By Marta Nogueira and Rodrigo Viga Gaier
RIO DE JANEIRO, Brazil (Reuters) – Faced with financial restrictions, Petrobras announced on Thursday that it will exercise preemptive rights in just three out of eight prospects to be offered at the two pre-salt auctions, under a divestiture regime, in October.
Petrobras estimated the amount of the subscription bonus to be paid by the company in 810 million reais, considering that the results of the auctions confirm only the minimum shares of 30 percent indicated in each block.
This amount, said company president Pedro Parente, equates to 0.3 percent of the company’s multi-year investment plan of about $ 74.1 billion, and does not impact the company, which seeks to reduce its high indebtedness .
In the second round of the pre-salt, the company announced that it will exercise its preference for the area adjacent to the Sapinhoá field, one of the largest in Brazil already in production, while in the third the company will exercise preference in the exploration prospects of Peroba and Alto de Cabo Frio Central.
“All the areas are very good. No doubt, nor could it be different, the decisions (regarding preference) took into account restrictions of a financial nature,” the Petrobras president told reporters at a conference to discuss the issue.
Petrobras’ director of Exploration and Production, Solange Guedes, said that the company decided to postpone exploration activities off the coast of Bahia to consider the company’s participation in the auction.
That way, the company will not need to increase the forecast of investments in its plan until 2021.
In contrast, the company does not rule out the possibility of increasing the percentage of 30 percent indicated for the areas where it is exercising its preemptive right, forming consortia to participate in the bids.
This, in theory, opens space for the participation of large global oil companies in the auctions.
The company also said that in areas where it did not exercise preemptive rights, it could participate on an equal footing with other bidders, whether acting as operator or non-operator.
While seeking to reduce its huge debt, the largest for a world oil company with strong cost savings and a billionaire asset sales plan, Petrobras has not revealed where the new resources would come from for potential larger stakes.
The president of Petrobras avoided giving details on the strategies defined by the company so far, but stressed that he should participate in bids in consortia.
“Our preference will always be for the formation of consortiums,” said Parente.
The executive denied that he had previously spoken with oil companies likely to be interested in the auctions, but pointed out that he has been able to observe in recent trips abroad strong interest from multinational companies in the prospects that will be offered.
The executive also stressed that financial constraints will have to be taken into account in future decisions, as well as assessments of the company’s interests in aggregating exploration areas to the portfolio.
“There is a sequence of questions that arise from today until the completion of the auction that will determine several different possibilities for decisions that the company has to take, where financial constraints, especially in the short term, are certainly relevant,” said Parente.
The executive also stressed that he is studying to participate in the 14th round of bidding for exploratory areas for oil and gas, under a concession regime, which are outside the area defined as pre-salt.
“(In the round of concessions) there are areas that may be of interest to us and that can improve the resulting risk and return of our portfolio as a whole,” he said.
According to Petrobras, the investment in areas in these auctions will not impact the goals of its 2017-2021 Business and Management Plan, such as reducing its debt.
The second round will offer investors the unitizable areas adjacent to the prospects of Carcará (block BM-S-8), Gato do Mato (block BM-S-54), Campo de Sapinhoá in the Santos basin, and Tartaruga Verde Field (Shared mound of Tartaruga Mestizo) in the Campos basin. The signing bonus totals 3.4 billion reais.
The third round will offer the areas of Pau Brasil, Peroba and Alto de Cabo Frio Oeste, in the Santos Basin, and the Alto Cabo Frio Central area, in the Santos and Campos Basins. The value of the signing bonus amounts to 4.35 billion reais.
In the sharing regime, the consortium / company that offers the highest percentage of oil to the government wins the auction.
To date, only one auction has been held under the share-sharing regime