The two companies plan to join forces to carry out advanced seismic and geological studies, start producing oil barrels to assess the fields, and then submit an asset development plan to the National Petroleum, Natural Gas and Biofuels Agency (ANP).

The partnership is a negotiation known in the oil and gas industry as farm-in and farm-out, or agreements involving the transfer of participation in concessions or oil and gas exploration and production agreements between companies. Texas-based Petro-Victory holds an exploration right granted by the ANP. However, at the end of the process, Brazilian company Azevedo & Travassos will have the option to partially or completely acquire the fields, following its inorganic growth plan for 2024.

Gabriel Freire, chairman of Azevedo & Travassos, said the agreement could help the company meet the target of around 1,000 barrels per day by the end of 2024 and expand exploratory fields. However, he does not know how many barrels the fields can produce.

Azevedo & Travassos recently announced the acquisition of all shares in Phoenix Óleo e Gás, eying production in young fields and outsourcing production in mature areas owned by “junior oils”—oil and gas companies in the early stages of development or exploration.

“Since Azevedo & Travassos returned to seek investment opportunities in the oil and gas industry, Petro-Victory stood out. It is not a company with mature fields; instead, its portfolio is [comprised of] exploratory fields,” Mr. Freire said.

Richard Gonzalez, founder and CEO of Petro-Victory, said the group has been in Brazil since 2016 and owns 41 blocks, 40 of which are in the Potiguar basin and one in Maranhão. The company has four blocks under production concessions and six with certified reserves. In the partnership with Azevedo & Travassos, both Andorinha and POT-281 have certified reserves. The next step is to start drilling and producing oil.

With the new partnership, the companies aim to expand their combined reserves. The Andorinha field was discovered by Petrobras and Galp and boasts a ready infrastructure. POT-281 is at an earlier stage.

As part of Petro-Victory’s growth plan, the company has been focusing on the exploration of hydrocarbons in onshore fields in the Potiguar basin and blocks that are at early production stages, rather than entering into mature assets as other junior oils have done. These companies have adopted the model of revitalizing areas that belonged to Petrobras.

“We have an operating committee and decisions will be made together. We have been in Brazil for eight years and, to operate in these fields, it was key to have a partner with experience in the Potiguar basin,” Mr. Gonzalez said.

The CEO of Azevedo & Travassos, Ivan de Carvalho Júnior, added that the company has an initial budget to contract equipment to start operating the wells. According to the executive, seismic and geological analyses already indicate that the fields have the potential to increase production. Furthermore, the company drilled wells in the 1990s and is familiar with the area.

“The idea is to combine technical and financial efforts to take advantage of this arising opportunity and buy time. Later, the effective part of participating in the concession will be submitted to the ANP,” Mr. Carvalho said.

The companies’ approach is part of the process of consolidating the independent oil companies market. As the oil and gas sector requires constant replacement of reserves and the new Petrobras management team has halted the divestment of assets, companies have started to study mergers, acquisitions, and partnerships.