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



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