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Material Terms of Potential Transaction: Pur- the amount of $ 1bn (CUSIP No. 71647NBH1/ framework in the extractive sector, and help
chase Price and Other Consideration. The aggre- ISIN No. US71647NBH17), by means of its ensure that the development potential of extrac-
gate consideration for the Potential Transaction wholly-owned subsidiary Petrobras Global tive revenues is realised,” said EITI Board Chair
is structured as a guaranteed cash payment of Finance (PGF). Pricing of the notes occurred Helen Clark. “We welcome Ecuador as an imple-
$5mn (subject to customary adjustments) to be on October 13, 2020, as disclosed to the mar- menting country and look forward to the EITI
paid in two (2) equal installments and additional ket, representing the lowest issuance yield for a promoting transparency, accountability, and
contingent payments linked to the following 10-year bond issued by Petrobras. debate around the management of the country’s
conditions and/or occurrence of events: (i) the The terms are as follows: amount $ 1.0bn; natural resource wealth.”
extension of the term of the Service Contracts coupon 5.60% p.y.; re-opening price 109.579%; Transparency is a fundamental element in
with a maximum payment by the Purchaser yield to worst 4.40% p.y.; maturity January 3, the development of a robust extractive sector.
to the Sellers of $12mn, (ii) the average Brent 2031; interest payment dates January 3 and July 3 Through a sustained approach to accountabil-
price during the 2021 and 2022 calendar years, of each year; ratings BB- (Fitch) / Ba2 (Moody’s) ity, EITI implementation can help make infor-
(iii) the actual collection of the “carry forward” / BB- (S&P). mation available to Ecuadorian citizens, and
generated under the Service Contracts and (iv) a The amounts raised shall be consolidated strengthen public understanding on how natural
percentage of the dividends or distributions paid with the $ 1.5bn originally issued on June 3, resources revenues are being managed.
by OCP above a certain amount. 2020, under one single $ 2.5bn series of bonds. Implementing the EITI will require that
Carve-Out Provision: Upon the occurrence PGF intends to use the net proceeds from the the Ecuadorian government publicly discloses
of certain conditions agreed to by the parties, sale of the Notes to repurchase its 4.375% Global information on contracts, beneficial owners,
the Sellers have the right to carve-out the sale of Notes due 2023, 4.250% Global Notes due 2023, revenues and payments, information on state-
the Midstream Business and their shares in OCP 6.250% Global Notes due 2024, 4.750% Global owned enterprises (SOEs) and data related to
from the perimeter of the Potential Transaction. Notes due 2025, 5.299% Global Notes due gender and environmental payments. These dis-
Other Considerations: In the event the Sell- 2025, 8.750% Global Notes due 2026, 7.375% closures will support ongoing efforts to publish
ers do not exercise the carve-out right described Global Notes due 2027, 5.999% Global Notes better, more accessible and more timely data on
above, upon the Closing, the Corporation will due 2028, 5.750% Global Notes due 2029 and Ecuador’s extractive sector.
assume certain reversion costs associated with 5.093% Global Notes due 2030, in each case that Ecuador is one of Latin America’s most
the Blocks in an amount corresponding to PGF accepts for purchase in the tender offers important oil exporters and has a growing min-
the Corporation’s participation interest in the announced concurrently with the offering of the ing sector.
Blocks. Notes, and to use any remaining net proceeds for With an oil production of 500,000 barrels a
Advisors: Laurentian Bank Securities Inc. general corporate purposes. day, Ecuador’s extractive industry can provide
and Horizon Capital are serving as financial Petrobras, October 22 2020 important revenues for infrastructure and devel-
advisors on this transaction. opment. Transparency and accountability are
New Stratus Energy, October 20 2020 key to ensure the country’s resources are man-
POLICY aged responsibly.
Yet the COVID-19 pandemic has imposed
Ecuador joins EITI after Attracting investment will continue to be a pri-
FINANCE severe burdens on Ecuador’s public budget.
Petrobras concludes $1bn securing board approval ority for the government and will require it to
demonstrate a high level of transparency.
offering of global notes The EITI Board has approved Ecuador’s applica- in September 2019, noting that EITI imple-
The government committed to join the EITI
tion to join the EITI, making it the 55th imple-
Petrobras announces that yesterday it concluded menting country and the 11th in Latin America. mentation would help Ecuador in its pursuit of
the offering of its 5.60% Global Notes due Janu- “EITI implementation can underpin “transparency and efficiency in managing the
ary 2031 in the international capital market in the modernisation of Ecuador’s regulatory natural resources of the country.”
Civil society organisations have campaigned
for Ecuador to join the EITI since 2012. Their
continuous engagement, as well as commitment
from some of Ecuador’s largest extractive com-
panies, have been instrumental in presenting
Ecuador’s candidature application.
Ecuador’s multi-stakeholder group (MSG)
– composed of government, industry and civil
society representatives – has developed an
ambitious Work Plan for the next three years.
The engagement of all the stakeholders will be
important to ensure that EITI implementation
aligns to national priorities and contributes to
inclusive development.
Ecuador’s first disclosures according to the
2019 EITI Standard will need to be made within
18 months of being admitted as an EITI imple-
menting country.
EITI, October 15 2020

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