Petro Rio has signed a Sale and Purchase Agreement with Petrobras for the acquisition of a 90% interest and the operation of the Albacora Leste Field.
The consortium will then be formed by PRIO, operating the Field with a 90% interest, and Repsol Sinopec Brasil ('RSB'), with a 10% interest. The deal is subject to the usual conditions precedent for this type of operation, such as approval by the National Agency of Petroleum, Natural Gas and Biofuels ('ANP'), approval by the Brazilian antitrust entity (CADE), and a waiver of the preemptive rights by RSB within 30 days.
The transaction will have a fixed price totaling US$ 1,951 million, of which US$ 293 million to be paid upon signing of the agreement, and a further US$ 1,658 million upon closing of the acquisition and transfer of the operation to the Company, subject to adjustments until the closing of the transaction (counted from October 1st, 2022) and to the fulfillment of the conditions precedent.
About Albacora Leste Field
Discovered in 1986, the Albacora Leste Field had its first oil in 1998 and currently has a production of approx. 30 kbbld in March, with 19º API oil and low-sulphur content, produced through its 17 production wells and 15 injection wells. The Field comprises an area of 511 sq km.
Albacora Leste has water depth of 1,200 meters, and is located in the north of the Campos Basin, 23 km from the Frade Field.
The Company estimates economically recoverable 1P reserves of approx. 280 million barrels for the Albacora Leste Field, with net reserves of over 240 million barrels net to PRIO, and expects the Field to be abandoned after 2050. These estimates consider a long-term price of US$ 62 per barrel of oil.
All amounts will be paid using the funds already available in PRIO’s accounts, along with the Company’s cash generation up to the closing of the transaction. Leverage levels will remain within healthy and conservative ranges of less than 1,0x Net Debt/EBITDA, as already widely disclosed.
Production in the Field is carried out through the P-50 FPSO, with an oil processing capacity of 180 kbbl/d and 6 MMm³/d of gas, while the Field’s artificial lift system is carried out by gas lift.
About PRIO’s Business Plan for Albacora Leste Field
During the first 18 months of operation, the Company will focus on the following fronts:
- Investments of approx. US$ 150 million in the P-50 FPSO to ensure high levels of integrity, increasing safety and operational efficiency to the standards of its other operations;
- Synergy capture and implementation of its operating methodology to reach operating cost levels compatible with the P-50 FPSO, at close to US$ 90 million per year.
Subsequently, the Field’s redevelopment campaign will begin, encompassing the connection or drilling of 17 production wells and 5 injection wells over 5 years, with an estimated CAPEX of US$ 70 to US$ 75 million per well (for 100% of the Field).
Like in Frade and Wahoo, the development will be divided into two phases:
- The first, covering the connection of 3 production wells already drilled, 8 new production wells and 1 injection well, which may increase the Field’s production to levels above 50kbpd (also for 100% of the Field) for up to 2 or 3 years.
- The second, with 6 more new producing and 4 injectors wells, to be carried out afterwards.
PRIO will also carry out the early decommissioning of 5 producing and 1 injector wells, already included in the acquisition price. The Company estimates decommissioning CAPEX of approximately US$ 15 million per well. The final abandonment of the Field, scheduled for after 2050, is estimated at US$ 800 million.
The reserve report for the Albacora Leste field will be published in due course.
PRIO was advised by Morgan Stanley and Safra, and by the law firm Tauil & Chequer.
Lastly, the Company thanks Petrobras for the opportunity to be a part of the asset sale process and for the commitment during the contract negotiation.