News Column

HRT proposes reverse split of Common Shares and Global Depositary Shares

May 22, 2014

RIO DE JANEIRO, May 22, 2014 /CNW/ - HRT ParticipaÇÕes em PetrÓleo S.A. (the "Company" or "HRT") (BM&FBOVESPA: HRTP3, TSX-V: HRP), announces today that further to the meeting of the Company's Board of Directors held on May 13, 2014, the shareholders of HRT are invited to attend the Company's Special Shareholders' Meeting (the "Meeting") to be held, upon first call, on June 13, 2014, and if applicable, upon second call on June 24, 2014, to vote, among other things, for the reverse split of the Company's common shares (the "Common Shares") on the basis of 1 (one) post-reverse split Common Share for each 30 (thirty) pre-reverse split Common Shares, pursuant to Article 12 of Law 6.404/76, which also includes the reverse split of the Company's Global Depositary Shares ("GDSs") on the basis of 1 (one) post-reverse split GDS for each pre-reverse split 30 (thirty) GDSs, maintaining the ratio between the Common Shares and the GDSs currently in force of 2 (two) GDSs for each Common Share. GDS holders are hereby informed that the Management Information Circular and Voting Instruction Form mailed to them in connection with the Meeting set forth an incorrect reverse split ratio for the GDSs of 60 (sixty) to 1 (one) and are hereby advised of the accurate reverse split ratio for the GDSs of 30 (thirty) to 1 (one).  Revised Meeting materials which reflect the accurate reverse split ratio for the GDSs will be filed on SEDAR and on the Company's website.  The submission of completed Voting Instruction Forms received by mail and referring to the incorrect GDS reverse split ratio will be accepted by the Company as valid voting instructions for the accurate GDS reverse split ratio of 30 (thirty) to 1 (one).

Background and Reasons for the Reverse Split

The Company's proposal to effect the reverse split is in line with the understanding that, further to some indications received from the Company Follow-up Department of the BM&FBOVESPA Exchange, it is highly recommended for the Company to maintain a stock price which falls between R$20 and R$30. In the opinion of the BM&FBOVESPA Exchange, such a target price protects companies from being affected by high fluctuations in percentage resulting from low fluctuations in stock prices.

Furthermore, stocks referred to as "penny stocks" have been excluded from the Ibovespa Index by the new index methodology, which came into force earlier this year. As a result, "penny stocks" may be completely banned from the trading sessions. This new methodology is in line with the new listing rules of the BM&FBOVESPA Exchange, which have been developed since 2011 and which were approved by the Brazilian Securities and Exchange Commission (CVM) at the end of January 2014. Pursuant to the new rules companies whose shares are trading below R$1 for more than 30 days will have 180 (one hundred eighty) days to resolve the situation - failing which, such companies may be forced to withdraw from the BM&FBOVESPA Exchange. The new rules will be applicable to all listed companies as of August 18, 2014.

Effects of the Reverse Split

As at May 1, 2014, the Company had 297,466,746 Common Shares issued and outstanding. Upon completion of the proposed reserve split of Common Shares, there will be approximately 9,915,558 Common Shares issued and outstanding (on a non-diluted basis and subject to fractions as discussed below). As at May 1, 2014, the Company had 118,090,300 GDSs issued and outstanding. Upon completion of the proposed reserve split of GDSs, there will be approximately 3,936,343 GDSs issued and outstanding (on a non-diluted basis and subject to fractions as discussed below).

If approved and implemented, the reverse split will occur simultaneously for all of the Company's issued and outstanding Common Shares and GDSs. The reverse split will affect all of the Company's shareholders uniformly and will not affect (i) the amount (in Reais (R$)) of the consolidated capital stock of the Company, (ii) the rights attributed to the Common Shares and the GDSs, or (iii) any shareholder's percentage ownership interest in the Company, except to the extent that the reverse split would otherwise result in any shareholder owning a fractional Common Share or GDS, as the case may be. In the event a shareholder would be entitled to receive a fractional Common Share or GDS after the reverse split, no such fractional share will be issued and the group of shares which compose the share fractions will be sold through an auction on the stock exchange by an Exchange Agent to be appointed by the Company.

The subscription bonuses and stock purchase options or subscriptions for Common Shares issued by the Company will also be proportionally adjusted to reflect the reverse split.

The reverse split will not result in a change of the Company's name.

In addition to shareholder approval, the reverse split is also subject to the approval of the TSX Venture Exchange (the "TSX-V"). Upon approval of the reverse split by the shareholders of the Company and all requisite powers for the implementation thereof shall be automatically granted. Following such approval, the Company will promptly issue a Notice to Shareholders which will provide the details of the implementation of the reverse split of Common Shares and GDSs, including the dates on which such securities will commence trading pursuant to the new ratios.

For additional information, please contact HRT's Investor Relations Department.

Sedar Profile # 00031536

Neither the 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.

About HRT

HRT ParticipaÇÕes holds one of the largest independent oil and gas exploration and production companies in Brazil. The HRT Group comprises six main subsidiaries: IPEX (Integrated Petroleum Expertise Company ServiÇos em PetrÓleo Ltda.), HRT O&G ExploraÇÃo e ProduÇÃo de PetrÓleo Ltda., HRT Netherlands B.V., HRT África PetrÓleo S.A., HRT AmÉrica Inc. and HRT Canada Inc.. The Company retains a 55% interest in 19 exploratory blocks in the SolimÕes Basin and 60% of interest in The Polvo Field, located in the southern portion of the Campos Basin. HRT also operates ten exploratory blocks off the Namibian coast: eight blocks in the Orange Sub-basin and two blocks in the Walvis Sub-basin. HRT's team includes PHDs and masters in geochemistry, geophysics, biology and engineering, most of them former employees of Petrobras and ANP (Brazil petroleum agency). HRT is committed to minimizing any possible environmental impacts in the sites where it acts. Our commitment to the local communities is towards health conditions, safety and quality of life. For more information, please visit the Company's website: www.hrt.com.br/ir

Disclaimer

This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our drilling and seismic plans, operating costs, acquisitions of equipment, expectations of finding oil, the quality of oil we expect to produce and our other plans and objectives. Readers can identify many of these statements by looking for words such as "expects", "believe", "hope" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. By their nature, forward-looking statements require us to make assumptions and, accordingly, forward-looking statements are subject to inherent risks and uncertainties. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements.

The following risk factors could affect our operations: the contingent resource and prospective resource evaluation reports involving a significant degree of uncertainty and being based on projections that may not prove to be accurate; inherent risks to the exploration and production of oil and natural gas; limited operating history as an oil and natural gas exploration and production company; drilling and other operational hazards; breakdown or failure of equipment or processes; contractor or operator errors; non-performance by third party contractors; labour disputes, disruptions or declines in productivity; increases in materials or labour costs; inability to attract sufficient labour; requirements for significant capital investment and maintenance expenses which HRT may not be able to finance; cost overruns and delays; exposure to fluctuations in currency and commodity prices; political and economic conditions in Namibia and Brazil; complex laws that can affect the cost, manner or feasibility of doing business; environmental, safety and health regulation which may become stricter in the future and lead to an increase in liabilities and capital expenditures, including indemnity and penalties for environmental damage; early termination, non-renewal and other similar provisions in concession contracts; and competition. We caution that this list of factors is not exhaustive and that, when relying on forward-looking statements to make decisions, investors and others should also carefully consider other uncertainties and potential events. The forward-looking statements herein are made based on the assumption that our plans and operations will not be affected by such risks, but that, if our plans and operations are affected by such risks, the forward-looking statements may become inaccurate.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, we do not undertake to update such forward-looking statements.

SOURCE HRT ParticipaÇÕes em PetrÓleo S.A.


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