Prio (formerly PetroRio) is set to acquire Sinochem Petroleum Netherlands, which holds a 40% interest in two offshore Brazilian oil fields, Peregrino and Pitangola, in a deal worth $1.91bn.
In this regard, the Brazilian oil and gas firm has signed an agreement with SPEP Energy Hong Kong and Sinochem International Oil (Hong Kong).
The transaction is set to create a new consortium, with Equinor maintaining its 60% as operator in the two oil fields, while Prio takes on the remaining 40% stake.
This is subject to standard closing conditions, including regulatory approval from Brazilian competition regulator Administrative Council for Economic Defence (CADE) and the waiver or expiration of Equinor’s pre-emption rights within 30 days.
Prio will pay $191.5m upon signing the agreement, with the remaining $1.72bn payable at closing, pending adjustments.
A report prepared by DeGolyer and MacNaughton (D&M) for Prio estimates that Peregrino’s economically recoverable reserves as of 1 January 2024 will total 338 million barrels, based on a long-term oil price of $62 per barrel.
Prio’s net share of reserves is projected at approximately 135 million barrels, with abandonment forecast after 2037.
Upon completion of the deal, Prio’s oil production is expected to increase by approximately 35,000 barrels per day. The Brazilian oil and gas company also anticipates operational synergies by combining shipments of Peregrino crude with other fields.
Payments for the transaction will be made using Prio’s existing cash resources, with debt levels expected to remain consistent with its net debt to EBITDA targets.
The Peregrino field, which began production in 2011, is located 85km off the coast in the Campos Basin.
Operated by Equinor, the field consists of three fixed platforms, Peregrino A, B, and C, and is supported by the floating production storage and offloading (FPSO) Peregrino. The FPSO has a processing capacity of 110 thousand barrels per day (kbbl/d).
Current production stands at 88kbbl/d, with 26 producing wells and six injection wells. The field’s oil has an API gravity of 13.5° and a sulphur content of 1.79%.
Prio was advised by Bank of America, as well as legal counsel from Tauil & Chequer Advogados in Brazil associated with Mayer Brown in Brazil and Mayer Brown International in the UK.
