Petro Rio S.A. (“Company” or “PetroRio”) (B3: PRIO3), in accordance with art. 26 of the Novo Mercado Regulation, and in addition to the Material Fact of November 28, 2019, informs its shareholders that the country’s National Petroleum, Gas and Biofuels Agency (“ANP”) has approved the concession of the 30% interest in Frade Field, currently held by Petróleo Brasileiro S.A. – Petrobras – to PetroRio.
Thus, within the upcoming days, the Concession Contract Additional Term will be signed by ANP, therefore closing the acquisition of the entirety of the oil and gas exploration, development and production rights and obligations equivalent to Petrobras’ 30% interest in Frade consortium.
As of the signing, the Company will hold 100% of Frade Field, 100% of Frade FPSO and the economic benefit stemming from the 30% interest in the Frade Field will be incorporated into the financial statements of the Company, which will fully benefit from the profitability derived from the cost reduction and production enhancement initiatives.
This transaction will increase Company’s 1P reserves by 17 million barrels and 5.2 thousand barrels will be added to PetroRio’s daily production. Additionally, the acquisition’s closing allows the Company to be entitled to an oil stock of approximately 400 thousand barrels.
In the same resolution, ANP also approved the reduction of the estimated Frade Field decommissioning amount, from US$ 393 million to US$ 179 million, which will result in a positive adjustment, corresponding to the abandonment provision line in PetroRio’s balance sheet.
The acquisition represents the conclusion of yet another successful step in the execution of PetroRio’s growth strategy, through the acquisition and redevelopment of producing fields, replicating Polvo Field’s success in Frade, thereby increasing the Field’s profitability and extending its economic life.