Prio Buys Albacora Leste For Us$ 2.2 Billion

02 May 2022

PRIO closed, on Thursday (28/4), the purchase of the Albacora Leste field, owned by Petrobras, in the Campos Basin. With an investment of up to US$ 2.2 billion, the venture will see the country's largest independent oil and gas company nearly double in size in both production and revenue and EBITDA. Currently, PRIO produces 34,000 barrels/day, and the acquisition adds another 27,000. 

The company estimates an economically recoverable reserve of 1P (90% chance of being recovered) close to 280 million barrels for the Albacora Leste Field, being, net for PRIO, a reserve of more than 240 million barrels, with abandonment expected after 2050. Estimates consider a long-term price of $62 per barrel of oil. Both companies have been in exclusive talks since November last year. Under the terms of the agreement, PRIO will own 90% of the business – Repsol Sinopec Brasil ("RSB") will have the other 10% stake. PRIO will pay 15% of the value of Albacora Leste now and the rest only at the closing of the operation, scheduled for the end of this year. 

The asset will be financed with the company's cash, which is $1.4 billion. The payment will have a fixed installment of US$ 1,951 million, of which US$ 293 million will be paid at the signing of the agreement, and an additional US$ 1,658 million at the conclusion of the acquisition and transfer of the operation to the company, subject to the adjustments due until the closing of the transaction (counted as of October 1, 2022) and the fulfillment of conditions precedent. 

The deal also includes the possibility of additional payments of up to US$ 250 million, depending on the annual average price of a barrel of Brent oil in the years 2023 and 2024. The company has a bold expansion plan. 

"We always said we wanted to get to 100,000 bep/day. Today, we produce 34,000 barrels and have just obtained the Operating License to begin drilling the Frade field. Last year we bought the Wahoo field, which can raise production to more than 60,000 bep/day and now, with Albacora Leste, a field that today produces almost 30,000 bep/day and has a revitalization plan that makes it reach 50,000 bep/day. That is, we have a plan in place that will take us to 100,000 bep/day. It won't be easy, but we will get there," says Roberto Monteiro, CEO of PetroRio. 

About Albacora Leste 

Discovered in 1986, it had its first oil in 1998 and currently has a production of approximately 30 kbbld in March, of API 19º and with low sulfur content, through 17 producing wells and 15 injector wells. The countryside covers an area of 511 km². The production of the Field is made through the FPSO P-50, with oil processing capacity of 180 kbbl/d and 6 MMm³/d of gas and the artificial lifting system of the Field happens by the gas lift system. 

About PRIO's business plan for Albacora Leste 

During the first 18 months of operation, the company will focus on the following fronts: 

• Investments of approximately US$ 150 million in the P-50 FPSO to ensure the highest levels of asset integrity and thereby achieve safety standards and operational efficiency equivalent to other operations. This amount does not include the waste water treatment project, which is being executed by Petrobras and will be completed before the closing of the operation; 
• Capture of synergies and implementation of its operational methodology in order to achieve a cost level (OPEX) compatible with the operationFPSO P-50 action, close to $90 million a year. Subsequently, the field redevelopment campaign will begin, involving the connection or drilling of 17 producing wells and 5 injector wells over 5 years, with an estimated CAPEX of US$ 70 to US$ 75 million per well (for 100% of the Field). Similar to the methodology employed in Frade and Wahoo, the development will be divided into two stages: 
• The first, contemplating the connection of 3 producing wells already drilled, 8 new producing wells and 1 injector well, which may increase the production of the Field to levels higher than 50kbpd (100% of the Field), maintaining such level for 2 or 3 years; 
• The second, with another 6 new producing wells and 4 injectors, to be carried out next. PRIO must also carry out the early decommissioning (by 2027) of 5 producing wells and 1 injector, already contemplated in the price paid by the Field. The company estimates a CAPEX of approximately $15 million per well. The final abandonment of the Field, scheduled for after 2050, is estimated at $800 million.