Petrobras gives up short-term revenue
in the shallow-water Bauna field
Australia's Karoon had agreed to acquire a 100pc stake in the shallow-water Bauna field from Petrobras.
By Nathan Walters/Bloomberg
Petroleumworld 07 27 2020
Brazil's state-controlled Petrobras has sacrificed short-term revenue in an acreage sale for the second time this month, reflecting deteriorated market conditions.
Australia's Karoon had agreed to acquire a 100pc stake in the shallow-water Bauna field for $665mn in a July 2019 sales agreement with Petrobras, but will now pay $380mn up to 18 months after the closing of the transaction and a contingent payment of $285mn by 2026, Petrobras said.
The terms of the contingent payment were not disclosed, but these are generally based on production and discovery targets.
Petrobras said the change was caused by the impact of the Covid-19 pandemic and the consequent difficulty in meeting conditions precedent established in the original sales agreement. The adjusted transaction is expected to close this quarter.
Located in the prolific Santos basin, Bauna started up in 2013 and currently produces around 16,000 b/d of 33°API crude through the 80,000 b/d floating production, storage and offloading (FPSO) unit Cidade de Itajai .
Earlier this month, Petrobras closed a deal with European independent Trident for 10 shallow-water fields in the Pampo and Enchova clusters in the Campos basin with adjusted sales terms.
The initial sales agreement, also signed in July 2019, envisaged an $851mn upfront payment plus a contingent payment of up to $200mn. The final agreement capped the fixed payment at $418.6mn, boosting the contingent portion to $650mn.
Savings on decommissioning costs play a large part in Petrobras' decision to unload shallow-water assets, which no longer figure prominently in the company's deepwater-focused upstream strategy.
But the shift towards higher contingent payments means that Petrobras could miss a divestment revenue goal of $20bn-$30bn outlined in its 2019-24 business plan that was adopted last year, before the Covid-19 outbreak. A new five-year plan is due out by the end of 2020.
Petrobras is expected to put more upstream assets up for sale to bridge the gap. In the near term, the next milestone to watch moves downstream. Petrobras plans to sell eight refineries accounting for around half of its 2.2mn b/d of domestic refining capacity.