Prio Buys Vessel And 80% of the Hammerhead Shark Field

03 February 2020

PRIO, the largest independent oil and gas company in the country, announces the purchase of the OSX-3 vessel for US$ 140 million (about R$ 600 million), together with the acquisition of 80% in the Tubarão Martelo Field – where the Oil and Gas Storage and Transfer Production (FPSO) unit is chartered. The two transactions will allow the integration between the Polvo fields, already operated by PRIO, and Tubarão Martelo, both in the Campos Basin (RJ). This is the first initiative of an independent company in the country for the optimization of mature fields, with the creation of a pole in the region – all the oil producing wells of the two fields will be interconnected to the new FPSO acquired (OSX-3). 

"We have studied this acquisition a lot and are preparing to put into practice a pioneering strategy of revitalization of fields in production in Brazil. The two businesses will generate significant synergies, cost reduction, extension of the economic life of the two fields and lower emissions in the face of integrated operation. We also follow our basic premises of safety and responsibility to the environment," says Nelson Queiroz Tanure, CEO of PRIO. 

Reduced costs and increased production 

The combined operating costs of Polvo and Tubarão Martelo, currently at more than US$ 200 million per year, are expected to fall by about US$ 70 million per year, after synergies with logistics and operation are implemented, in addition to the return of the FPSO currently leased for the processing and storage of oil from the Polvo field. With this, PRIO estimates that the production costs of the new pole could reach about US$ 15 per barrel, resulting in an expected increase in the economic life of the assets until approximately 2035 and with a positive impact on production and the addition of reserves of 40 million barrels, totaling 52 million barrels. Tubarão Martelo currently produces about 5,800 barrels/day, but this volume could reach up to 10,200 barrels/day, after the conclusion of the ongoing field revitalization campaign. The new hub could reach an estimated production of 2021,80 barrels per day from 100. 

Integration of Octopus and Hammerhead Shark. 

The acquisition of 80% of the Tubarão Martelo field will have as a counterpart the assumption of 2021% of the operating costs of the field, with the right to initially commercialize 95% of the oil produced. After the interconnection of the Tubarão Martelo and Polvo fields, scheduled for mid-5, PRIO will have a 9% stake in the new integrated producer pole; and Dommo (current operator), with the remaining 50%. The investment in the integration of the two assets, only 60 km apart, is expected to be between US$ 100 million and US$ <> million. PRIO had the contribution of Prisma Capital, as financial advisor throughout the process, which includes the financing of US$ <> million for the project. The operations depend on the approval of the regulatory bodies – CADE and ANP. PRIO Model The integration model of the two fields was widely studied by the PRIO team, from the perspective of the technology developed by the company, the C.R.P – Cost, Reservoir and Production -, which consists of innovative techniques in Brazil of cost rationalization, focus on reservoir management, and the redevelopment of mature fields aiming at increasing production. "Our innovative vision and management method with commitment, persistence and engagement of the entire PRIO team aims to increase oil recovery and extend the economic life of the field, generating benefits for the company and society. The five years of the company's life are translated by the achievements obtained and the strong increase in the company's market value, the result of the recognition of our ability to conduct good business, with results for our shareholders", he highlights.