New Stratus Energy Inc. announced that Ecuador's state-owned oil company, EP Petroecuador, has entered into a memorandum of understanding (MOU) with new stratus with the purpose of optimizing and speeding up the development and production of its oil fields in blocks 43 (ITT) and 31, minimizing the environmental impact, during a joint meeting between authorities of the government of Ecuador, EP Petroecuador and the corporation held on June 5th 2022. The MOU outlines the basic elements of a cooperative effort to develop stranded oil and gas production from blocks 43 and 31 both operated by EP Petroecuador -- with the objective of increasing oil production from current levels of approximately 60,000 barrels of oil per day (bopd) to approximately 250,000 bopd over the next 5 years. Blocks 43 and 31 include the giant Ishpingo-Tambococha-Tiputini (ITT) oilfields which are the cornerstone of the government's plan to double the country's current oil production to 1.0 million bopd.

New Stratus, through its wholly owned subsidiary Petrolia Ecuador S.A., is the operator of blocks 16 and 67 currently producing in the order of 15,500 bopd. The existing infrastructure of Blocks 16 and 67, including power generation, excess processing and pipeline export capacity, will be an essential element of the joint effort strategy outlined in the MOU. The estimated investments associated with the MOU's plan exceed US$1.2 billion.

MOU Highlights: Execution of the MOU plan is conditional to the government and new Stratus completing negotiations for the migration to PSC (production sharing contracts) and extension of the current service contracts for blocks 16 and 67. The term of the current contracts expires on December 31, 2022. The development plans seek a minimal carbon footprint in blocks 43 and 31 by optimizing utilization of existing infrastructure capacity in block 16.

The estimated US$1.2 billion investment, to be secured by new Stratus, will finance the drilling and completion of more than 200 wells planned by EP Petroecuador in Blocks 43 and 31, along with the construction of ecological energy corridors1 to connect these blocks with Block 16 facilities, as well as the provision of all associated support services including reservoir studies, project management and environmental protection activities. For the services to be provided, New Stratus will receive a negotiated payment-in kind from EP Petroecuador, at the point of crude export in the Pacific coast. It is estimated that the project will provide more than 30,000 direct jobs to Ecuadorian workers and stimulate additional oil investment in the country.