Page 16 - LatAmOil Week 30

LatAmOil BRAZIL LatAmOil

The state-run Brazilian firm told Bloomberg
last week that its most recent development
wells at pre-salt fields had already been declared
commercial.
It also stated, though, that it was adopting a
new programme designed to eliminate all dry
holes by using artificial intelligence.
In April, oil companies operating in Brazil
requested that ANP mothball 29 oilfields that
had been producing around 65,000 barrels per
day (bpd) of oil. They did so in response to the
decline in oil demand the followed the global
coronavirus (COVID-19) outbreak. All of the Shell spudded its first well at Saturno in May (Image: Shell)
requests for mothballing except one were filed
by cash-strapped Petrobras. third to $8.5bn. The company is taking this step
Rio de Janeiro-based Petrobras has said it is in order to mitigate the financial impact of the
going to reduce investments this year by nearly a pandemic. ™

Karoon renegotiates Brazilian oilfield deal

AUSTRALIAN independent Karoon Energy allowing it to begin the immediate workover
has renegotiated payment terms with Brazil’s of Bauna’s production infrastructure. This is
state-run Petrobras for the acquisition of the expected to boost production materially with-
offshore Bauna oilfield. out requiring further debt raising.
Karoon agreed in 2019 to pay $665mn for Karoon CEO and managing director Robert
a 100% stake in the producing field, which lies Hosking, who has announced plans to retire at
in the Santos Basin. However, the company the 2020 annual general meeting (AGM), said
launched a strategic review of its operations the revised agreement “delivers the benefits
following this year’s oil and gas price collapse, we always wanted from acquiring a producing
prompting it to seek new sale and purchase asset, including immediate cash flow, reasonable
agreement (SPA) terms. terms, management of risk, and opportunity for
The independent said that the previously the future”.
announced “headline” payment would now be The executive told local daily The Age that
split into two payments, the first being a “firm” the revised terms would allow it to proceed with
consideration of $380m and the second a “con- the deal even though the asset had lost some of
tingent” consideration of $285mn. its value. “If we had to write a cheque based on
The $380m includes a $50mn down-pay- the full $665mn on day one, lenders probably
ment Karoon has already made and a $150mn wouldn’t have provided that debt at the current
payment once the transaction closes. Karon oil price ... and we would have had to pull out of
said the remainder of the firm payment would the deal,” he said. ™
depend on any of the asset’s operating and
investing cashflows relating that it is owed,
given that the deal has an effective transaction
date of January 1, 2019. Once the final figure has
been determined it will then be paid out over
an 18-month period from the day the deal is
finalised.
The Australian developer said it would pay
the contingent $285mn payable based on the
average annual daily Platts Dated Brent oil price
using thresholds of between $50 per barrel and
$70 per barrel during 2022-2026.
The original SPA’s bonus payment of $50mn,
which depends on average Brent prices exceed-
ing $100 per barrel this year, remains in place.
Karoon said it would use existing cash and
organic cashflows from the asset to fund the
acquisition, which was now simplified and
significantly de‐risked thanks to the amended
terms. It said the new payment structure per-
mitted it to preserve its financial position while Karoon originally agreed to pay $665mn for Bauna (Image: Karoon

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