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November 29, 2019

Petrobras to sell Frade field interest to PetroRio for $100m

Brazilian state-owned firm Petrobras has signed a share purchase agreement (SPA) to sell its 30% stake in the Frade concession to PetroRio for $100m.

Brazilian state-owned firm Petrobras has signed a share purchase agreement (SPA) to sell its 30% stake in the Frade concession to PetroRio for $100m.

The sale is with respect to the complete oil and gas exploration, development and production rights and obligations that are equal to 30% interest of the Frade consortium.

The deal included the sale of the entire stake held by Petrobras subsidiary Petrobras Frade Inversiones (PFISA) in Frade, which is the owner of the offshore assets used in the development of Frade field production.

The Frade field is located in the Campos Basin, north coast of the Rio de Janeiro state in Brazil. It is about 118km from the north coast of the Rio de Janeiro, in water depths between 1,050m and 1,300m. It reached an average production capacity of 8,400 barrels of oil equivalent per day (boepd) in 2019.

PetroRio currently owns the remaining 70% of Frade’s concession through its subsidiaries. Upon completion of the sale, it will completely own Frade. The company will make the initial payment of $7.5m to Petrobras upon signing the contract and the remaining $92.5m after the completion of the transaction.

Petrobras will receive $20m in contingent payments upon new potential discoveries in the field. The acquisition will add about 27 million barrels to PetroRio’s 2P reserves and also result in the increase of about 6 thousand barrels to the company’s daily production.

Petrobras said in a statement: “This disclosure complies with Petrobras’ divestment guidelines and is aligned with the provisions of the special procedure for assignment of rights on exploration, development and production of oil, natural gas and other fluid hydrocarbons, provided for in Decree 9,355/2018.”

The company noted that the transaction aligns with the portfolio optimisation and the improvement of its capital allocation.

The transaction is, however, subject to receiving the approval from the Administrative Council for Economic Defense (CADE) and the National Agency of Petroleum, Natural Gas and Biofuels (ANP).

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