Exploração e Produção de Petróleoe Gás Natural Ltda. ("PetroLatina") to co-operate in respect of the ownership and development of Block REC-T-170 awarded in recent Round 9 land auctions by the ANP.  The ownership of the block is Brownstone - 18.75%; BrazAlta and W.Washington - 56.25% and PetroLatina - 25%.

Presently Brownstone has limited activity in Brasil and is reviewing its projects and continued involvement in the region.

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 Brazil - Competitive Landscape and Current Opportunities