FPSO Atlanta; Source: Yinson Production

Stake in Brazilian offshore fields opens doors to Latin American oil & gas arena for US player

Houston-based Westlawn Americas Offshore (WAO), part of Westlawn Group, is entering Latin America’s oil and gas playground, thanks to a deal with Enauta, a Brazilian oil and gas company, for the acquisition of a partial stake in a concession, covering two oil fields located off the coast of Brazil.

FPSO Atlanta; Source: Yinson Production

Westlawn Americas Offshore has inked a purchase and sale agreement with Enauta to buy a 20% participating interest in the BS-4 concession, which includes the Atlanta and Oliva fields, for $301.7 million. This sum, which will be paid at the closing of the transaction, is subject to adjustments related to the net cash flow with investments for the delivery of Atlanta and Oliva generated between the effective date of November 1, 2023, and the transaction closing date.

The agreed transaction format shows that $75 million will be paid over the coming 60 days in the form of a loan to be deducted from the amount paid at closing. The completion of the transaction is subject to approval from investors at the first and second series of Enauta domestic bonds and Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP).

the Brazilian player explained: “Partnerships are important drivers for value generation and risk-sharing in the development of megaprojects such as Atlanta and Oliva. Since Atlanta’s Phase I investment was sanctioned in March 2022, Enauta has been approached by several potential partners interested in joining the project.

The signing of a 20% minority stake with WAO is aligned with principles of Enauta’s value generation strategy, capital allocation efficiency and management of a balanced high growth, high risk-adjusted return oil and gas portfolio.”

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Furthermore, Enauta is adamant that WAO’s team shares its decision-making agility, thus, this team is expected to add value to Atlanta and Oliva’s upcoming development phases, as the team is said to have a sound track record in leadership positions in oil and gas companies such as BP, Equinor, Anadarko, Murphy Oil, and Sierra Oil & Gas.

The divestment of a partial stake is anticipated to lead to balance sheet strengthening for the Brazilian firm to accelerate organic and inorganic expansion opportunities, shareholder compensation, and access to competitive sources of capital.

Greg Hebertson, WAO’s COO, commented: “We are pleased to make our first expansion into Latin America in partnership with Enauta. We share similar views of the long-term potential of the Americas and look forward to growing our relationship together elsewhere in the region.

Moreover, the sale of the partial interest is expected to contribute to Enauta’s strategy to maximize value from trading Atlanta’s niche crude, currently servicing low-sulfur bunker fuel markets in Southeast Asia, and improve the firm’s shares and domestic bonds investor assessment, illustrating the appetite from long-term investors in value creation potential from the two fields’ expected growth.

“The implicit value outlined in the transaction highlights potential upside to Enauta’s current market value, considering the valuations of Manati, the return on capital of Uruguá-Tambaú and Parque das Conchas acquisitions, long-term exploration portfolio, and large assets such as Yinson’s long-term receivables and tax assets, on top of Enauta’s team ability to deliver high risk-adjusted returns,” outlined the Brazilian firm.

Located in the Santos Basin, at a 1,500-meter water depth, the Atlanta field is operated by Enauta Energia, a wholly-owned subsidiary of the company, which also has a 100% interest in this asset. The field has been producing since 2018.

Enauta is working on replacing the FPSO Petrojarl I, working on the Atlanta field, with the FPSO Atlanta, which the company bought for Atlanta’s Full Development System (FDS) in 2022. The naming ceremony for the FPSO Atlanta was held at the Dubai Drydocks World shipyard on December 13, 2023. Recently, the FPSO left the shipyard in Dubai and set sail to Brazilian waters.

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Aside from selling a partial interest in this concession, Enauta is busy with portfolio expansion, thanks to a contract with Petrobras to get a hold of oil and gas fields in the Santos Basin and natural gas pipeline infrastructure. The Brazilian firm also set out to acquire the entire stake held by QatarEnergy Brasil in the oil fields comprising the Parque das Conchas.