Petrobras offshore assets sale signals valuation loss

Brazil's state-controlled Petrobras closed the sale of 10 shallow-water fields to UK independent Trident Energy for less than half of the fixed value agreed last year, a possible harbinger of deteriorated valuations for other assets the company intends to sell.

After an initial payment of $53.2mn in July 2019, Petrobras announced today that Trident had paid the remaining $365.4mn to close on the Campos basin fields in the Pampo and Enchova clusters. The final agreement envisages another $650mn in contingent payments in addition to the fixed total of $418.6mn.

The preliminary sales agreement, signed before the Brazilian real nose-dived, was pegged at $851mn plus a contingent payment of up to $200mn.

The Enchova, Enchova Oeste, Marimba, Pirauna, Bicudo, Bonito, Pampo, Trilha, Linguado and Badejo fields produced around 22,000 b/d of oil equivalent (boe/d), mainly heavy oil, through four production units in the second quarter, Petrobras said.

The reduced value of the transaction, reflecting the impact of lower oil prices and the Covid-19 pandemic, suggests that Petrobras may not meet its divestment revenue target of $20bn-$30bn through 2024, as indicated in its $75.7bn five-year business plan. The company has listed dozens of shallow-water assets as part of its strategy to tighten focus on its core deepwater production business and pare down its heavy debt load. A new business plan is expected to be released by year's end.

Newcomer Trident says it hopes to at least double production from its newly acquired holdings.

"Our plans are long-term and we will make immediate investments to increase production and protect assets while preparing drilling and workover campaigns," Trident Brasil chief executive Patrick Garo said.

The Brazilian government is working on policy changes aimed at maintaining investment and production growth in the new oil market conditions.

Earlier this month, the national energy policy council (CNPE) published a decree that will cut royalties to 5pc from a previous 10pc for small and medium-sized companies. The implementation of the reduction hinges on the establishment of the governing framework by oil regulator ANP.

By Nathan Walters