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ExxonMobil, Murphy and brasilian Enauta, win three ultra-deepwater blocks offshore Brazil

ANP

ExxonMobil with three offshore blocks in Brazilian portfolio

By Jeff Fick / Platts

RIO
Petroleumworld 09 11 2019

ExxonMobil teamed Tuesday with Brazil's Enauta and Murphy Oil to snap up three ultra-deepwater oil and natural gas concessions during Brazil's first Open Acreage auction.

The companies paid a total of Real 7.9 million ($1.9 million) to purchase the SEAL-M-505, SEAL-M-575 and SEAL-M-637 blocks in the offshore Sergipe-Alagoas Basin.

The three blocks are close to areas ExxonMobil, Enauta and Murphy Oil grouped to buy at recent offshore bid rounds as well as where Brazil's state-led Petrobras made about a 12 separate oil and gas discoveries and plans a long-term well test of the Farfan discovery by the end of 2019. The area is rich in oil and gas, with government officials expecting the region to produce 30 million cu m/d by the mid-2020s.

ExxonMobil will hold a 50% operating stake in the blocks, while Enauta will retain a 30% minority share and Murphy Oil 20%. The stakeholder breakdown maintains the same ratios in the companies' other Sergipe-Alagoas Basin partnership.

Brazil's National Petroleum Agency (ANP) expected the Open Acreage program to play a key role in boosting production and recovery rates, especially onshore and in mature offshore basins that have fallen out of favor as state-led oil company Petrobras focuses on the subsalt. Brazil currently recovers just 24% of oil in place, with the ANP's goal to increase that rate more in line with the industry standard of 30%-35%, Director General Decio Oddone has said.

The Tuesday sale, however, got off to an inauspicious start as three shallow water blocks in the Campos Basin and five deepwater blocks in Sergipe-Alagoas Basin failed to garner bids. ANP expected to receive at least a single bid for each of the nine sectors that were nominated for the sale.

The Open Acreage auction included 273 exploration and production concessions and 14 areas holding marginal accumulations of oil and gas, with 249 blocks onshore and 24 offshore. All of the blocks in a sector were included in the sale after oil companies expressed interest in the area, with oil companies committing to make at least a single offer for the nominated blocks.

Of the 273 blocks on offer Tuesday, 33 were sold, with signing bonuses totaling Real 15.3 million. Brazil sold 12 of the 14 mature fields holding marginal accumulations of oil and gas. The bidding was heated, with 10 different companies making offers for the areas and paying a total of Real 6.9 million in signing bonuses.

Under the auction rules, oil companies that expressed interest in a sector but failed to make a bid will be required to pay at least the minimum signing bonus for the area the company expressed interest in ahead of the sale, ANP officials said.

The areas up for sale were exploration and production concessions that failed to receive bids at previous bid rounds or were returned to the ANP. In addition, the ANP also put up for sale mature onshore fields holding marginal accumulations of oil and gas that had also been returned to the ANP.

Brazil also no longer includes onshore concessions in its annual bid rounds, so the Open Acreage program is the only way for oil companies to win development rights for onshore acreage.

The Open Acreage program will be "the primary model to contract areas for small and medium-size companies," said ANP Director General Decio Oddone during the sale's opening ceremony. The program allows oil companies to take the initiative to buy acreage when it's convenient rather than waiting for specific areas to come available in annual bid rounds, which limted exploration activity, Oddone said.

Each Open Acreage bid session is triggered by one or more oil companies expressing interest in at least a single block. The ANP then opens a 70-day window for oil companies to express interest in additional areas that will be added to the sale. The auction is then held within 90 days of the first expression of interest.

Independent natural gas producer Eneva also bid aggressively in the onshore Parnaiba Basin, where the company installed Brazil's first gas-to-wire project. Eneva produced 5.5 million cu m/d in July, according to the latest data available from the ANP.

Eneva paid total signing bonuses of Real 3.5 million for 100% stakes in the PN-T-102A, PN-T-47, PN-T-48A, PN-T-66, PN-T-67A and PN-T-68 blocks. Eneva committed to drilling two wells in the PN-T-66 block and single wells in the PN-T-102A, PN-T-47, PN-T-48A and PN-T-68 blocks.

US independent Petro-Victory also made its debut at a Brazil bid round, paying Real 3.2 million for 100% of 15 blocks in the Potiguar Basin's SPOT-T2 and SPOT-T4 sectors. The blocks will be the Fort Worth, Texas-based explorer's first operated assets in Brazil, with the company last year acquiring a 50% minority stake in five blocks operated by Imetame Energia in the onshore Espirito Santo Basin.

Brazil will next hold its 16th bid round sale of exploration and production concessions on October 10.



Story by Jeff Fick from S&P Global Platts .

spglobal.com / 09 10 2019

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s were respectively known as Spanish Guyana and Portuguese or Brazilian Guiana.


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