FPSO Cidade de Vitória; Source: Saipem

Two oil and gas clusters off Brazil change hands

Oslo Stock Exchange-listed oil and gas E&P company BW Energy has brought to a close an acquisition of two clusters in the Espírito Santo Basin offshore Brazil.

FPSO Cidade de Vitória; Source: Saipem

Back in June 2022, BW Energy inked an agreement to acquire a 100 per cent working interest in the Golfinho and Camarupim clusters and a 65 per cent stake in the BM-ES-23 block offshore Brazil from Petrobras. Following the completion of the transaction, BW Energy would be the operator of all concessions. In addition, the firm agreed to acquire the FPSO Cidade de Vitória, producing on the Golfinho field, from Saipem. Both transactions were expected to close in 1Q 2023.

Due to a review of the sale of Golfinho and Camarupim clusters, as part of a wider analysis of Petrobras’ ongoing divestment programme, initiated by Brazil’s Ministry of Mines and Energy (MME), a suspension of ongoing sales of assets was requested for 90 days. However, the sale process for these two clusters was restarted in March 2023. The completion of the acquisition was slated for 2Q 2023.

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In an update on Monday, 28 August 2023, BW Energy revealed that the acquisition of the Golfinho and Camarupim clusters was completed. As a result, the firm assumed ownership and operatorship of approximately 10,000 barrels of daily oil production, several proven low-risk in-field development opportunities with short lead times, and substantial potential long-term upside from proven gas accumulations. 

The closing of the transaction follows a period of stable oil production after the restart of the FPSO Cidade de Vitória following repairs and upgrades.  This acquisition is financed through BW Energy’s existing liquidity and an oil pre-payment facility, with $12.2 million paid at closing following an initial $3 million payment at signing in 2022. In addition, the agreement includes up to $60 million in future contingent payments linked to oil price, well operations, and further development of the acquired assets. 

Carl K. Arnet, the CEO of BW Energy, commented: “We are pleased to complete the transaction to become the owner of material production and cash flow in Brazil and to diversify our production and resource base. We have a strong local organisation in place ready to assume operatorship and capture a significant potential for value creation through already identified phased development opportunities and near-field exploration.” 

Located at a water depth between 1,300 and 2,200 metres in the Espírito Santo Basin, the Golfinho cluster comprises the Golfinho oil field, the Canapu non-associated gas field, and the exploration block BM-ES-23, which holds the Brigadeiro gas and condensate discovery. On the other hand, the adjacent Camarupim cluster is located in water depths between 100 and 1,050 metres, comprising the non-producing gas fields of Camarupim and Camarupim Norte.

Aside from ongoing oil production revenues and previously identified infill drilling opportunities and oil upside developments, BW Energy believes that this acquisition presents a value-creative opportunity to monetise existing and future gas resources. These will be brought to shore and sold in the already-established Brazilian gas market to which the FPSO Cidade de Vitória is connected via a gas export line that the firm will acquire and control as part of the transaction. 

BW Energy’s internal estimate is 38 million boe of proven recoverable resources, predominantly oil, of which 19 million boe are developed and producing and 19 million boe undeveloped, defined infill opportunities. Additionally, the company identified a further 0.7 Tcf of recoverable gas accumulations for potential future development. The acquisition of the FPSO from Saipem is expected to be completed in 4Q when the current short-term lease and operating contract for the FPSO expires. 

The fields transferred account for 6.6 per cent of the production operated by Petrobras in the state of Espírito Santo, and their transfer does not impact the Brazilian giant’s other activities in the region, where the company maintains operations in deepwater fields, such as Parque das Baleias, in addition to six exploratory areas.

The firm is maintaining its investment commitments in the state of Espírito Santo, with emphasis on the implementation of a new production unit in the Jubarte field  – the FPSO Maria Quitéria – and the interconnection of new wells, projecting an increase in its production curve by 2027.

In addition to the offshore fields, Petrobras still has other operations in the state, such as the Cacimbas (UTGC) and Sul Capixaba (UTGSUL) natural gas processing units and the Barra do Riacho Waterway Terminal.