Petrobras sells $10.3 billion worth of assets

Brazilian oil and gas giant Petrobras has executed three sale and purchase agreements to sell assets in the total amount of $10.3 billion (about R$40 billion).

FPSO Cidade de Campos dos Goytacazes / Photo by José Augusto Alves/Agência Petrobras

In 2019, considering the signed transactions and the closed one, the total amount of asset sales is $11.3 billion, Petrobras said on Thursday announcing the agreements.

CEO Roberto Castello Branco commented: “Today is an important day for Petrobras with the execution of three relevant transactions. Continued portfolio management contributes to improving capital allocation, thereby increasing value creation for our shareholders, as well as making it possible to reduce the company’s indebtedness and cost of capital.”

The transactions include the sale of 90% of Petrobras stake in the Transportadora Associada de Gás S.A. (TAG) to the group formed by ENGIE and the Canadian fund Caisse de Dépôt et Placement du Québec (CDPQ).

Furthermore, Petrobras has sold a 50% working interest in Tartaruga Verde field (BM-C-36 Concession) and Module III of Espadarte field, both located in deep waters of the Campos Basin, offshore Brazil, to Petronas.

Finally, the transactions include the sale of Petrobras’ full stake in 34 onshore production fields in Rio Grande do Norte to Potiguar E&P S.A., a subsidiary of Petrorecôncavo.

 

TAG sale 

 

The transaction value is approximately $8.6 billion, considering the adjustments agreed in contract, and will be paid on the transaction closing date. This amount includes the payment, by the buyer, of TAG debts with the BNDES of approximately $800 million.

TAG operates in the natural gas transportation sector, presently holding long-term authorizations to operate and manage a pipeline system of about 4,500 km in length and 74 million m3/day of transport capacity, located primarily in the North, Northeast and Southeast regions of Brazil. Petrobras will continue to use natural gas transportation services rendered by TAG, through contracts already in force between the two companies, with no impacts on its operations and the delivery of gas to distributors and other customers.

 

Tartaruga Verde & Module III of Espadarte field 

 

The value of this transaction amounts to $1.29 billion, to be paid in two tranches. About $258.7 million was paid right away and $1.034 billion on the transaction closing date, subject to adjustments. Petrobras will maintain 50% working interest and the operatorship of the fields.

Tartaruga Verde field started operations on June 22, 2018, via the FPSO Cidade de Campos dos Goytacazes and currently produces approximately 103 thousand bpd of oil and 1.2 million m³/day of gas.

In a separate statement on Friday, Malaysia’s Petronas said: “The acquisition of equity in Tartaruga Verde and Module III of Espadarte fields marks an important milestone for Petronas as the company diversifies and expands its oil business portfolio in South America.”

The Module III is an area of Espadarte field to be developed in an integrated way with Tartaruga Verde field, with first oil expected in 2021.

 

Sale of 34 onshore production fields

 

The total amount of the third transaction is $384.2 million. It will be paid in three installments: i) $28.8 million was paid on Thursday; ii) $293.9 million at the closing date, subject to adjustments; and (iii) $61.5 million as earn-out linked to the approval, by the National Agency for Petroleum, Natural Gas and Biofuels (ANP), of the contractual term extension of 10 of the 34 concessions under the transaction.


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