Category Archives: Resources

Petrobras issues US$6B in Global Notes

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Brazilian energy company Petrobras has concluded today a US$6 billion issuance of 5, 10, and 30 year notes in the international capital markets.

The transaction was the largest-ever corporate bond offering by a Brazilian company in the international capital markets, and the book was oversubscribed 2.5 times with more than 463 investors from the United States, Europe, Asia and Latin America participating, most of them dedicated to the high grade market.

The notes were issued by Petrobras’ wholly-owned subsidiary Petrobras International Finance Company (PifCo) and constitute general senior unsecured and unsubordinated obligations of PifCo that are unconditionally and irrevocably guaranteed by Petrobras. Pricing occurred on January 20, 2011.

Petrobras will use the proceeds of this multi-tranche offering to finance Petrobras’ planned capital expenditure under its 2010-2014 business plan.

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BP Agrees to Sell its Interests in Pan American Energy to Bridas Corporation

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BP announced November 28th that it has entered into an agreement to sell its interests in Pan American Energy (PAE) to Bridas Corporation. PAE is an Argentina-based oil and gas company owned by BP (60 per cent) and Bridas Corporation (40 per cent).

Bridas Corporation will pay BP a total of $7.06 billion in cash for BP’s 60 per cent interest in PAE. The transaction is expected to be completed in 2011.

The sale of its interests in PAE is part of BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before the agreement to sell its interests in PAE, BP already had sales agreements in place totalling some $14 billion. The proceeds of the sale announced today will be used by BP to increase the cash available to the group.

BP group chief executive Bob Dudley said: “Today’s agreement further demonstrates both the high quality and attractiveness of the assets throughout BP’s global portfolio and also the company’s ability to meet our significant financial commitments arising from the Gulf of Mexico tragedy.

“We now have agreements in place that should secure the majority of our divestment target. We will continue to identify further assets that may be strategically more valuable to others than to BP as we complete the programme.”

Under the terms of the agreement, Bridas Corporation is required to pay BP a cash deposit of $3.53 billion with the balance of the proceeds due on completion of the sale. $1.41 billion of this deposit is due to be paid on December 3, 2010, with the balance of $2.12 billion to be paid by Bridas Corporation on December 28, 2010.

The transaction excludes the shares of PAE E&P Bolivia Ltd, and the figures below exclude amounts attributable to PAE E&P Bolivia Ltd.

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Energy firms invest $65 million in Bolivia gas well

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Spain’s Repsol-YPF, Brazil’s Petrobras, France’s Total and Bolivia’s YPFB have invested $65 million to drill a gas well in the southern province of Tarija.

Located in a field Petrobras operates in southern Bolivia, the San Alberto 15 well has been fully drilled to a depth of 7,884 meters (25,850 feet), the Brazilian company said in a statement.

It added that San Alberto 15 is the first well to be drilled in the second development phase of the large San Alberto field.

The two-year project required investment of $65.3 million, half of which was provided by YPFB Andina, whose shareholders are YPFB and Repsol; 35 percent by Petrobras; and 15 percent by Total.

The companies now are completing the work of connecting the well to the San Alberto gas processing plant, a project that will require an additional investment of $10.5 million.

San Alberto 15 is expected to come online in the second half of December with daily output of 1.7 million cubic meters per day of natural gas.

Bolivia produces an average of roughly 40 million cmd of natural gas and ships most of it to Brazil and Argentina, with the San Alberto field one of the main sources of the exported gas.

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Ecopetrol commences commercial production at Casaba Sur Field

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Ecopetrol has declared the commercial viability of Casabe Sur field, located in the municipality of Yondo, Antioquia, Colombia following confirmation of its potential through tests performed on four wells.

The statement of commercial viability means that, after evaluating the results of the exploratory phase and testing stages, Ecopetrol confirms the potential of the field and decides to begin the commercial production stage.

The field has a commercial area of 305 hectares and is owned 100% by Ecopetrol. The original volume of hydrocarbons in situ is estimated to be 62 million barrels, of which unaudited proven oil reserves are calculated to be 5.4 million, with 9.9 million barrels of probable reserves.

The field’s current output is 1,600 barrels of crude per day (bpd). The development plan calls for increasing such output to 5,500 bpd by 2012 with the application of secondary recovery technologies, especially water injection.

The field is operated through a services and technical collaboration contract for the area of Casabe between Schlumberger and Ecopetrol.

The commercial viability of the Casabe Sur field contributes to Ecopetrol’s strategy of incorporating reserves in areas surrounding production fields and helps reach the Company’s production goal of one million barrels of oil equivalent (oil and gas) per day by 2015 and one million three hundred thousand barrels of oil equivalent per day by 2020.

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Brazil to build rigs for South American oil companies

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President Luiz Inacio Lula da Silva said Brazil now is capable of building oil rigs not only for state-controlled energy giant Petrobras but also companies in other countries, especially South America.

“We’re going to make rigs here for other countries as well,” Lula said Thursday during the inauguration of the P-57, an oil platform with a 180,000-barrel-per-day capacity that Petrobras is planning to bring online later this year.

The president said Brazil’s shipbuilding industry, which became one of the world’s largest in the 1970s but had been all but abandoned before he took office in 2003, has recovered once again and attracted foreign investment.

The P-57, a floating, production, storage, and offloading-type platform that cost $1.2 billion, was built by Brazilian shipyards with close to 68 percent domestic components.

“The platform’s hull was converted from the Island Accord oil tanker at the Keppel Shipyard in Singapore between October 2008 and March 2010,” Petrobras said in a press release.

The company added that the P-57 is the first in a new generation of offshore platforms that are to be used to develop massive reserves in Brazil’s pre-salt cluster, so-named because the estimated 80 billion barrels of oil equivalent that area may contain are located deep below the ocean floor under a layer of salt up to 2 kilometers (1.2 miles) thick.

If the most optimistic estimates prove correct, the pre-salt deposits – located in a 160,000-sq.-kilometer (62,000 sq.-mile) area – could translate into a nearly six-fold increase in Brazil’s current proven reserves of 14 billion barrels and transform the South American nation into a major oil power.

Lula recalled that Petrobras plans to invest close to $224 billion through 2014 – primarily to exploit those deepwater reserves – and therefore will have to commission numerous rigs and tankers.

“We’re going to build the hulls for eight more rigs in (the state of) Rio Grande do Sul. In the coming years, we’re going to build dozens of rigs and hundreds of support ships in the country,” Petrobras CEO Jose Sergio Gabrielli said during Thursday’s ceremony at the Brasfels shipyards in Angra dos Reis, southwest of Rio de Janeiro.

Repsol forms JV with Sinopec

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Repsol YPF, S.A., Spain’s largest integrated oil integrated, has decided to sell a 40% stake in its Brazilian assets to China Petrochemical Corp. or Sinopec Group for $7.1 billion. This deal reflects China’s increasing interest in international oil and gas resources, especially in Brazil.
This transaction is China’s largest year-to-date international investment for oil and gas.
In August 2009, Sinopec had acquired Geneva-based oil and gas explorer Addax Petroleum for $7.5 billion. Post acquisition, the company would gain access to Addax’s substantial reserves off the coast of West Africa and in Iraq.
Repsol was searching for funds for its various upstream activities in the coveted subsalt area offshore Brazil. The deal will help Repsol to invest in these prolific projects as subsalt projects need substantial capital to explore.
The joint venture between the two companies, valued at $17.8 billion, will explore these subsalt offshore oilfields. Importantly, the joint venture will be treated as the largest foreign-controlled energy venture in Latin America, in which Repsol will have the controlling interest with a 60% interest.
The key positives in the Repsol story include its leverage to the Atlantic Basin LNG market and improving prospects for diversification away from its Latin American (particularly Argentine) core. For this, the company is trying to sell a stake in its Argentine counterpart YPF. The company’s growing pipeline of projects outside Argentina is expected to lower its exposure to that market in the long run.
Following this news, the American Depository Receipts of Repsol were up nearly 7% to $27.47 at closing on Friday.

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