Page 14 - LatAmOil Week 39 2021
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LatAmOil NEWS IN BRIEF LatAmOil
The industry was hit hard by the unexpected 2022. In order to continue as a going concern
sharp drop in demand and commodity prices beyond that point the Company will need to
in 2020 and responded by reducing costs, cut- raise further finance, either through a farmout
ting capital expenditure and delaying projects. partner or by raising funds in an equity issue.
The industry is cautiously increasing activity Argos Resources, September 24 2021
in response to the recovery in oil prices in the
first half of 2021, albeit still being hampered by
operational and logistical difficulties caused by INVESTMENT
the continuing Covid-19 restrictions. Acknowl-
edging this slowdown in activity, the Company Petrobras concludes sale
requested an extension to the term of Licence
PL001, a production licence covering an area of interest in GásLocal
of approx. 1,126 sq kms in the North Falkland
Basin, as more time will be required to recover Petrobras, following up on the release disclosed
from this downturn. In April 2021 the Falkland on September 25, 2020, informs that it con-
Islands government agreed to a twelve-month cluded, on this date, the sale of its 40% interest ba1, respectively, was based primarily on Petro-
extension to the Second Phase of the Licence to in the company GNL Gemini Comercialização bras’ positive track record of improving operat-
1st May 2022. e Logística de Gás (GásLocal) to White Martins ing and financial performance that have resulted
In April 2021 the Company also announced Gases Industriais (White Martins), ending the in solid credit metrics for its rating category. In
that, subject to shareholder approval, it had controversies arising from the activities of the addition, Moody’s expects that Petrobras’ oper-
raised $550,000 through a subscription for new Gemini Consortium and Gás Local, especially ating and financial discipline will continue to
shares by certain new shareholders and Ian those pending arbitration and issues under liti- support cash generation, which will help sustain
Thomson, Executive Chairman of the Com- gation. The agreement also foresees adjustments its current capital structure despite higher pay-
pany. Shareholder approval for this fundraise in the commercial conditions for the supply of outs to shareholders.
was obtained at a General Meeting on 30th April. gas, by Petrobras, as a consortium member of The rating actions also considered the com-
The net proceeds of the fundraise, when added the Gemini Consortium, formed by Petrobras, pany’s good liquidity position and comfortable
to existing cash reserves, is sufficient to fund White Martins and GásLocal, until the end of debt maturity profile as well as its ample access
the Company’s working capital requirements 2023, in accordance with what was determined to the global capital markets.
through the term of the Licence extension as by the Administrative Council for Economic Petrobras’ Ba1 rating is one notch above Bra-
well as costs expected to be incurred in techni- Defense (CADE). zil’s Ba2 sovereign rating based on the company’s
cal work in furthering the Company’s farmout After the fulfillment of all the precedent considerably stronger fundamental credit pro-
efforts. A pilot study has been commissioned to conditions, the signed agreement will result file than that of the sovereign, including Petro-
reprocess some of the 3-D seismic data which, in Petrobras receiving an estimated amount of bras’ proven resilience to adverse economic and
if successful, would help to further de-risk BRL60.6mn, of which (i) BRL56.0mn was paid business conditions, such that observed in 2020.
the prospects mapped within the Company’s on the present date and; (ii) BRL4.6mn, subject In addition, Petrobras’ corporate governance
Licence area and enhance its farmout potential. to the corrections foreseen in the respective somewhat protects it from government interfer-
The Company notes the decision announced agreement, to be paid within 13 months from ence. Therefore, Moody’s considers that there is
on September 23 by Harbour Energy, the current the agreement closing date. low likelihood that the company would default
60% owner and operator of the Sea Lion oilfield, About GásLocal: GásLocal is a company that as a consequence of sovereign credit distress or
to explore the options to exit the project and its operates in the commercialisation and logistics default because of i. Petrobras’ solid financial
other license interests in the Falkland Islands. of CNG or LNG, through cryogenic carts. metrics and capital structure, ii. its small reli-
Any impact this decision may have on the Com- Petrobras, September 24 2021 ance on domestic funding sources, iii. its limited
pany’s activities is being assessed. exposure to foreign currency risk given the low
The Company continues to seek partners to and declining proportion of refining business of
participate in drilling on its Licence and is cur- FINANCE the total, and iv. the fact that over 30% of its sales
rently engaged with a number of counterparties are export related.
who have expressed interest. Given the current Moody’s upgrades Petrobras’ Ba1 rating and ba1 BCA are fur-
challenging environment the Company believes ther supported by i. the company’s sizable pro-
it may be some time before any expressions of Petrobras rating to Ba1 duction and reserves, ii. its solid cash generation
interest are translated into commitments. vis-a-vis debt burden, and iii. its dominance in
Financial overview: The Group loss for the Moody’s Investors Service upgraded the cor- the Brazilian oil industry. Petrobras’ ratings are
six months to June 30, 2021, was $200,000 (2020: porate family rating of Petrobras to Ba1 from constrained primarily by i. Brazil’s sovereign
loss of $192,000) giving an undiluted loss per Ba2. The rating action was triggered primarily rating, ii. business plan execution risk, and iii.
share of $0.0009 (2020: $0.0009 loss per share). by the company’s strong operating and financial the potential of government interference con-
Administrative expenses were $205,000 com- performance as well as its solid credit metrics. trary to the business and financial interest of the
pared to $148,000 for the same period in 2020. Simultaneously, Moody’s raised Petrobras’ base- company.
Net assets of $29.6mn is an increase of $350,000 line credit assessment (BCA) to ba1 from ba2. The stable outlook on Petrobras’ ratings
since December 2020 as a net result of the loss for The rating outlook is stable. reflects Moody’s view that the company’s credit
the period and a fund raise of $550,000. Ratings rationale: Moody’s decision to profile will remain mostly unchanged in the fore-
Financial outlook: The Group has sufficient upgrade Petrobras’ ratings and BCA, a measure seeable future. The stable outlook also reflects
cash resources to continue for the period of the of a company’s standalone credit risk without the stable outlook on Brazil’s sovereign rating.
current licence term, which expires on May 1, government support considerations, to Ba1 and Moody’s Investors Service, September 28 2021
P14 www. NEWSBASE .com Week 39 30•September•2021