Aug 5, 2019
Willing to take advantage of the window of opportunity that the market offers in terms of interest rates and assets for sale, PetroRio is preparing to issue dollar funds next month that will give it the firepower to buy assets and develop those that already exist.
The company has consulted with investors and has seen “a lot of appetite” for the issue, according to Nelson Queiroz Tanure, who has held the presidency of PetroRio for a year and a half. The idea is to raise about $ 400 million, he said.
The oil industry has been “at the epicenter of the latest Brazilian problems,” according to Tanure, either because of corruption cases raised with Operation Lava Jato or not-so-successful business models such as OGX and former HRT. In this context, PetroRio came up with new management from the former HRT with the proposal to grow in a disciplined manner in the independent oil production market.
“We’re doing the right thing to get back on track,” Tanure said in an interview at Bloomberg’s Sao Paulo office. “Being bigger because it’s bigger doesn’t interest us, what interests us is producing oil profitably,” he said. The company’s shares accumulate 73% increase this year, compared to the 16% appreciation of Ibovespa.
The model includes acquiring mature fields, reducing costs, increasing operational efficiency and extending their economic life, as they did with the Polvo field, acquired from BP and Maersk. PetroRio drilled new wells in Polvo last year, boosting its production, and is preparing to drill up to 3 wells in the second half.
Budget discipline involves renegotiating contracts, sharing with suppliers the burden of oil price variations. To get employee commitment, compensation is dictated by employee performance. Today, 80% of PetroRio’s employees are members of the company, given the option to convert part of their bonus into shares.
Willing to value offshore assets for sale, Tanure says the prices paid for some recently sold fields were “exorbitant”. “I see with concern very adventurous new entrants.”
In addition to Brazil, PetroRio has also elected the Gulf of Mexico as an area of interest. “It’s a geopolitical diversification, a hub very rich in oil and gas,” said PetroRio’s president. The region, he said, has interesting assets that the company intends to look at.