Photo: Frade FPSO; Source: Kentech

PetroRio closes Frade field stake buy from Petrobras

Brazilian oil and gas company PetroRio has completed the acquisition of the 30 per cent interest in Frade field from compatriot state-owned company Petrobras.

PetroRio said last Friday that it concluded the acquisition of Petrobras’ stake in the Frade field after signing of a concession contract additional term by the country’s National Petroleum, Gas, and Biofuels Agency (ANP).

As of this date, the economic benefit stemming from the 30 per cent interest in the Frade field will be incorporated into the company’s financial statements, which now holds 100 per cent of Frade and 100 per cent of the offshore units used in the field’s production development.

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In addition to the $7.5 million paid upon signing of the share purchase agreement on 28 November 2019, another $36 million were paid by PetroRio on this date and the company will be entitled to an oil inventory of around 500 thousand barrels, which is currently located at the Frade FPSO.

According to the company, this transaction increases PetroRio’s 1P reserves by 17 million barrels and adds 5.2 thousand barrels to its daily production.

Furthermore, according to the agreement from 2019, an additional $20 million will be paid in case of a commercially viable new oil discovery, not included in the previously disclosed revitalization plan of the Frade field.

To remind, PetroRio started buying the Frade field, piece by piece, back in March 2019 when it closed the acquisition of a 51.74 per cent interest from U.S. oil giant Chevron.

In the autumn of the same year, the company was able to acquire 18.26 per cent of the Frade field from Frade Japão Petróleo Limitada, a joint venture established by Inpex and Sojitz Corporation.

The final piece of the puzzle was Petrobras’ 30 per cent stake. The initial contract for the sale was signed also in November 2019 for a then reported price of $100 million. There is also a contingent $20 million due to Petrobras if a new discovery is made on the field.

As for the field, Frade is a subsea development located in the Northern Campos Basin off the coast of Brazil, with wells tied back to a floating production, storage and offloading (FPSO) vessel.